Last Call for Georgetown Liquor License Moratorium

Starting next week, for the first time in 27 years, restaurants in Georgetown will be able to apply for new liquor licenses.  The District of Columbia’s Alcoholic Beverage Control today voted not to extend its decades-old moratorium on liquor licenses for restaurants, which had been set to expire on April 8.  The moratorium was instituted in 1989 in response to the trash, noise and (some would say) mayhem that came from Georgetown being not only one of the city’s top nightlife destinations, but also home to (my alma mater) Georgetown University and its thousands of students.  In the ensuing years, however, some have blamed the license cap for Georgetown lagging behind the rest of the city in attracting new and exciting restaurants, which have proliferated in other parts of the District.

Some have questioned whether the lifting of the moratorium will make much of a difference, given the number of dormant liquor licenses that are in safekeeping with the District’s regulatory agency.  Those licenses were being held, however, because many of the holders were seeking to extract a significant (think mid-five figures) fee in exchange for a transfer.  That might have been cost prohibitive for smaller operators – particularly in the fast casual space.  Now that gatekeeping expense will be no more.

As was the case in Adams Morgan, which had its own moratorium on restaurant liquor license lifted in 2014, the moratorium on new tavern and nightclub licenses in Georgetown will remain in effect.  Next up will be the cap on new licenses in Georgetown’s neighbor, Glover Park, which is set to expire on May 3 of this year if not extended by the Board.

If you are interested in the possibility of applying for a restaurant liquor license in Georgetown, please do not hesitate to contact our office.

Is The End Near for Montgomery County’s Liquor Monopoly?

Montgomery County, our home jurisdiction, is the only county in the state of Maryland that exerts complete control over the distribution of alcoholic beverages.  With few exceptions, every pint of beer, glass of wine, and drop of spirits consumed in the county passes through the hands of the County government on its way from producer to customer.  This system has been in place since the repeal of Prohibition in 1933 left the regulation of the sale and distribution of alcohol to the states, and Maryland in turn essentially allowed counties themselves to determine how booze would been sold.  Up until last year, Montgomery County was accompanied by Worcester County in being such a “control jurisdiction,” but Worcester’s liquor monopoly ended last year.

Now, Montgomery’s system of liquor distribution is facing its own existential threat and, for the first time in a generation (or maybe ever), it seems like the forces seeking to end its monopoly may actually be in a position to do so.

Most prominently, Maryland’s Comptroller, Peter Franchot, has firmly expressed his desire to end the County’s liquor distribution monopoly and has announced his intention to work with state legislators from Montgomery County to introduce legislation to do so in the 2016 session.  (Note:  While such laws are county-specific, they must be passed by the entire Maryland General Assembly).  The Comptroller has forcefully stated that the County’s monopoly “eliminates competition, charges higher prices, offers fewer product choices and increases burdens on small businesses.”  Franchot’s position on this topic is particularly compelling because the Comptroller’s office is the top alcohol regulator in the state.

At the same time, a key group of Montgomery County legislators, led by Bethesda’s Bill Frick, has announced its own plan to put forth a bill in the 2016 session that would allow the County’s voters to weigh in via a referendum on whether the government liquor monopoly should continue.  This bill, like Franchot’s proposal, would not put the County out of the liquor business altogether, but rather require it to compete with private distributors.  That is precisely what occurred in Worcester County.

Under either proposal, even if they were to pass, the County’s control over liquor licensing, enforcement, and the like would not be effected or diminished at all (and, to be clear, our County’s regulators are among the best and most responsive in the State).  The proponents of proposals argue, however, argue that it is those activities — and those activities alone — that the County should be engaged in; and that commercial activities such as the sale and distribution of alcohol should be left to private industry.

This firm represents many bars and restaurants in Bethesda, Rockville, Silver Spring and other Montgomery County communities and I can scarcely think of any who would not welcome the opportunity to buy their products directly from private distributors who have the business incentive to provide a wide variety of products, at a competitive price, and in a timely fashion.  If you are a bar or restaurant owner — or simply a consumer — and have any thoughts on this matter, I invite you to contact me.  Due to the nature of my practice, I am often contacted by county and state officials on this matter and I would be pleased to pass along your thoughts.

Maryland Craft Beer Industry Continues to Boom

If anyone thinks craft beer is in a bubble or is going to slow down any time soon, perhaps they should look to what is going on here in Maryland, where growth not only appears strong — but strengthening.  Just in the past week we’ve seen:

As local regulations and state laws become more friendly, we hope to see continued growth in this industry — which is a great benefit to all Marylanders.

Difficulty Obtaining a Liquor License Among Things that Doomed Taco Bell’s Fast Casual Concept

Taco Bell thought its concept — U.S. Taco Co. — could take on Chipotle and, failing that, at least give it a toe-hold in the rapidly growing fast casual dining market.  But, after just one year of being open in Huntington Beach, California, its first and only outpost has closed.

