Baltimore City Liquor Board

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The 442nd session of the Maryland legislature adjourned on April 12, 2021.

There were no balloons dropped from the balconies at sine die, ostensibly because of Covid-19 social distancing there were no high school pages to drop celebratory balloons from the balconies, but it is worthy of note that this year the legislature passed House Bill 391 criminalizing intentionally releasing balloons?

During the 90 day General Assembly session, senators and delegates considered 2,347 bills and passed 817. Only a modest number of that legislation passed involves alcoholic drink. The Governor has until the 30th day after presentment to sign or veto bills.

This post is a review of the alcoholic beverage legislation enacted this session.

Time and space do not allow a recitation of the bills that failed, but many were not successful, including a much discussed bill that would have allowed supermarket sales.

The new laws compiled below, while adding to the alcoholic beverage regulatory scheme, merely tweak production, distribution and sales. Savvy players in the alcoholic beverage industrial complex will find business opportunities to lead and profit in matters of beer, wine and spirits, including opportunities advantaged by these newly enacted laws.

Retail Sale or Delivery for Off-premises Consumption

On March 19, 2020, in response to the spread of Covid-19 in the State and citing the protection of public health by furthering the goals of social distancing and promotion of compliance with isolation protocols, Maryland Governor Hogan issued an executive order expanding alcoholic beverage delivery and carryout services. The order allowed licensed establishments to deliver or sell alcoholic beverages for off-premises consumption despite any restrictions inherent in their licenses. The order remains effective until after the termination of the state of emergency and rescission of the proclamation of a catastrophic health emergency.

Senate Bill 205/ House Bill 12 are no doubt the most impactful enactment this year when that new law will authorize local alcoholic beverages licensing boards to temporarily adopt regulations authorizing specified license holders to provide alcoholic beverages by delivery or sale for off-premises consumption on a temporary basis. In considering whether to adopt these regulations, a local licensing board must weigh the need to promote economic recovery for small businesses in the wake of the Covid-19 pandemic and the need to protect public health and welfare.

The bills limit an alcoholic beverages license holder to delivering or selling alcoholic beverages that are authorized under its license. Local licensing boards may not increase a license fee or otherwise charge extra for the expanded privileges authorized under the bills, but may set a limit on the amount of alcohol that may be sold or delivered in a single transaction.  The bills also require the Alcohol and Tobacco Commission and the Maryland Department of Health jointly to conduct a study on the impact of the expansion of access to alcohol and report to the General Assembly on the findings of the study by December 31, 2022. The bills terminate on June 30, 2023.

Manufacturer’s Licenses and Off-site Permits

Senate Bill 821/ House Bill 1232 are emergency bills that make various temporary changes to the regulation of alcoholic beverage manufacturers in the State. Broadly, the bills significantly alter provisions on off-site and special event permits and alter the licensing fees and privileges of several manufacturer’s licenses. With respect to permits, the bills repeal specified manufacturer’s permits and establish a manufacturer off-site permit and a brewery special event permit. With respect to licensing, the bills alter the fee structure for most manufacturer’s licenses, authorize most manufacturers to sell and deliver their own alcoholic beverage products to consumers if specified procedures are followed, alter the limitations of the Class 7 limited beer wholesaler’s license, and alter the privileges associated with Class 1 distillery licenses and Class 8 farm-brewery licenses. The consumer delivery provisions in particular are intended to help manufacturers return to economic health after suffering the impacts of the pandemic.

A manufacturer off-site permit may be issued to the holder of a specified manufacturer’s license. The permit authorizes the holder to provide samples of and to sell alcoholic beverages produced by the holder. The brewery special event permit may be issued to the holder of a specified brewery license and authorizes the license holder to conduct a special event to provide samples and sell products manufactured by the license holder.

Existing law provides that alcoholic beverage manufacturer’s licenses may be issued by ATC for a set annual fee. These bills instead authorize ATC to determine the annual license fee, as long as the fee does not exceed a specified cap, which is the existing annual fee. The bills also authorize most alcoholic beverage manufacturers to sell and deliver their products in accordance with specified rules.

In addition, the bills increase certain barrel limits for a Class 7 limited beer wholesaler’s license and allow the holders of Class 1 distillery and Class 8 farm brewery licenses to sell and deliver their products directly to individuals in the State who meet specified criteria. The bills terminate on December 31, 2022.

