Delivery to consumers will be the biggest change to the alcoholic beverage industry in Maryland during 2018.

A tipping point is now being reached among retail license holders offering delivery to consumers. Despite that it was a change in state law in 2015 that enables delivery, it has taken some time for what is a new rapid and dramatic evolution in operations, widely adopting by the broader retail industry.

The package good store that is not delivering in 2018 has missed the moment of critical mass. Shopping behaviors have changed and while one of the most disruptive Amazon effects is the consumer expecting delivery, Amazon does not delivery alcoholic beverages in Maryland. But as Millennials move into their prime food and beverage spending years, they want everything delivered, not just their prepared food, but also their beverages.

We are not predicting delivery by drones in 2018, but the entire retail alcoholic beverage industry is being reshaped with more modest delivery vehicles.

There are other concomitant trends that both attract Millennials, and also simplify delivery for retailers, like mobile pay. Retailers maximizing delivery opportunities do not limit themselves by only accepting old fashioned credit cards, but also accept Apple Pay, Android Pay, Masterpass, and Visa Checkout. And a retailer can link a PayPal account to Android Pay, or pull from Venmo.

But an alcoholic beverage retailer in Maryland must comply with specific state and local laws to be authorized to deliver.

In Maryland retail delivery to a purchaser of alcoholic beverages is prohibited unless a retail license holder obtains a letter of authorization from the local licensing board to make deliveries. Additionally, and why brick and mortar liquor stores will continue to flourish is that the delivery must be made,

from the licensed premises by the retail license holder or an employee of the retail license holder.

Local licensing boards across the state have different requirements for approving deliveries by a license holder and issuing the required letter of authorization. Fairly typical is the Baltimore County Rule 9 that establishes a fairly rigorous procedure, both for approval and operation. Written application must be made to the Board and the licensee must appear at a public hearing. The rule further provides,

At the time of application for a permit under this rule, a retail licensee shall submit to the Board information concerning the training of its drivers in verifying the age of recipients of alcohol deliveries.

Once approved, the Board requires that for each delivery of alcoholic beverages, “the person delivering the alcoholic beverages and the person receiving the alcoholic beverages shall complete and sign a form provided by the Board.” The retail licensee must retain the form for not less than a month after the delivery.

The rules goes on to make clear, that the person making the delivery “shall refuse to deliver alcoholic beverages” when the intended recipient is under 21 years of age or when “the intended recipient refuses to sign the form required under this rule, or refuses to provide the person making the delivery with a valid driver’s license or other valid government-issued proof of identity with proof of age.”

Completing the form is the price of doing business by delivery and purchasers have come to accept that mild inconvenience for the greater benefit of having that cold craft beer delivered to their door.

Make no mistake, whether or not a particular retail store is delivering, delivery is here and about to explode. Including there are already national phone apps and websites, enabling ordering with a tap or a click, that have partnered with local liquor stores. Other industries, including a local florist is now approved to deliver alcoholic beverages with flowers and gift baskets. Delivery is going to upend existing retailers who do innovate.

There are those who deliver illegally, including those out of state businesses that ship into Maryland (.. that by some estimates may be up to 5% of all retail sales) and expanding legal delivery outlets will no doubt take a bite out of the scofflaws.

Taking advantage of this huge market shift is very much about how well a retailer adapts. The future of alcoholic beverages involves delivery. All existing licensees should make application to the local licensing board today. If we can assist you with your application of structuring a delivery operation, do not hesitate to give us a call.

Following a hearing it was determined two “yoga and beer” events were permitted at a brewery in Howard County, Maryland. Yes, yoga and beer is a Millennial ‘thing’ and more.

This matter was initiated with a complaint filed by a neighbor of the Manor Hill Farm and Brewery who alleged that the yoga events were not an agricultural activity and that more than 50 people might attend which could increase traffic.

Penultimate in the consideration is that the farm has an Agritourism Special Use Farm Permit for these activities, “Farm tours, farm stays, farm photography sessions, hay rides, corn mazes, classes related to agricultural products or skills, and picnic and party facilities offered in conjunction with the farm visitation.” The County zoning inspector who conducted a field inspection during one of the events, testified that he considered this permit in his conclusions that yoga was well within the activities allowed under this permit.

