Maryland's liquor laws may be byzantine and inscrutable in general, but only those who live in Baltimore County (or Baltimore City, which operates similarly) have likely witnessed full regulatory madness. The county's system for licensing the sale of alcohol has achieved the distinction of being simultaneously both too lax and too restrictive, while preventing some businesses from entering the market and others from leaving it — even as they teeter on the edge of bankruptcy.
Think that might be an exaggeration? If anything, we're being too kind. In particular, when it comes to the licensing of restaurants that simply want to serve a cocktail or bottle of wine with a meal, the hurdles their owners face look something like a 1960s "Twilight Zone" episode where sanity has taken a permanent vacation.
That's why Baltimore County Executive Kevin Kamanetz's recent decision to appoint a 12-person task force to examine possible changes to his county's liquor laws in order to encourage the restaurant business is a welcome, if ambitious, effort. Previous administrations in Towson have considered such a move but backed away — the quagmire of special interests and politics involved proving far too daunting to be judged worth the effort.
For those unfamiliar with Baltimore County's system of licensing taverns, restaurants and package stores, here's how it works. The county is divided into 15 districts, where liquor licenses of all kinds are limited to one for every 2,500 residents. Those licenses have been snapped up in every district except for the Liberty Road corridor, a county enterprise zone.
That means an entrepreneur who just wants to open a restaurant in Cockeysville, for instance, must purchase an existing license from within the district. The restriction has given licenses a substantial value of anywhere from $100,000 to a record $325,000.
But wait, it gets more complicated. Over the years, the General Assembly has granted a series of exceptions to these rules. In some cases, entrepreneurs were given authority to purchase licenses from other districts and transfer them.
The result? The one-per-2,500-residents restriction is largely meaningless, as some areas are thick with licensees. The district covering Essex-Middle River, for example, has a staggering 81 more licenses than the law would otherwise allow. Some tavern owners have taken to staying open only a few weeks or days per year to hold onto their valuable license, in hopes of a lucrative transfer sale.
Meanwhile, the law also limits any one business entity from controlling more than six licenses (seven if one is on Liberty Road). But that restriction didn't anticipate the rise of chain restaurants where one company — Darden Restaurants, for example — owns Red Lobster, Bahama Breeze, Olive Garden and others that might have multiple locations in the county.
That's not even the worst of it. Clearly, the system makes no sense as it neither limits alcohol consumption nor encourages economic development. Yet, there are plenty of stakeholders heavily invested in the status quo. For instance, arranging a license transfer requires support from the county's state senators (as the General Assembly must approve), a group of veteran politicians who would be loath to give up such influence.
The negative effect of all of this on Baltimore County's economy is very real. Restaurant sales are up nationwide this year and represent 4 percent of the nation's economy with an estimated $1.7 trillion economic impact. It is the country's second-largest private sector employer, with 12.8 million workers, according to the National Restaurant Association.
Obviously, the county's archaic and ineffective licensing system should not be allowed to prevent new restaurants (and jobs) from being created in Baltimore County. But it's also reasonable to expect the county to protect those who have made huge investments in licenses.
Can both be done? Maybe. One possibility would be to eliminate the restriction on chain ownership while also creating a limited restaurant liquor license (one that wouldn't allow a separate bar, for instance) that might supplement the market. In theory, the latter might depress license values but the former might increase them.
The task force's work will likely prove controversial. Owners of existing businesses and those who wish to expand or enter the market will be at odds. Elected officials are likely to have strong opinions, too. But recent experience — the legislature's move to raise the sales tax on alcohol and partially repeal the ban on direct-to-consumer shipments of wine — shows that powerful interest groups don't always prevail. Baltimore County liquor laws may yet become sensible (well, at least more sensible), and that would be a notable achievement.