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.

 

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.

 

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.

It is difficult to comprehend what new liquor licensing laws could possibly be required in Maryland in 2017 after the legislature passed the largest bill in Maryland history last year, some 3,180 pages long, codifying alcoholic beverage laws.

But as the just concluded 437th session of the Maryland General Assembly, began in the City of Annapolis on the eleventh day of January 2017, and ending on the tenth day of April 2017, more than 2,881 bills were introduced of which more than 361 bills were enacted, including more than a few that will provide business opportunities for those engaging in the sale of alcoholic beverages. This post is a compilation of those bills.

For the past several years, craft brewers in the State have backed legislation to increase the amount of beer they may sell for on-premises consumption in their taprooms. They have been opposed by beer wholesalers and retailers, who have feared that their businesses would suffer as a result. Of the several bills on these issues, the sides reached agreement on House Bill 1283 (passed) that applies to all Class 5 breweries, which include both small craft breweries and a large Guinness brewery scheduled to open in Baltimore County. Note, the bill does not apply to pub-breweries, micro-breweries, or farm breweries.

The bill increases, from 500 barrels to 2,000 barrels, the amount of beer a Class 5 brewery may sell for on-premises consumption each year. The brewer may apply for permission to sell an additional 1,000 barrels per year, provided any beer sold in excess of the 2,000 barrels is first purchased by the brewer from a licensed wholesaler. The bill also authorizes a Class 5 brewery to contract to brew and bottle beer with and on behalf of another Class 5 brewery or holder of a Class 2 rectifying license, Class 7 micro-brewery license, Class 8 farm brewery license, or nonresident dealer’s permit. Contract beer that is sold for on-premises consumption at a Class 5 brewery may not exceed the greater of 25% of the total number of barrels of beer sold annually for on-premises consumption or 1.2% of total finished production under the Class 5 brewery license. Also, the bill alters the hours during which the sales and serving privileges of an on-site consumption permit may be exercised for specified Class 5 breweries. For license holders who obtain an on-site consumption permit after April 1, 2017, the hours of sale for on-site consumption extend from 10 a.m. until 10 p.m., Monday through Sunday. Class 5 breweries, who obtained licenses before April 1, 2017, are exempt from the bill’s stated hours of sale and will continue to operate under the longer hours established in each local jurisdiction. Continue Reading New Alcoholic Beverage Laws from the 2017 Session of the Maryland Legislature

The Baltimore County Board of Liquor License Commissioners is in the process of adopting new Rules and Regulations.

All liquor licensees are required to comply with not only the provisions of the Annotated Code of Maryland, the Baltimore County Code, but also the Rules and Regulations of the Board of Liquor License Commissioners for Baltimore County.

The current Rules and Regulations were last revised in 2014.

A version of those Rules and Regulations redlined to reflect the proposed changes is available here.

The Board of Liquor License Commissioners held a public hearing on February 27, and we both offered written comment and testified at the hearing.

Among the proposed changes, there is a new proposal for cameras to be installed in non public areas of licensed premises. We noted at the hearing that there will be a significant dollar expense of complying with this new mandate for cameras, and we noted that the proposed text is not precise in terms of which areas must have cameras (e.g., is it intended that there will be cameras in restrooms, in storage rooms, in walk in refrigerators, closets? We recommended that this new requirement be delayed until some date in the future, including greater specificity if a camera requirement is going to be implemented.

We also recommended clarification and standardization in the term “licensed premises,” in lieu of the several other ways that the licensed premises are described, including “premises covered by the license” and licensee’s “establishment.” This can be of importance where the Board of Liquor License Commissioners is faced with matters occurring ‘in a parking lot’ or ‘upstairs’ that may be outside of the licensed premises and beyond the control of the licensee. And what is and what can be included within the licensed premises may be a matter of inquiry as the Board approves new licenses.

We also recommended removing from the Rules and Regulations the required specific number of parking spaces from the Exception Licenses. That is, the Exception License that requires square footage of retail and office space is sufficient, especially in a day and age when land use regulations (including that there are LEED green building credits for reduced parking spaces) encourage less off street parking spaces not only in mixed use projects and in transit oriented development, but in all commercial uses. And all parking demand is being reduced by the use of Uber, Zip Car and the like. So, requiring more off street parking spaces seems counter to good environmental stewardship and has little, if anything, to do with liquor licenses.

While it might seem trivial to some, in the interest of staying current with modern trends and regulations, we recommended that the mandate in the Rules and Regulations for flush toilets be removed. That is, in the interest of potable water use reductions, waterless urinals are (not only permitted by the County plumbing code) but are becoming popular (again, they can contribute to LEED green building credits) in our County and waterless urinals should not be prohibited in licensed premises.

The effective date for the new Rules and Regulations is not yet known, but all licensees are well served by reviewing the redlined draft available from the link above.