On cross examination, the inspector testified the yoga “class was held in a field just west of the brewery.” The complainant averred yoga is a prohibited use.

That 25 people actually attended was well within the 50 visitors allowed at one time at a Farm Brewery Class 1 activity, which includes beer tastings.

Board of Appeals Hearing Officer Michele L. LeFaivre reasoned, “[I]t is permissible for an “educational program” to be a yoga event, activity, or performance with fewer than 50 attendees who taste beer during a visit.”

And you will be glad you took the time to read the 25 page written decision In The Matter Of Sara Domerchie, not simply for its legal scholarship but also because the writing is sheer delight when it includes passages like,

The term “educational program” is sufficiently clear. Clarity is a question of reasonableness. As future United States Supreme Court Justice Souter observed in a New Hampshire Supreme Court zoning interpretation opinion, “[a] reference to ‘sufficient’ clarity is, of course, a criterion of reasonableness, and our prior cases have avoided any suggestion that a fussy standard of technical drafting should be applied in passing on the validity of municipal or administrative regulations.” Barton v. H.D. Riders Motorcycle Club, Inc., 131 N.H. 60, 64, 550 A.2d 91, 94 (1988). An absence of fussy precision in the application of the term “educational program” does not credential Appellant’s assertion of yoga as commercial activity, not agricultural activity, and which, in the last instance, is a misunderstanding of how HCZR treats farm uses, which includes more than agricultural activity.

The Hearing Officer gave great deference to the Department of Planning and Zoning having determined there was no violation and closing out the enforcement case triggered by the complaint. While not directly relevant here, we enjoyed reading that this same complainant protested a “pet day care” conditional use permit on the same street, highlighting the interplay of zoning ordinances and alcoholic beverage laws.

The combination of yoga and beer are safe, at least in Howard County. Okay the pairing of yoga and beer was likely not conceived when the first Howard County zoning ordinance was adopted in 1949 (so it does not appear in the ordinance’s list of permitted uses), but today yoga and beer events are popular from Toronto to Kathmandu and trending across the U.S. are hosting those events to support a local charity.

We are excited that this sounds like a great way to promote not only a farm brewery and also your business in Maryland and beyond.

One of the most common questions asked by callers to the local liquor boards is whether a liquor license is available for a particular location? The answer varies depending upon the local jurisdiction governing alcoholic beverage licenses.

But Baltimore County is typical of many locales. The maximum number of alcoholic beverage licenses in each of the 15 Election Districts within Baltimore County is limited to one On Sale License for each 2,500 of population of each Election District and one Off Sale License for each 4,000 of population of each Election District.

Population reports are updated annually by the County Department of Planning. The County’s population is growing, so many years there are new licenses available on a first come basis in some but not all Election Districts.

No license is transferable from the Election District in which it was originally located.

Of course you can purchase a license from an existing license owner within the Election District and the price of licenses varies greatly. In fact most licenses are purchased from a third party, some in prime Election Districts for hundreds of thousands of dollars.

But the real action in Baltimore County and many other locales are in the Exception Licenses that are generally available from the government without cost. There is an exception from the population requirements for an office building having at least 60,000 square feet of leased commercial office space (down from 75,000 square feet last year) allowing one Class B (On Sale) beer, wine and liquor license.

Hotel and motels having a minimum of 100 rental units are entitled to one On Sale beer, wine and liquor license.

Shopping Centers having a minimum of 200,000 square feet of leased store space (down from 250,000 square feet last year), a minimum of 10 tenants having existing leases for remaining terms of not less than one year each and parking facilities to accommodate a minimum of 400 automobiles are entitled to one Class A (Off Sale) beer, wine and liquor license and one On Sale beer, wine and liquor license.

One additional Off Sale beer, wine and liquor license and one additional On Sale beer, wine and liquor license are available in any shopping center having a minimum of 400,000 square feet of leased store space (down from 500,000 square feet last year) and at least 20 tenants having existing leases for terms of not less than one year each and contiguous off street parking facilities to accommodate a minimum of 800 automobiles.

