Mr.

Isiah Leggett
County Executive of Montgomery County
Executive Office Building, 2nd Floor
101 Monroe Street
Rockville, Maryland 20850
Dear Mr. Leggett:
On May 25, you requested that our organizations submit the names of two of our Chamber members
who would be interested in being on a small workgroup focused on the Department of Liquor Control
(DLC) and that they have a detailed working knowledge of the liquor distribution system. The
Chambers provided you the names of Pinky Rogers and Brian Vasile, both of whom have years of
experience and working knowledge of the DLC and the distribution system. They were also
recommended to the task force due to their respective roles in the system off premise and on
premise. Both have actively participated in the two meetings of the task force thus far.
Your letter also requested that we submit in writing our ideas or suggestions for new organizational
models that would further the agreed upon goals for privatization models. Since that time we
requested that a presentation on the Worcester County, MD experience be provided so that we could
be better informed about all potential models.
Without the benefit of fully learning from the Worcester County model, attached please find our
proposed organizational model which meets your stated requirements:
1. Provide high quality service, excellent product selection and competitive prices to the public and
licensees.
2. Hold the County harmless in terms of existing and future revenue generated by the DLC
In summary, we recommend that the Montgomery County Department of Liquor Control (DLC) should
remain responsible for the licensure, regulations and education aspects of liquor control in the County.
This is a function of government. The wholesale and distribution operations currently run by DLC should
be moved to the private sector. The DLC may opt to maintain retail stores but will be required to
compete full and open with other private operations within the County.
Our proposal provides the recommended necessary changes to allow the full privatization of sales and
distribution in the County, along with conservative estimates on revenue sources and the results that
would come from making these changes.
We anticipate that this proposal be given the same full vetting as the other proposals received thus far
by the task force and request that the work of the task force be expedited so that a final report and
recommendations can be developed in advance of the next session of the Maryland General Assembly.
Thank you.
Sincerely,
Ms. Pinky Rodgers, President/Owner
Pinky & Pepes Grape Escape

Brian Vasile, Managing Partner

Brickside Food and Drink
Marilyn Balcolmbe, Ph.D., President & CEO
Gaithersburg-Germantown Chamber of Commerce
Georgette Godwin, President & CEO
Montgomery County Chamber of Commerce
Ginanne M. Italiano, IOM, President & CEO
The Greater Bethesda Chamber of Commerce
Jane Redicker, President & CEO
Greater Silver Spring Chamber of Commerce
cc:

Bonnie Kirkland
Fariba Kassiri
Joy Nurmi
Montgomery County Council
Montgomery County Delegation to the Maryland General Assembly

RECOMMENDED ORGANIZATIONAL MODEL FOR

LIQUOR CONTROL AND DISTRIBUTION IN MONTGOMERY COUNTY
PROPOSED BY THE BUSINESS REPRESENTATIVES OF THE DLC TASK FORCE*
AUGUST 2016
PROBLEM
The current system of liquor control in Montgomery County stifles the success of local businesses and
limits consumer choice and convenience. It is an antiquated model that runs counter to economic
development objectives while expending significant public resources to maintain. This government
monopoly regime has a long and infamous legacy of poor customer service, management problems and
inefficiencies. As the Night Time Economy Task Force detailed, the well-documented challenges of
upholding this vestige of Prohibition-era laws impedes economic development, thereby thwarting
efforts to create the viable and sustainable communities in Montgomery County needed to maintain the
current level of services and quality of life residents expect.
OBJECTIVE
In order to better support a thriving local economy and better serve the needs of the consumer, we
must consider alternative organizational models for the wholesale and distribution of beer, wine and
spirits in Montgomery County. The goal of any change should be to further the success of local small
businesses that employ thousands of Montgomery County residents and contribute to the tax revenue
of Montgomery County.
PROPOSED MODEL
The Montgomery County Department of Liquor Control (DLC) should remain responsible for the
licensure, regulations and education aspects of liquor control in the County. This is a function of
government. The wholesale and distribution operations currently run by DLC should be moved to the

private sector. The DLC may opt to maintain retail stores but will be required to compete full and open
with other private operations within the County.
These recommendations are most closely aligned with the Office of Legislative Oversights Option 2
Private Wholesale Distribution of Beer, Wine and Liquor.
These changes should include the following:

1. The maintenance and administration of alcohol and tobacco enforcement, alcohol

licenses, and education and training programs will have no change.
2. DLC retail stores throughout the County will compete with private sector retailers on a
level playing field (see #3). Analysis shows that the County could retain up to
$10,000,000 in annual profit from DLCs retail operations. 1
3. All licensees in Montgomery County to be eligible to sell spirits, beer and wine.
4. The County will sell its interest in the wholesale distribution of beer, wine and
spirits. Estimated income for the sale of the beer franchise to be in excess of $50,000,000
alone.2
5. County will sell all facilities including real estate, equipment and vehicles being used for
its distribution business.
6. All license holders in Montgomery County will purchase alcoholic beverages from a
licensed wholesaler instead of the Montgomery County DLC.
REVENUE SOURCES
In addition to the $10,000,000 annual net revenue from the DLC retail stores and the one-time revenue
of more than $50,000,000 from the sale of the wholesale distribution rights, equipment, real estate and
vehicles, there are other options that the task force, consultant and County Executive should consider in
order to offset the bonds obligations. These could include DLC opening more retail stores. In addition,
the concept of potential revenue sharing with the State should be considered.
RESULTS

The issue of managing special orders becomes null and void under this proposal.

There is no investment required by Montgomery County Government to maintain a

warehouse and provide private sector services (logistics management, fleet management,
facilities maintenance, etc.).

The market place will deliver improved customer service through more competition.

Consumers will be better served through greater choice and convenience.

There will be more economic activity (and therefore more tax revenue) through business
growth in County of on-premise and off-premise businesses who have vowed not to
expand under current system.

The proposal removes the conflict of interest of the same organization regulating and
enforcing its own entity and allows for better focus on core mission of licensing,
education, enforcement.

We look forward to working with the task force and Montgomery County for the future improvement of
the economic viability and competitiveness of Montgomery County.

* Proposed by the Business Representatives to the DLC Task Force and the Gaithersburg-Germantown
Chamber of Commerce, Greater Bethesda Chamber of Commerce, Greater Silver Spring Chamber of
Commerce, and Montgomery County Chamber of Commerce
1.

December 15, 2015 memo from Craig Howard, OLO to Councilmember Roger Berliner Re: Response to
Questions on Liquor Control Revenue and Expenditures
2.

According to the Maryland Beer Franchise Fair Dealing Act (Art. 2B 21-203), if a franchise
is to be transferred due to sale of the brand to a new manufacturer, the incumbent distributor
must be paid fair market value of the franchise. Based on industry norms and Maryland
legislative history, it is estimated that the Countys franchise rights would be no less than two
times the gross profit for beer wholesale sales, or roughly $50 million.