Industry Practice Prohibition

House Bill 185 prohibits an alcoholic beverages license holder in the State, or an employee of a license holder, from conditioning the sale of alcoholic beverages for on-premises consumption on the purchase of more than one serving of an alcoholic beverage at a time. The issuer of an alcoholic beverages license may revoke or suspend the license for violating this prohibition. In addition, the bill establishes criminal penalties for a violation, which include a fine or possible imprisonment.

Alcohol and Tobacco Commission

Senate Bill 761/ House Bill 1336 include the Executive Director of ATC in the State’s retirement and pension plan and provide that the Executive Director has the designation of a peace officer. This gives the Executive Director the same status as other ATC employees in the pension system.

Local Alcoholic Beverages Legislation

Allegany County

Senate Bill 677/ House Bill 883 establish a Class B-D beer, wine, and liquor license that authorizes the holder to sell beer, wine, and liquor for on-premises consumption, as specified. The bills also authorize the board of license commissioners to issue up to two licenses in a single year. A license holder must complete a Food Alcohol Ratio Report once every licensing cycle.

Senate Bill 731/ House Bill 1059 establish a gift basket permit that may be issued to a person whose primary business is the sale and delivery of flowers or specified gift baskets. The permit holder may not hold any other alcoholic beverages license or permit in the county. The permit holder’s annual sales from alcoholic beverages may not exceed 10% of the holder’s annual gross sales.

Senate Bill 679/ House Bill 880, both emergency bills, authorize the board of license commissioners to reimburse license holders for certain annual license fees, as specified, for the 2020 through 2021 licensing period. The board must also waive or impose lower annual fees relating to the same types of licenses for the 2021 through 2022 licensing period.

Anne Arundel County

Senate Bill 489/ House Bill 679 establish a Class MT (movie theater) beer and wine license. The board of license commissioners may issue the license to the owner of a movie theater in the county that holds a crowd control training certification. The license authorizes the sale of beer and wine for on-premises consumption, as specified.
Continue Reading Maryland Adopts New Alcoholic Beverage Laws in 2021

The General Assembly is Maryland’s legislative body. The legislature meets in regular session for 90 days each year beginning the second Wednesday in January to act on more than 2,500 pieces of legislation.

On sine die, when the legislature adjourned its 439th session at midnight on the 90th day, on April 8, 2019, a total of 864 bills and 2 resolutions passed both chambers. Most of the legislation enacted in that 2019 General Assembly session, including those bills involving matters of alcoholic beverages, were effective on October 1, 2019.

This is a compilation of the more than 60 new laws involving alcoholic beverages. You can read each of the bills highlighted below at General Assembly.

Savvy players in the alcoholic beverage industrial complex will find business opportunities to lead and profit in matters of beer, wine and spirits, including opportunities advantaged by these newly enacted laws.

Statewide Alcoholic Beverages Regulation

In Maryland, alcoholic beverages manufacturers and wholesalers are regulated by the State Comptroller’s Office, while alcoholic beverages retailers are regulated by local boards of license commissioners. House Bill 1052 (passed) establishes the new Alcohol and Tobacco Commission and transferring most of the staff, powers, and duties related to alcoholic beverages and tobacco from the Comptroller’s Office to ATC. The Governor vetoed the legislation, but the General Assembly overrode the veto during the 2019 session. The new ATC consists of five members appointed by the Governor with the advice and consent of the Senate.

In January 2017, the alcoholic beverage distributor Diageo announced plans to open a Guinness brewery in Baltimore County. At that time, the law regulating on-premises sales and sampling for Class 5 breweries limited the sale and sampling to 500 barrels of beer each year. In 2017 the legislature made significant changes the manner in which Class 5 breweries were regulated to accommodate Diageo. This year, Senate Bill 801/House Bill 1010 (both passed) further enhance the privileges associated with a Class 5 brewery license, a Class 7 micro-brewery license, and a Class 8 farm brewery license. Among other things, the bills increase to 5,000 barrels the amount of beer that Class 5 and Class 7 breweries may sell each year for on-premises consumption, allow Class 5 breweries to brew and bottle malt beverages at the locations described on their individual storage permits, authorize Class 7 breweries to brew up to 45,000 barrels of malt beverages each calendar year, and authorize certain Class 5, Class 7, and Class 8 breweries to self-distribute up to 5,000 barrels of their own beer through the use of a Class 7 limited beer wholesaler’s license. The bills also set the hours of sale for Class 8 farm breweries at 10 a.m. to 10 p.m.

