A Soviet drinks monopoly in Maryland

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Maryland’s Montgomery County is a nice place. Its western border runs along the Potomac River and its southern territory abuts Washington. Many folks who work in the district settle in Bethesda and other parts of Montgomery County, as the schools tend to be better and the property prices lower. It is Maryland’s richest county, and boasts many attractions.

But Montgomery County is a case study in the peril of allowing the government to enter the drinks business. In short, once the government gets in, it is very hard to get it out, no matter how badly it performs.

Maryland has a local-control law that gives counties great discretion to decide how they want to regulate alcoholic beverages. Montgomery County uses this authority with unabashed gusto. Its Department of Liquor Control, whose very name is telling, operates in two of the three tiers of the drinks system. The DLC has a monopoly on retail liquor sales and also is the sole wholesaler for beers, spirits and wines. No other county in the state except Somerset has so deeply sunk itself into the drinks business.

If you want to buy a bottle of liquor in Montgomery County, you must trek to one of the DLC’s liquor stores. If you operate a restaurant or run a store that sells drinks, you must purchase your drinks from the DLC, which is a nightmare. Greta Weber of Washingtonian magazine recently detailed the sort of debacles that are commonplace:

In the last week of 2015, a familiar disaster struck Brickside Food & Drink in Bethesda. The culprit: the Department of Liquor Control. From two days before Christmas until two days before New Year’s Eve, the DLC—an 80-year-old government entity that maintains a monopoly on the county’s alcohol supply—missed its deliveries to Brickside, shorting the Woodmont Triangle eatery by more than 10 kegs of beer and about 50 cases of wine, liquor and bottled beer.

Some 50 other businesses had the same problem that week. How did this happen? A “clerical error” by the DLC. They just mistallied how much product they were to deliver. Which is exactly the sort of mistake that one regularly makes when one is a monopolist.

DLC’s director resigned, but the crummy service continues. Andrew Metcalf of Bethesda Magazine reports:

Pinky Rodgers, co-owner of Pinky & Pepe’s Grape Escape in the Kentlands, took issue with comments from county officials that the department’s operations have been improving since it began implementing an action plan about a year ago. The department controls the wholesale distribution of alcohol and the retail sale of all liquor in the county. In the past 30 days, eight of the nine deliveries to her business have had problems that ranged from incomplete orders to broken bottles and moldy boxes, she said. Rodgers also brought photos of rusty DLC delivery trucks that she says leak, resulting in the delivery of soggy packages to her business.

DLC Interim Executive Director Fariba Kassiri responded to Rodgers’ complaints that she would “apologize if there are actual issues but our data doesn’t show that.” The DLC went on to claim that 85 percent of its deliveries were just fine. No private company in a competitive market could cock-up 15 percent (about one out of every six or seven) of its deliveries and stay in business long.

Thanks to the DLC’s shabby business practices, Montgomery County residents often cross into the District of Columbia to buy drinks. That’s why the DLC liquor store on the D.C. border was shuttered – because it lost money. Per-capita liquor sales in the county are 33 percent below the nationwide average, while the district’s sales are twice the national average, according to an analysis by the Distilled Spirits Council of the United States.

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Selling and distributing beer, wine and spirits, essayist Martin Morse Wooster rightly notes, is not a proper function of government. And plenty of voters in Montgomery County want the government out of the business.

But the DLC endures. For decades, one politician after another has tried unsuccessfully to ease the county out of the drinks business. Reform efforts continually fail because the DLC’s unionized government employees lobby to keep the monopoly (and their jobs). The county government’s long-serving executive, Democrat Ike Leggett, opposes privatization and claims financial doom will ensue if the county lost the DLC’s annual $30 million profit, which is used to keep up roads and schools. (Note: the $34.4 million the DLC provided in FY2016 amounts to 0.7 percent of the county’s $5 billion operating budget.)

All of which means the county’s 800 restaurants and drinks retailers and 700,000 or so residents who can legally drink remain stuck with this Soviet dinosaur until they vote in leaders ready to stand up for reform.

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