Maryland lawmakers uncork changes to alcohol laws

Wineries across the state — and country — soon might be permitted to ship bottles directly to Maryland homes. Shoppers could pick up local wines at more farmers' markets. And diners might one day be able to bring their favorite vintage to an already licensed restaurant.

After years of shooting down changes to the state's alcohol laws, lawmakers are showing signs this year that they're ready to embrace some measures long sought by consumers.

But for enthusiasts, there may be a price to pay: On Thursday, a Senate committee agreed to raise the sales tax on alcohol from 6 percent to 9 percent. If the increase survives the budget process, it would be the first tax hike on alcohol in four decades.

Maryland wine aficionados are cheering the policy developments. While many are not happy about the potential tax increase, several predicted that it would have minimal impact on sales.

John Richardson was picking up a selection of white wines Thursday afternoon at Beltway Fine Wine & Spirits in Baltimore County. The Towson man said he liked the idea of being able to get California wines shipped to his home.

"It was tantalizing because I get those advertisements for this absolutely wonderful wine you can't get," he said as he wrestled a box of bottles into his trunk. "It's been a long time coming."

At the Chesapeake Wine Co. in Canton, Kristen Edwards said she, too, is glad to have the option to order wine from other states — especially bottles from her family's own vineyard, Damiano, in upstate New York.

"They've been tremendously successful there," she said. "It's sad they can't have that here."

The Baltimore woman said she doesn't like taxes, "but it's like cigarettes. They will find a way to pay it. It is a luxury for people."

Maryland has some of the tightest alcohol controls in the nation, including a three-tier system that demands separation of wholesalers, distributors and retailers. Liquor lobbyists and legislators say it is essential to preserve the system so the state can maximize taxes on the goods while encouraging temperance.

But in recent years — thanks in part to a growing interest in wine — Marylanders have been stepping forward to fight for changes.

"Consumers have realized that their legislators control what they drink," said Adam Borden, an advocate for relaxing the restrictions. The Baltimore man credited the years-long fight over direct shipping with "fundamentally changing how Annapolis deals with alcohol issues."

After long focusing on the desires of the alcohol industry, he said, "finally the General Assembly has started to appreciate that without consumers, the industry doesn't exist."

Industry lobbyists acknowledge a growing interest in the liquor laws.

"The sessions get increasingly more active each year with alcohol legislation," said Bruce Bereano, a lobbyist for the wholesalers. He said Maryland's wineries are becoming more involved and aggressive, and farmers' markets, too, are seeking to become part of the retail sale of alcohol.

Baltimore, Frederick and Carroll counties want wineries to be able to sell their goods at farmers' markets in those jurisdictions, an idea that has won support in the House of Delegates and the Senate.

Bereano said the alcohol industry is trying to work "with responsible and reasonable people." He said industry support this year of direct shipment from wineries — a concept the industry long and vocally opposed — stands as an example.

Both the Senate and House of Delegates are scheduled to debate the direct-shipping proposal Friday. Passage would make Maryland the 38th state (plus the District of Columbia) to allow such business.

The legislation would enable a resident to receive up to 18 cases per year from wineries across the country. The wineries would pay an annual $200 fee for a permit to ship.

Consumer advocates said they were happy with the bill's progress but that it remains too limited. Many also want retailers to be allowed to ship alcohol to their homes. Just 12 of the 37 states that permit direct shipping extend that to retailers.

Some have noted that the proposed $200 fee for wineries is greater than those of other states, raising the question of whether smaller, out-of-state vineyards will seek permits to send their goods to Marylanders.

"For our business, it's great," said Sarah O'Herron, who co-owns Frederick County's Black Ankle Vineyard with her husband. "We have a high-end product, which means we have to draw from audience of fairly wide geography."

She expected a significant increase in their wine club, which includes about 250 people — all of whom have to drive to the rural vineyard to pick up their bottles.

"It's quite flattering that people will do that, but we have many more people who want to be part of the club but can't commit to the drive."

Still, O'Herron said, the $200 annual fee could keep Marylanders from enjoying Black Ankle-like vineyards in other states.

