The federal Alcohol Tobacco Tax & Trade Bureau (TTB) announced earlier this month that, as of the end of 2013, there were over 3700 active brewer’s notices on file with the TTB. A federal brewer’s notice is required to operate a brewery and sell beer in interstate commerce. That number represents a 12% increase over the total at the end of 2012, demonstrating the explosive growth in craft brewing in the United States.
The TTB also cited the government shutdown as contributing to the backlog of applications for both new breweries and new product or label approvals. While TTB notes it is “work[ing] tirelessly” to process these applications in a timely manner, that this backlog exists highlights the need to ensure that all applications are in order when they are submitted so further needless delay can be avoided.
In the last two years, the Woodmont Triangle area of downtown Bethesda has seen a building boom in high-rise luxury apartment buildings. Construction of one of those buildings, however, appears to be taking its toll on some established local businesses, and has now caused the closing of two local restaurants and an automotive repair shop.
To read more on this ongoing controversy, and the multiple lawsuits it has spawned, please see my post here, which summarizes the excellent coverage from the blog BethesdaNow.
The Baltimore Sun had an interesting story last week about how the liquor board of Harford County, Maryland, wants to eliminate the state requirement that every county liquor license application have on it at least one resident of the county. As stated in the article, it can often be a challenge for a restaurant to identify a resident to serve as the resident agent and, even after one is identified, the operations of the establishment can be dependent on maintaining the relationship with that one individual. Indeed, it was that very issue that brought the matter to fore in this instance. [Read the full article here]
These residency requirements have presented particular challenges for my clients in Montgomery County, where many national chains and D.C.-based enterprises are often interested in adding locations. To be issued a license, however, each of these applicants must identify a Montgomery County resident to join the application and maintain responsibility should the establishment violate local liquor laws. That is rarely an insurmountable hurdle, but it can be a challenging one, and one that is arguably unnecessary. Were this requirement eliminated, it could make it much easier to attract restaurants and bars to the County, something local authorities have deemed a priority.
In the December 2013 Maryland State Bar Association’s Bar Bulletin, I look ahead to the 2014 Maryland legislative session and preview a couple of issues that will be very important to retailers of alcoholic beverages in Maryland.
Please take a moment to read the full article here.
Generally speaking, and with some notable exceptions, the production, distribution and sale of alcoholic beverages in the United States are divided among three tiers, with ownership of producers, distributors and retailers required to remain separate. For example, in Maryland, where my firm has its primary practice, anyone with an ownership interest in an entity with a manufacturer’s or wholesaler’s license is prohibited from holding a retail liquor license. Although the 21st Amendment to the U.S. Constitution, which ended Prohibition, leaves it to the individual states to regulate the sale of alcoholic beverages, nearly every state has traditionally mandated this division among the three tiers.
Because the three-tier system is such an integral and widespread element of liquor regulation in the United States, it was with great interest (and some puzzlement) that I read this press release announcing the acquisition by a North Carolina craft brewery of a publicly traded beer, wine & liquor wholesaler. (Read more here) I was furthermore surprised to see that a substantial shareholder in the wholesaler was itself a company that owned several large, prominent restaurant chains, and that this company would remain a shareholder of the combined brewery/distributor. Thus, it would seem that the proposed sale would lead just the sort of vertical integration between producer, wholesaler and retailer that the three-tier system was intended to thwart. Illustrating this fact is a telling quote from the CEO of the chain restaurant company:
“We look forward to showcasing [the brewery]’s craft beers in our restaurants and assisting with its regional distribution.”
There you go: brewery owns distributor, which will be assisted in such distribution by a restaurant chain which is a large shareholder in the combined brewery/distributor, all in an effort to promote that brewery’s beers in those same restaurants. While not a true “tied house” situation, it could have similar effects.
Given this stated intention to use the vertical integration of the three tiers to its competitive advantage, it will be interesting to see how North Carolina liquor regulators view the combination of and cooperation between these companies. Moreover, as the combined brewery/wholesaler company expands into other states, it will also bear watching whether it is met with resistance from other state and local alcoholic beverage licensing boards, either on applications for wholesaler’s licenses by the combined brewery/distributor, or on retail liquor license applications by new outlets of the associated restaurant chains.
In order to compete with its neighbor the District of Columbia, Montgomery County, Maryland, continues to strive to make itself a more inviting place for those seeking after-hours entertainment options. As indicated in my previous post, a sizable portion of these efforts involves reforming the county’s laws regarding the sale of alcoholic beverages. In case you had any doubt, however, as to how important these issues are for the county, a recent article in the Gazette newspaper notes that more than two-thirds (9 out of 13) of the bills being considered by the county’s delegation to the 2014 General Assembly relate to liquor licensing and other aspects of the county’s regulation of alcohol.
If you have any questions about how any of these laws will affect your business, how you might be able to take advantage of any proposed changes, or how you can play a role in affecting the outcome of any of these proposals, please do not hesitate to contact us.
Earlier this year, Montgomery County, Maryland, created a task force of local civic leaders and businesspeople to address issues that could make the county a more inviting place for those seeking lively nightlife offerings. On October 21, 2013, this “Nighttime Economy Task Force” issued its recommendations, many of which — particularly those changing county liquor license requirements — will have a direct effect on the restaurant and tavern industry in the county. Among the most welcome recommendations for this industry are:
[continue reading here]
The locally-focused blog Bethesda Now featured a story last week on the upcoming opening of a new Bethesda location for the Spanish-based restaurant chain 100 Montaditos. The local operators, who were approved for a Montgomery County liquor license on September 19, expect to open in early October. The new location on Elm Street, just off Bethesda Row in downtown Bethesda, will be the first U.S. location outside of Florida.
The Morris Law Firm is pleased to have been part of the effort to bring 100 Montaditos to Bethesda, serving as their alcoholic beverage licensing counsel and assisting them in all aspects of their liquor license application and liquor board hearing.
In a closely watched case (and one I have written about here, here, and here), the Maryland Court of Appeals last month, in a 4-3 decision, declined to recognize dram shop liability in the state of Maryland. Dram shop liability is a theory of liability that holds a restaurant or tavern owner accountable if a patron kills or harms another person after drinking too much at the owner’s establishment. The typical case involves an automobile accident and a drunk driver. Maryland has been one of only a handful of states that do not recognize at least some form of dram shop liability. And that will continue, at least for now.
[Read more here…]
The Maryland Transit Administration has recently begun informing property owners and businesses along the route of the proposed Purple Line that they might have to make plans to move. That is because the state will begin purchasing property along the proposed route as soon as September 2013. For those property owners who will not agree to sell — at the state’s proposed price — the state can condemn the property and take it via the power of eminent domain. Maryland officials have estimated the costs of such property purchases at $200 million.
If you are concerned that your property might be subject to state condemnation to make way for the Purple Line, please contact us so we can review the state’s plans with you.