Almost 86 years to the day after the repeal of Prohibition, the Maryland General Assembly commenced on January 8, 2020.

That 440th legislative session in Maryland was, for the first time since the Civil War, cut short, ending three weeks early.

Despite the abridged, less than 90 day full session, the legislature acted on 1,664 House bills and 12 resolutions and 1,081 Senate bills and 6 resolutions with 667 bills passing both chambers before they adjourned sine die on March 18, 2020. The Governor has until the 30th day after presentment to sign or veto bills.

This post is a review of key alcoholic beverage legislation enacted this session and awaiting the Governor’s signature.

We would be remiss if we did not mention that this is being written while Maryland is still in a state of emergency as described in our prior post, COVID-19 Orders Authorize Carry Out and Delivery of Alcoholic Beverages in Maryland.

In terms of context, on December 5, 1933 Utah became the 36th state to ratify the 21st Amendment, thereby repealing the 18th Amendment and ending over 13 years as a dry nation. Resistance to Prohibition across Maryland had been strong. But the vestiges of Prohibition continue in Maryland with the laws that today govern alcoholic beverages, including a hodgepodge of county by county regulation and a “three tier” distribution system that is all but unchanged since 1933. This year of a short legislative session no doubt saved Marylanders from some additional regulation, but 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.

Statewide

HB 900 / SB 911 delays the effective date of last year’s legislation, which establishes the Alcohol and Tobacco Commission (ATC), from June 1, 2020, to January 1, 2021, and extends the expiration dates of the initial terms of the members of ATC. The bill grants authorized employees of the Field Enforcement Division of the Comptroller’s Office transferred to ATC the powers of police and peace officers and classifies them as police officers and law enforcement officers, as specified. The bill also requires ATC and the Comptroller’s Office to cooperate in their respective duties related to alcohol and tobacco regulation, as specified, and clarifies the responsibilities of ATC and the Comptroller’s Office under last year’s legislation.

HB 902 / SB 765 repeals various requirements that an alcoholic beverages license applicant or license holder be a registered voter, taxpayer, and/or resident of a jurisdiction for a period of time (generally one or more years) as a condition for obtaining or maintaining a license and instead, generally requires the applicant or licensee to be a resident, voter, and/or taxpayer of the State or a local jurisdiction at the time of application and during the license period. The bill applies to various State and locally issued alcoholic beverages licenses and permits.

SB 118 a departmental bill, establishes statutory definitions for “alcohol production” and “agricultural alcohol production” in the Land Use Article. Either or both definitions may be (but are not required to be) adopted by a local jurisdiction by local ordinance, resolution, law, or rule.

City of Annapolis

HB 844 / SB 503 establishes a club public event permit in the City of Annapolis. The City of Annapolis Board of License Commissioners may issue the permit to the holder of a Class C alcoholic beverages license. The permit authorizes a club to sell alcoholic beverages that are allowed under the club’s Class C license during a public event, at the place described in the license, to an individual who is not a member of the club or a guest of the member for on-premises consumption. The permit holder must submit an application for approval to the board at least 45 days before a public event and obtain approval from the board before each public event. The board may approve up to 12 public events per permit holder in a calendar year.

Anne Arundel County

HB 138 / SB 052 clarifies that the Anne Arundel County Board of License Commissioners may consider, when issuing Class A, Class B, or Class D off-sale alcoholic beverages licenses, whether an establishment is located in an assessment district in which the ratio of Class A, Class B, or Class D off-sale licenses per individual is more or less than one license per 4,000 individuals. An assessment district is a tax assessment district established by the county through local law.

HB 285 requires the Anne Arundel County Board of License Commissioners to publish a meeting agenda no later than one week before the hearing; make each open meeting available to the public with live video and audio streaming; and publish the minutes of each open meeting, as specified, no later than one month after the meeting.

HB 329 authorizes the Anne Arundel County Board of License Commissioners to post a completed alcoholic beverages license application online at least 10 days prior to the hearing date, instead of posting this notification in a newspaper, as currently required. The board must require an applicant to post a suitable notice in a conspicuous place at the location described in the application for at least 10 days.

HB 330 / SB 057 an emergency bill repeals the petition of support requirement in Anne Arundel County for alcoholic beverages license applications.

HB 461 / SB 141 raises the salaries of the chief inspector, deputy chief inspector, and general inspectors employed by the Anne Arundel County Board of License Commissioners.