One additional Off Sale beer, wine and liquor license and one additional On Sale beer, wine and liquor license are available in a shopping center for each additional 200,000 square feet of leased store space (down from 250,000 square feet last year).

Mixed use development licenses may be obtained in addition to other licenses available and the square footage used in calculating mixed use development Exception Licenses shall not also be considered for purposes of determining other Exception Licenses. No more than 5 On Sale Exception Licenses of any type may be issued for use at any location or mixed use development.

And there are also Club licenses that are excluded from the population and numerical requirements.

Again, a major advantage of obtaining a new license from the government, be it by population or an exception beyond its actual availability, is that it can be had at no cost, that is, beyond an application fee it does not have to be purchased.

As one might imagine, the availability of liquor licenses is actually quite elastic and not just in Baltimore County. If you have questions about the availability of an alcoholic beverage license or if we can otherwise assist you in obtaining a license so not hesitate to give us a call.

Maryland law provides, “before deciding whether to approve an application and issue a [liquor] license, a local licensing board shall consider .. the public need and desire for the license,” among other factors.

And the laws goes on to further provide the “local licensing board shall deny a license application .. if the local licensing board determines that .. the granting of the license is not necessary to accommodate the public,” among other grounds.

But what does that nebulous legal test mean? Among the most frequent question we are asked is, “how do I prove that a liquor license is necessary at a location?”

The answer is different depending upon the location. The structure of Maryland’s liquor board system is local, independent boards, mitigating against any consistency of interpretation. Such is intentional. There is reason to conclude from the elaborate statutory scheme regulating the liquor boards that the legislature well understood that there was a substantial likelihood of differing interpretations of the term “necessary” by different local liquor boards.

In Baltimore County, the local liquor board Rule 19 furnishes a population based formula for determining the maximum number of licenses that may be issued for each election district, and that rule does not mention the term “necessary.” In determining the legal meaning and effect of Rule 19, the population based nature of Rule 19, that one off-sale liquor license is appropriate for every 2,500 people, suggests that this is the number of licenses that is most appropriate for the population. Is it possible that this number is “necessary for the accommodation of the public?”

No, because the final paragraph of Rule 19 states that the rule is in addition to those State law factors and that the Rule is not sufficient, alone, to meet the requirements for new licenses.

If Rule 19 does not control the standard for necessity, then how is that standard to be given meaning? The Maryland Court of Appeals defined the term “need” in the context of zoning law involving a challenge to the location of a doctor’s office in a residential area. The relevant law stated that a doctor’s office was a permissible use in a residential area if, inter alia, there was a “need” for such services in the area. The Court held that, in this context, “need” meant that which was “expedient, reasonably convenient and useful to the public.”

That zoning case is analogous to liquor licensing matters. State law allows for the transfer of a liquor license if, among other things, “need” is shown. The statute itself indicates that “need” should be considered in light of what is “necessary for the accommodation of the public.” When accommodation is the ultimate goal, it is reasonable that absolute physical necessity is not required. This is especially true when, as here, the accommodation at issue involves the location of a liquor store.

Black’s Law Dictionary states that the meaning of “necessary” varies with the context in which it is used:

[The word] may import absolute physical necessity or inevitability, or it may import that which is only convenient, useful, appropriate, suitable, proper, or conducive to the end sought. It is an adjective expressing degrees, and may express mere convenience or that which is indispensable or an absolute physical necessity.

The Baltimore County licensing board determined, here, a definition of need that focuses on convenience is, given the context, most appropriate.

The Maryland Court of Special Appeals, in 2000, concluded that “necessary,” in this instance, means that the transfer of the liquor license to the transfer site will be “convenient, useful, appropriate, suitable, proper, or conducive” to the public in that area. And this is proven at a liquor board hearing with both expert and lay witness testimony.

We can provide you with expert witness testimony for your liquor board hearing to prove that a liquor license is necessary at a location.


A liquor license requires a location in a proper zoning district.

An August 22, 2017 decision by the Howard County, Maryland Board of Appeals Hearing Examiner is both a detailed exposition of a liquor store as a permitted use under the zoning regulations and a wonderful treatise on the broader topic of land use law in that suburban Maryland county.

