Liquor: The Other Drug

New liquor license legislation and spotty enforcement of existing laws leaves communities with no choice but to fight when faced with new liquor establishments.

by Russ Henley and Alice Cherbonnier

The relationship between a liquor establishment and its surrounding community can be very rocky. Some residents see such businesses as magnets for all sorts of disturbances, and the influx of cars into the neighborhood streets can cause a parking nightmare for those who live nearby.

The liquor license issue is even more complex than this. Instead of just two sides to a dispute—neighborhoods versus liquor establishments—there is a third party involved—the local Liquor Board, which is reponsible for issuing retail liquor licenses, ensuring compliance with state laws, and overseeing local liquor laws. All counties in the state, plus Baltimore City, have Liquor Boards, which are part of the Comptroller of Maryland’s Alcohol and Tobacco Tax Division.

Big Revenue-Producer
The state has a major financial interest in overseeing these two substances. There are taxes and fees every step of the way in getting them from the manufacturer to the consumer.

Retail liquor licenses (for bars and restaurants) actually generates comparatively little revenue for the State. In 2001, only 10 applications for liquor licenses were processed in the entire state, at $200 each. License fee renewals, of which there were 125 that year, cost only $30 each. In all, only $5,750 was generated from retail liquor licenses.

Overall in 2001, this Division had net receipts of over $231 million for permits, licenses and excise taxes for alcoholic beverages and tobacco products, plus a net income of $199,367,485 from fees and taxes on the distribution and sale of tobacco.

The big money for the State comes from licenses for manufacturers, wholesalers, and others; and for permits—including $133,502 for 66,751 “vehicle identification cards.” Not counting revenues from retail liquor licenses, the State brought in over $7 million in alcoholic beverage permit fees in 2001. The biggest share of the money, of course, comes into the State’s coffers from excise taxes imposed on the sale of alcoholic beverages. It could generate a lot more revenue if it increased

Limits on New Licenses in City
Baltimore City’s Board of Liquor License Commissioners has regulations designed to protect neighborhoods from liquor-related problems, but critics charge that the laws are not always strictly enforced. Sometimes, they charge, the Board has not been as vigilant in their interests as laws on the books would indicate.

When neighborhoods perceive a threat to their peace and harmony from an additional bar in their midst, or the issuance or transfer of a liquor license to a party they feel is not suitable, they have no choice but to take action.

According to the Liquor Board’s website, there are currently 1,580 alcoholic beverage establishments in Baltimore City, down from 2,200 in 1968. This trend is in keeping with the City’s declining population; many licenses simply expired when the prescribed time frame allowed for transferring licenses expired with no takers. Barring state legislation to the contrary, there won’t be any more licenses available due to a 1968 moratorium that was placed on the distribution of new liquor licenses in Baltimore City.

Now that some parts of the city have become “hot spots” for development, there is increasing interest among investors in transferring licenses from areas where there is little potential profitability in having a license to areas where business would be better. Such a transfer, if the intended new community already has the maximum number of liquor licenses, would also require City Council approval.

This spring, the City’s Board of Liquor License Commissioners looked to the Maryland Senate for ways to keep existing liquor licenses active even though, by current regulation, they would otherwise soon become extinct by operation of law.

Sen. George W. Della, Jr. of the 46th Legislative District introduced Senate Bill 771 at the Liquor Board’s request. If it had passed, it would have authorized the Commissioners to determine “under specified circumstances” the period for which a liquor license could be deemed unexpired. The legislation did not get out of committee, however, so the issue is still in limbo.

Had the law been enacted, the City’s Liquor Board, at its discretion, would have had the power to postpone license expiration for an indefinite period in the event of a licensee’s undue hardship (defined as such circumstances as fire, natural disaster, litigation, bankruptcy, condemnation proceedings, or death or physical impairment).

This flexibility, the Commissioners asserted, because circumstances sometimes require more than the currently-allotted 360 days to be resolved.

Nathan Irby, Jr., executive secretary of the City’s Liquor Board, explained, “All we’re asking for are exceptions to the law, and that’s not hurting anybody.”

Who Should Enforce Laws?
Neighborhood groups may differ on this point. The proposed legislation fueled an uproar from the Remington Neighborhood Alliance (RNA), which had been trying for a year, at considerable expense, to prevent the transfer to their community of a liquor license that, by their reckoning of the current law, should have been expired.

According to Ward Eisinger, president of the RNA, the failed bill would have contradicted the City’s efforts to reduce the number of liquor licenses. He expressed dismay that the legislation was even introduced in the light of these efforts. “They might as well be giving out new tavern licenses, since they keep trying to breathe new life into ones that are legally dead,” he said.

In recent years, the RNA has fought two other cases of what they viewed as illegal license renewals—something that neighborhood leaders feel shouldn’t be their job.

Susan Hughes, a staff attorney for the Community Law Center who has represented communities in liquor license protests, concurs. “The burden is being placed on the wrong party. It’s not the public’s job to enforce these [liquor] laws,” she said. The Liquor Board, she pointed out, holds that responsibility.

With about 24 cases of “extreme hardship” extension requests in the City this spring, Irby denies that the Board is trying to do anything extra to help these licensees.

“We’re not trying to save licenses,” Irby says. “These licenses can lay dormant as long as they’re being paid for.”

The Governor’s Veto
A more recent dispute over a proposed new liquor establishment in Canton had yet another neighborhood fuming later this spring. At a final bill signing on May 22, Gov. Robert L. Ehrlich vetoed a bill that would have imposed in the 46th Legislative District an existing city ban on new or transferred liquor licenses that are situated within 300 feet of a school or church. The proposed Firehouse Tavern in Canton, which would have fallen under the restrictions, can now proceed with applying for a liquor license—assuming that the Governor’s veto is not overidden by the Maryland General Assembly.

License Not Really ‘Sold’
When compared to other types of licenses, the nature of a liquor license is unique. A licensee can “sell” his or her liquor license even though the license is not actually property. What is actually being sold is the right to operate a liquor-serving business, for which having the license is a necessity. The licensee is, in effect, being reimbursed for giving up the right to use the license.

For more information, visit the Liquor Board website, the Maryland General Assembly Homepage, or this link for information about Maryland’s liquor licensing and permitting process. Background information about liquor licenses in the state can be found by visiting here.

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This story was published on June 10, 2003.