HB 554 / SB 239 establishes a Class C (small yacht club) license in Anne Arundel County and authorizes the Anne Arundel County Board of License Commissioners to issue the license to a small yacht club that meets specified requirements. A license holder may sell beer, wine, and liquor to yacht club members and guests accompanied by members on the yacht club premises. The license holder may purchase alcoholic beverages from a retail dealer.

HB 638 / SB 143 alters the requirements for the approval of alcoholic beverages license transfers in Anne Arundel County. The bill specifies that the Anne Arundel County Board of License Commissioners is not bound by a specific statutory limitation if a creditor’s claim involves indebtedness incurred through the purchase or sale of alcoholic beverages in connection with the licensed premises. Additionally, the bill authorizes the board, if the board determines that a properly filed claim is outside its expertise, to approve an application for the transfer of a license or an application for a new license if there is an amicable resolution of the claim or a judicial determination on the claim.

HB 714 / SB 525 establishes a gift basket permit in Anne Arundel County. The bill authorizes the Anne Arundel County Board of License Commissioners to issue the permit to a person: whose primary business is the sale and delivery of flowers; whose business includes the sale and delivery of gift baskets of flowers, food, or other items; and does not hold another alcoholic beverages license or permit. The board is prohibited from issuing a permit for use in conjunction with or on the premises of a chain store, supermarket, or discount house. A permit holder may sell and deliver, to consumers of a legal drinking age located in the county, gift baskets containing specified volumes of beer, wine, or liquor products, purchased from a retail license holder. The permit holder must maintain records and submit reports required by the board. The annual permit fee is $100.

HB 758 / SB 221 requires the Anne Arundel County Board of License Commissioners to employ one full-time executive director and one full-time administrator and specifies the pay grades for these positions. In addition, the bill increases, from one to two, the number of full-time secretaries the board must employ.

SB 037 / HB 430 requires, in Anne Arundel County, that prior to a license renewal, holders of Class B beer and light wine; Class H beer and light wine; Class B beer, wine, and liquor; or Class H beer, wine, and liquor licenses must attest in a sworn statement that the gross receipts from food sales for the 12-month period immediately preceding the application for renewal were at least 51% of the gross receipts from the sale of food and alcoholic beverages, as specified.

SB 126 / HB 558 an emergency bill alters the manner in which the holder of an entertainment facility license in Anne Arundel County may sell beer, wine, and liquor to include the sale by the glass or by the bottle. The bill expands the scope of authorized acts that may be performed in the licensed entertainment facility, as specified. The bill authorizes the Anne Arundel County Board of License Commissioners to allow the holder of an entertainment facility license to sell alcoholic beverages for promotional events in an area adjacent to the entertainment facility if that area is both under controlled access of the license holder and is a parking lot, picnic ground, building, or terrace controlled by the license holder. The bill also authorizes the board to revoke an entertainment facility license for displays of nudity and sexual acts at the entertainment facility, as specified.

SB 194 / HB 536 an emergency bill authorizes the Anne Arundel County Board of License Commissioners to allow a license holder to transfer an alcoholic beverages license to another premises in the same tax assessment district in accordance with all applicable laws and regulations on transfers of licenses if the premises for which the license was issued is (1) substantially destroyed by fire, explosion, or catastrophe; (2) taken by condemnation; or (3) taken by the exercise of the power of eminent domain.

Baltimore City

HB 168 clarifies that the hours of sale for a Class B-D-7 license located in the area bounded by Liberty Heights Avenue, Northern Parkway, Druid Park Drive, and Wabash Avenue are from 9 a.m. to 9 p.m.


Continue Reading Maryland Enacts New Alcoholic Beverage Laws in 2020

Most Marylanders are now aware of Governor Lawrence J. Hogan, Jr.’s March 23, 2020 Executive Order in response to the global coronavirus outbreak closing non-essential businesses, however, the Interpretive Guidance issued by the Governor’s Office of Legal Counsel makes clear the order does NOT require “alcoholic beverage stores and distributors, distilleries, and wineries” to close.

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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In the final days of 2018 the President signed into law H.R. 5317 repealing the pre-Civil War prohibition on certain alcoholic beverage manufacturing on Indian lands.

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The Board of Liquor License Commissioners for Baltimore County has issued new Rules and Regulations effective September 30, 2018.

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, the

Given that a liquor license is “the” key asset in a business selling alcoholic beverages, be it a restaurant or package goods store, violations of laws associated with those licenses are of great import.

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