But this decision is much larger than this Howard County case alone. Today in commercial real estate, alcoholic beverage licensed businesses are increasingly more valuable because they are largely free from the downturn that most retail is seeing as a result of the Internet and online shopping. In most places alcoholic beverages cannot be bought online and shipped. And restaurants with food costs supported by alcoholic beverages are increasing in dramatic numbers.

This Howard County appeal was about an application by the property owner Science Fiction, LLC to the Planning Board to “clarify a liquor store does not have to be contained within the full service food and grocery store to be a permitted use.”

The prior existing regulation included as a permitted use, “l. full service food and grocery stores, and related uses, of 100,000 square feet or more.” The Planning Board’s counsel repeatedly told the Board, the issue was whether a liquor store use is compatible with a grocery store. Science Fiction also asked the Hearing Examiner “to consider [the FDP amendment application] as a zoning matter, not a liquor licensing matter.”

The 39 page decision is a great read beach weekend read for zoning geeks as it reveals the history of zoning, from the first 1916 New York City ordinance to the inapplicability of Euclidean principals in the James Rouse’s planned community of Columbia within Howard County where this liquor store was proposed.

But the liquor license industrial complex will delight in the portion of the decision discounting economic competition as a valid objection,

To the extent the Planning Board considered economic competition in its November 4, 2016 denial, meaning the impact of the proposed FDP amendment on other liquor stores, the Board’s action was arbitrary and capricious. Kreatchman v. Ramsburg, et al., 224 Md. 209, 219-220, 167 A.2d 345 (1961) (holding a liquor store owner in the Normandy Heights shopping center whose sole reason for objecting to a Zoning Board action was prevention of competition from a proposed shopping center further west on US 40 was not aggrieved when “[h]is only concern is with the threat of competition from a possible package liquor store in the [other] shopping center. It is to protect himself against that possible competition that he seeks the protection of the zoning regulations.”) Appellant Exhibit 6 is a Hearing Examiner decision and order addressing the inapplicability of economic competition considerations in zoning actions.

Appropriate zoning is required for all uses, not only alcoholic beverage related uses. The application of Science Fiction was approved, adding new subsection “.m” to the § 7D Permitted Uses text criteria, in the New Town zoning district,

m. Liquor store – located on the full service food and grocery store property and partitioned from the full service food and grocery store building. The liquor store has an independent entrance for deliveries and customers. “Partitioned” means walls or other physical divisions separating the full service food and grocery store and liquor store uses.

With zoning in place, an application may now be made to the liquor board for this liquor store adjacent to a Wegmans grocery store.

We are often asked, “what do I need to know about buying a restaurant in Maryland?” While each prospective purchase is driven by the unique facts of the situation and there are no two restaurants, bars or taverns that are alike, each has as its key asset an alcoholic beverage license. This blog post is a “Top 10” list of issues to consider (.. okay 10 plus 2 extra issues):

  1. What are you buying? Is this a purchase of the stock in the business entity owned by the principals or a purchase of the assets of the business? There are justifications for each option, but on balance, an asset purchase is likely more advantageous for a buyer.
  2. Does the sale include the building where the restaurant is located or is the space leased and, if so, is that lease assignable by the seller (with or without landlord consent)? Most restaurants in Maryland are in leased spaces.
  3. Is a covenant not to compete by the seller and its principals for some number of years part of the deal?
  4. What is the agreed purchase price? How much is the deposit, the amount to be paid at closing on the transaction, is there any seller financing, and the like?
  5. How is the purchase price allocated for income tax purposes? How will transfer and recordation taxes be shared and are there other taxes due for the business and on this transaction?
  6. What representations and warranties is the seller making about the business, including about what business assets exist, the financial condition of the business, etc.? Or is this an “as is” transaction?
  7. What type of due diligence will be undertaken by the buyer, including how long a study period will be provided, before the deposit becomes nonrefundable?
  8. Among the most important issues (because of the large dollars that alcohol sales contribute to a restaurant) is the contemplated transaction contingent upon transfer of the alcoholic beverage license, including possibly allowing for the running of any appeal time.
  9. Will each party comply and cooperate with the other party to assure compliance with bulk sales laws, including notices to all creditors.
  10. What is the closing date on the contemplated transaction?
  11. Will the business will continue to be operated in the ordinary course pending closing?
  12. Is there a broker to be compensated?