Established in 1974, the Beer Franchise Fair Dealing Act regulates the agreements, franchises, and relationships between beer manufacturers and their distributors (wholesalers). Among other things, the Act prohibits a brewery from terminating a contract with a distributor without good cause. Senate Bill 704/House Bill 1080 (both passed) shorten the franchise agreement termination process for a brewery that produces 20,000 or fewer barrels of beer per year. Such a brewery must wait 45 days, rather than 180 days, after notifying a distributor of its intent to terminate or refuse to renew a beer franchise agreement before terminating the agreement. Additionally, such a brewery is authorized to terminate or refuse to continue or renew a franchise agreement without good cause and is no longer required to give its distributor an opportunity to correct a deficiency if that is the reason the agreement is being terminated. However, the bills require the brewery to compensate the distributor for the fair market value of the terminated franchise and establish an arbitration process if the brewery and the distributor cannot otherwise reach a compensation agreement.

Mead is a fermented alcoholic beverage made primarily of honey and water. Production of mead dates to 9,000 years ago. Mead is categorized as a honey wine for federal excise tax purposes. As a result, mead has historically been considered a wine in Maryland for regulatory purposes, even though State law is silent on the issue, and has been taxed accordingly. Senate Bill 596 (passed) reclassifies mead by expanding the definition of “beer” to include mead and applies the same alcoholic beverages tax rate to mead that is imposed on beer.

A Class 1 distillery license authorizes the establishment and operation of a plant for distilling any amount of brandy, rum, whiskey, alcohol, and neutral spirits at the location described in the license. A Class 1 distillery license also authorizes the license holder to conduct guided tours; serve samples; and sell up to 2.25 liters of products manufactured on the licensed premises, for consumption off the licensed premises, and related merchandise, to persons of legal drinking age who participate in a guided tour of the licensed premises.

House Bill 549 (passed) authorizes a local alcoholic beverages licensing board to issue an on-site consumption permit to the holder of a Class 1 distillery license. The permit authorizes the sale of mixed drinks made from liquor produced by the distillery and other non-alcoholic ingredients for on-premises consumption. A distillery may only use up to 7,750 gallons of its own liquor for this purpose each year.

In 2016 the legislature authorized the Comptroller to grant a distillery off-site permit to a Class 1 distillery licensee or a Class 9 limited distillery licensee. House Bill 551 (passed) increases the number of farmers’ markets and other events that a distillery or limited distillery may participate in using a distillery off-site permit. Specifically, the bill repeals the 5-event limit on the number of farmers’ markets for which the permit may be used, and authorizes the permit to be used to participate in up to 32, rather than 6, other events each year.

House Bill 666 (passed) generally combines the nonprofit beer festival permit, nonprofit wine festival permit, and nonprofit liquor festival permit into a single nonprofit beer, wine, and liquor festival permit.

In general, an individual may not consume an alcoholic beverage in public nor possess an alcoholic beverage in an open container in public. House Bill 88 (passed) establishes that consuming or possessing an alcoholic beverage in this manner is a code violation and a civil offense rather than a criminal misdemeanor. Under the bill, a violator receives a civil citation rather than being subject to arrest.

Local Alcoholic Beverages Legislation

Allegany County. Senate Bill 667/House Bill 866 (both passed) authorize the Board of License Commissioners to issue a Class D (on-sale) beer and wine arts and entertainment district license to a for-profit festival promoter for use at an entertainment event held in an arts and entertainment district in the county. In addition, the bills authorize the board to issue a Class L beer, wine, and liquor license to the holder of a manufacturer’s license. The Class L license authorizes the holder to sell or provide samples of beer, wine, and liquor produced by the holder or by another manufacturer’s licensee for on-premises consumption during the hours of sale applicable to the underlying manufacturer’s license.

Anne Arundel County. House Bill 770 (passed) authorizes the Board of License Commissioners to issue more than one Class B, Class H, or Class BLX license to an individual already holding an interest in a license of a similar class. The interest may be held, controlled by direct or indirect ownership, stock ownership, interlocking directors or interlocking stock ownership, or any other direct or indirect manner. However, the other license type and interest must not be for a franchise operation or chain store operation.
Continue Reading More than 60 New Alcoholic Beverage Laws Create Opportunity in Maryland

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