"You'd have to have the sales to justify paying the fee," she said, noting that she pays just $10 per year for permission to ship to California homes.

Mitchell Pressman, owner of the Chesapeake Wine Co. in Canton, said the direct shipping proposal is "good for consumers." But for retailers, he said, it is "not doing us any good."

He argued that retailers should be able to offer customers wine-of-the-month clubs, gift packages and shipping. Right now, he can't deliver to residents in neighboring Baltimore County, he said, "which is absurd."

"We are a progressive state, yet we have liquor laws like we are in Mississippi," said Pressman, who has been in the business for 30 years. "I want the state out of my business."

Borden said the reluctance to embrace retail shipping — and hesitation over other bills — shows "there still needs to be more balancing of the scales between the industry and consumers."

Del. Dereck Davis, chairman of the House Economic Matters Committee, and Sen. Joan Carter Conway, chairwoman of the Senate Education, Health and Environmental Matters Committee, the panels that consider alcohol bills, say they have always been responsive to consumers.

Both say they have been unfairly painted as industry loyalists.

"We want to appease as many people as we possibly can," said Davis, a Prince George's County Democrat. "But everything is a balance. We have to balance all interests as we make policy for the state."

One idea that could be a few years away from passage involves "corkage fees."

At present, patrons may take their own bottles to some restaurants that don't have a liquor license and pay a corkage fee. Legislation under consideration — but unlikely to gain passage this year — would enable restaurants with liquor licenses in Baltimore, Frederick County and elsewhere to allow diners to bring their own bottles and pay a corkage fee.

Lawmakers on the alcohol panels have reservations.

Conway, a Baltimore Democrat, said restaurants want to preserve their alcohol revenue and fear that allowing customers to bring their own bottles could jeopardize it. Davis said the issue is one that should be handled statewide, not county by county, and seems ripe for a summer study.

But there's another major alcohol change on the horizon this year: a sin tax.

Introduced just days ago — but fast-tracked for passage — Senate legislation would bump the sales tax on alcohol from 6 percent to 9 percent over three years. The Senate Budget and Taxation Committee approved the increase Thursday; it must still be approved by the full General Assembly to become law.

Lawmakers want to roll out the tax hike in 1 percent increments in each of three years. Legislative analysts expect it would generate $30 million in new state revenue in the first year, rising to about $85 million annually once it is fully implemented.

Although the revenue would go into the state's general fund, the Senate committee has plans for it next year: $5 million would assist people with developmental disabilities, $8.8 million would flow to Prince George's County and $12.2 million would go to Baltimore City.

Because Prince George's County has grown wealthier relative to other jurisdictions, it has seen a drop in state aid, something the alcohol tax money would help assuage. Baltimore would use the money to pay for the increasing health care costs of retired teachers.

Vincent DeMarco, president of the Maryland Citizens' Health Initiative and a longtime advocate for increasing the alcohol tax, cheered the tax increase proposal as "a great public health victory that will save numerous lives."

Even a small increase in the cost of alcohol, he says, causes a drop in drinking.

Chris Jones of Parkville stopped by Beltway Fine Wine & Spirits Thursday afternoon to pick up several cases of beer for a surprise party. She said she did not favor increasing the tax on alcohol, but added that "if you want it, you're going to get it."

Pressman, of the Chesapeake Wine Co., said he's not worried about his business. But colleagues in northeastern Maryland, he said, might lose customers to Delaware, where there is no sales tax.

That was a concern shared by the four senators who voted against the tax increase Thursday.

"You're going to send a lot of people right over the border," said Sen. George Edwards, a Western Maryland Republican.

julie.bykowicz@baltsun.com

jkanderson@baltsun.com

On the Web:

•Direct-shipping bill (Senate version): http://mlis.state.md.us/2011rs/billfile/sb0248.htm

•Corkage bill (Senate Baltimore City version): http://mlis.state.md.us/2011rs/billfile/sb0614.htm

•Farmers' market bill (House Baltimore City version):

•Alcohol tax bill (Senate): http://mlis.state.md.us/2011rs/billfile/sb0994.htm

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