This Top 10 plus 2 list of issues to be considered is really just the starting point. Some are easily dealt with between the parties and others, like the transfer of the alcoholic beverage license, which is key in the value of the business, require an application, public hearing and approval by a board of liquor license commissioners.

And not just because you are reading a blog written by attorneys, but given that large dollar amounts involved, the complexity of the transaction and potential liabilities involved, the purchaser of a restaurant or other alcoholic beverage business in Maryland should be represented by legal counsel. We do that work and would be pleased to speak with you.

This blog post is a review of retail liquor license violations across Maryland during 2016.

The twenty three counties in Maryland, Baltimore City, and the City of Annapolis issue retail alcoholic beverages licenses and local boards of liquor license commissioners police activities under those licenses.

Local licensing boards regulate the types of licenses issued, scope and restrictions of licenses, including hours of sale, and much more. Those boards enforce the more than 3,100 page state law, county and city laws, and the boards’ own rules and regulations. Enforcement varies from locale to locale and is often fact specific, but penalties can range from civil enforcement dollar penalties or fines to suspension of a license for a period of time, ultimately to revocation of a license.

Local licensing boards across the state reported a total of 859 retail license violations during 2016.

Overwhelmingly, the largest category of those violations, 321, that is over 37% of all violations, are for sale of an alcoholic beverage to a minor. Sales to a minor represent the largest number of violations not only statewide but also in nearly all counties; and generally result in larger dollar fines than other violations.

In a statistical anomaly the only other violation that reports in triple digits is sale of alcohol without an license, however, 101 of the 103 reported violations are in Prince George’s County such that this is a locale specific issue not necessarily of gravis concern to most licensees.

The next largest categories of violations are ministerial in nature. 63 licenses paid penalties for late renewal filings and 49 paid penalties for not being able to produce and alcohol awareness certificate.

35 alcoholic beverage businesses had penalties assessed for being a public nuisance. 22 of those were in Baltimore City and most were part of the larger effort to reduce the number of package goods stores.

33 were penalized for illegal conduct on the licensed premises, ranging from solicitation of sex acts to sale of drugs; and, another 15 allowed prohibited practices in the premises the largest number of which involved partially clothed dancers.

29 establishments were cited for unauthorized entertainment.

18 businesses paid penalties for failure to maintain records, reports of purchases, and invoices.

16 were penalized for sales to intoxicated persons.

15 were fined or had licenses suspended for failure to cooperate with police.

12 were serving during prohibited hours.

11 purchased alcoholic beverages from other than a wholesaler.

There were also license violations for: an intoxicated server; gambling on the premises; open container; minors conducting the sale; failure to display a license; inappropriate relationship with a wholesaler; tampering with contents of nonalcoholic beverages on the premises; business being operated by other than the owner; operating under a trade name not approved, etc.

Curiously, there were no reports in 2016 of violations for: serving outdoors without permission; refilling bottles; failure to register a keg; underage employees; and, noise disturbing the neighborhood, despite violations for each during 2015.

Statistically, with 139 each Montgomery and Prince George’s reporting the largest number of those violations. The only other jurisdictions in triple digits was Baltimore City with 122 violations. Baltimore County reported 54 violations. Frederick County had 42 and Allegheny had 41 respectively. Carroll County reported 39 violations. Howard County had 35 violations and other locales had fewer. No jurisdiction reported no violations.

Given that a liquor license is “the” key asset in an alcoholic beverage business, a licensee should consider the value of that license when cited for a violation and is well served to be represented by legal counsel at a license board proceeding.


It is not surprising that in Maryland the determination as to whether the liquor license is owned by the individual applicants, or by a corporation that operates the business, depends on the circumstances of the particular case.

That said, Maryland law has been and continues to be that liquor licenses issued to individuals for the use of a corporation, which is the most common situation, are owned by the corporation.

The Baltimore County alcoholic beverage license that was the subject of the court challenge in 2001, in the widely discussed case of Rosedale Plaza Limited Partnership v. Lefta, Inc., et al., over who owned the license read, in pertinent part:

THIS IS TO CERTIFY, that Andreas Pitsos, Maria Papadimitriou, Irene A. Pitsos, Lefta, Inc., t/a Hillbrook Station Raw Bar & Grill/Chesaco Liquors, 1703–09–11 Chesaco Avenue, Baltimore, MD 21237 is licensed by the State of Maryland to keep for sale, and to sell all alcoholic beverages at retail at the place herein described, for consumption on the premises or elsewhere.

In that case and despite a statute (.. that no longer exists), then Article 2B Section 9-101(a), which provided in pertinent part:

License issued to individuals; application for partnership.—A license may not be issued to a partnership, to a corporation, or to a limited liability company, but only to individuals authorized to act for a partnership, corporation, or limited liability company who shall assume all responsibilities as individuals, and be subject to all of the penalties, conditions and restrictions imposed upon licensees ..

The appellate court found that liquor license was owned by the corporation. And that has been Maryland law.

Note, Maryland is a minority jurisdiction in this regard and most other states hold to the contrary. But at least 38 states have a Dram Shop Act (but not Maryland) which raises the stakes on who is strictly liable to anyone injured by a drunken patron.

Consistent with the decision is Lefta, in another instance, the Court of Appeals held that a state tax lien of a corporation could be enforced by a writ of execution upon a liquor license issued for the benefit of that corporation. Similarly, in another case, the Court of Appeals accepted that a writ of execution that had been entered against the liquor license to satisfy a personal debt of the licensee arising from his divorce would be improper if the license was owned by a corporation.

Subsequent to all of that and if it were not already clear how Maryland courts will addresses this issue, there are now new sections Maryland Alcoholic Beverages Article of the Annotated Code (the recodified Article 2B), specifically entitled,

Section 4-103 Application on Behalf of Partnership

Section 4-104 Application on Behalf of Corporation or Club

Section 4-105 Application on Behalf of Limited Liability Company

While the current codes expressly provides, “[T]his section is new language derived without substantive change from the second sentence of former Art. 2B, § 9-101(a)(1) and the second sentence of (b)(2), as it related to partnerships,“ .. it is a substantive change in the statute to be consistent with the accepted interpretation.

None of this precludes an individual from doing business in his own name, as a sole proprietorship, and having the liquor license is his name.

There is now no question in Maryland liquor licenses issued to individuals for the use of a partnership, a corporation or an LLC, are owned by the that legal entity and, absent some express agreement to the contrary, the persons named on the liquor license as a licensees have no individual ownership interest in the liquor license.

The Board of Liquor License Commissioners for Baltimore County has issued new Rules and Regulations.

Liquor board Rules are of great import and govern the issuance of an alcoholic beverage license as well as the day to day operations of a business selling alcoholic beverages. While hyper technical in nature, Board Rules have the force of law and a violation of a Rule can result in civil penalties and ultimately suspension or revocation of an alcoholic beverage license.

Maryland Annotated Code, Alcoholic Beverages Article, Section 13-207 provides, the Baltimore County Board may adopt Rules to carry out the State law, including rules regarding:

  1. the presence on a licensed premises of an individual who is not a consumer; and
  2. the issuance of a license when the actual use of the license is to be deferred until the completion of construction or alterations on the premises.

There are substantially the same enabling laws across the state and those code sections require public notice and a public hearing before adoption the Rules.

In March of this year, our blog post Baltimore County to Adopt New Liquor Licensee Rules described the drafting and public hearing for the now final Rules. There are significant changes from the earlier draft. Deleted from the final Rules is the proposal that licensed premises have a video camera system.

Added to that draft is the now new Rule 39 implementing the new State law that authorizes the sale of draft beer in non-refillable growlers. This is a significant new opportunity for licensees, and it particular restaurants that otherwise do not have an ability to sell beer (.. including taking advantage of the growth in craft beers) for off premises consumption.

The new Rules are a great clean up of the last version promulgated in 2014, including ‘keeping pace with the times’ by expressly authorizing notice of certain hearings to be posted on the Board’s website. But there are still vestiges of the past in this new document, including a fun regulation that a “licensee may not use or permit to be used or dispensed on the licensed premises any violent emetics or purgatives” (.. you will have to Google that).

And there are a host of substantive changes that create more and additional economic opportunity arising from the sale of alcoholic beverages in the County. There are changes to Rule 19, including the all important “exception licenses” (i.e., exceptions to the limitations on the number of licenses by population with an election district). For example, the new provisions requires,

Office buildings having a minimum of sixty thousand (60,000) square feet of leased commercial office space provided that each such building shall be limited to one (1) Class B (On Sale) beer, wine and liquor license.

.. a more generous provision than the prior Rule that required a 75,000 square feet office building. And there are other similar more economic opportunity friendly changes like reducing the minimum size of a shopping center from 500,000 square feet to 400,000 square feet for an exception Class A off premises sales license.

The new Rules will advance the alcoholic beverage industrial complex in Baltimore County. All licensees should read the June 2017 Rules.

Enacted unanimously by the Maryland Senate and House of Delegates and approved by the Governor, a new state law establishes a nonrefillable container permit for draft beer that will create a new revenue stream for restaurants, bars and others across Maryland.

The permit authorizes the sale of draft beer for off-premises consumption by packaging the beer in a nonrefillable container that meets specific standards. The permit may be issued by a local board of license commissioners in 19 counties, Baltimore City, and the City of Annapolis; these are the same jurisdictions that may currently authorize the sale of draft beer in larger refillable containers.

The new law takes effect July 1, 2017.

The law will have a meaningful positive impact for a small business that will realize increased sales through this new category. For example restaurants that have an alcoholic beverage license authorizing on premises sales only will now, after obtaining the permit authorized by the law, be able to sell draft beer for off premises consumption. This will especially be an advantage for the exploding craft beer industry.

There is a great deal of excitement for this “Growlette” or smaller nonrefillable version than the existing authorized refillable Growler.

House Bill 292, cross filed with Senate Bill 491, establishes specific requirements for the nonrefillable container permit for draft beer. The term and hours of sale for a nonrefillable container permit are the same as those of the underlying license. An applicant who holds an underlying license without an off-sale privilege must meet the same advertising, posting of notice, and public hearing requirements as those for the underlying license.

To be used as a nonrefillable container for draft beer, a container must:

be made out of aluminum;

be sealable;

have a capacity of 32 ounces;

be branded with the identifying marks of the seller of the container; and

bear the federal health warning statement required for refillable containers.

Positively, applicants in specified jurisdictions may not be charged a fee for the nonrefillable container permit if they already have a refillable container permit.

The current law although little used, dating to 2014, already standardized the requirements for alcoholic beverage refillable containers used in the sale of draft beer or wine for off premises consumption. The holder of a refillable container permit may sell, fill, or refill any container that meets certain standards.

The 2014 law already authorizes a refillable container that: for beer, have a capacity of not less than 32 ounces and not more than 128 ounces; for wine, have a capacity of not less than 17 ounces and not more than 34 ounces; be sealable; be branded with an identifying mark of the seller of the container; bear the federal health warning statement; display instructions for cleaning the container; and bear a label stating that cleaning the container is the responsibility of the consumer, and that the contents of the container are perishable and should be refrigerated immediately and consumed within 48 hours after purchase

Many businesses have advised that there is great interest in nonrefillable containers for draft beer, especially in the expanding craft beer industry.

There will be costs of the supplies, storage needs, and possible recycling issues involved with nonrefillable containers, but because the establishments already sell draft beer, this is a win win.

We assist the alcoholic beverage industry in positively leveraging constraints and finding advantages in matters involving the sale of licensed beverages, often including new approaches and possibilities in this emergent area. If we can assist you with sound business advice and legal counsel in matters of the sale if draft beer or otherwise in the broader licensed beverage industry do not hesitate to give Nancy Hudes or Stuart Kaplow a call.