Among the problems facing the upstart:  difficulty obtaining a liquor license.  As we’ve written here, many of the more successful fast casual chains offer beer and wine to their customers, appealing to cost-conscious millennials as well as parents of young children, who may want a beer with their dinner without having to bring the kids to a full-service, sit-down restaurant to do so.

While U.S. Taco Co. may be dead, Taco Bell will continue its foray into the upscale quick service space with yet another new concept (with booze included), Taco Bell Cantina.  The first of those opened in Chicago and San Francisco last month.

DC Restaurant Owners Learn the Hard Way How Important a “Very Good Lease” Is.

A dispute with its landlord has caused the abrupt closure of a popular Columbia Heights restaurant.  Apparently, the dispute was brought to a head when the landlord refused to sign off on the restaurant’s liquor license application, which is a requirement under DC law.  Now the parties have sued (and counter-sued) each other in DC Superior Court and the restaurant’s owners are looking for a new location.

I, of course, have not seen the lease at issue here, but this story should demonstrate how critical it is for restaurant owners to include liquor license provisions in their restaurant leases if they are planning to serve alcoholic beverages.  Never assume it is understood you plan to apply for a liquor license — get it in the lease, or there is no obligation on the part of the landlord to cooperate in your efforts to get one.

It appears the this restaurant owners have learned from this experience, noting that, while their restaurant concept and execution is proven, “It’s just a matter of having a very good lease.”

 

Client Spotlight: Tony Conte and Inferno Pizzeria Napoletana

Permit us a moment to bask in the good fortune of one of our clients and share with you this terrific piece on Tony Conte and Inferno Pizzeria Napoletana, as recently featured in the Washingtonian.

We are also pleased to report that Inferno’s liquor license application was approved by Montgomery County this morning, so you’ll be able to have a great glass of wine or cold bottle of beer with your authentic D.O.C. pizza.

New Liquor License Residency Requirements in Prince George’s County

As written here before, residency requirements can be a significant (or at least annoying) hurdle to obtaining a liquor license in Maryland.  Nearly every county requires that at least one of the licensees for any establishment to have been a resident of that county for some defined period prior to the issuance of the license (usually two years).

Prince George’s County is no longer one of those counties.

Effective July 1, 2015, applications for Prince George’s County liquor licenses must only have one applicant to be a resident of the state of Maryland.  This change is particularly significant in Prince George’s County because the County’s liquor laws also require the resident applicant to have a substantial ownership interest in the business in question.  When, as is often the case, the resident applicant does not have any real involvement in the business, this related ownership requirement creates organizational complications and potential legal vulnerabilities for the actual proprietor of the restaurant.  Removing the county residency requirement minimizes these complications and streamlines the  application process.

In addition to those benefits, the law change also recognizes that there are many businesspeople who live and operate in other counties (not to mention other states and the District of Columbia) who see Prince George’s County as an underserved jurisdiction with great opportunities for economic growth, but are wary of these county residency and ownership requirements.  I know this because many of these businesspeople have been and are my clients, and they have been frustrated by these and other seeming barriers to entry.  This change opens the County’s doors and makes it more welcoming to expanding restaurant businesses.

If you are interested in locating a bar or restaurant in Prince George’s County, or if you already hold a Prince George’s County liquor license, and are interested in how this law change may affect you, please do not hesitate to contact us.

 

Judge Rules Non-Citizens Should be Able to Hold Liquor Licenses

In nearly every county in Maryland, being a non-US citizen is a bar to holding a liquor license.  A judge in Anne Arundel County, however, recently ruled that such laws are discriminatory and ordered the county liquor board to reconsider a liquor license application submitted by a non-citizen permanent resident.  Upon such reconsideration the board must either issue the license or come up with a reason other than citizenship status to deny it.

While this case is not binding on the other jurisdictions that prohibit non-citizens from holding licenses, it should provide encouragement for permanent residents who own restaurants to push this issue in those other counties.

 

Planning a Brewery? Think Zoning Zoning Zoning

Have you ever wondered why Annapolis, our state’s fair capital city, does not have any craft breweries?  After all, Frederick and Baltimore are home to multiple world class craft beer producers.  Well, the answer is both simple and amazing:  the zoning codes of the City of Annapolis and Anne Arundel County do not include brewing beer as a permitted use.  That means, essentially, there is no building or parcel of land in the entire city or county for which brewing is permitted.

Although, at least as it relates to the County, that may change this year.

This change, if it came, would be thanks in large parts to the efforts of two Maryland brewers — one aspiring and one established — the latter of which who was foreclosed from his first choice of Anne Arundel County and therefore opened his highly successful Jailbreak Brewing (outstanding, by the way) in the more welcoming Howard County instead.  Their efforts, and a few receptive local officials, has prompted a proposal to change to the county’s zoning laws to open the door to brewing in the county.  As a recent news article indicates, the door is not opening all that wide just yet, but it is a start.

Of course, this serves as an important reminder of how although state laws regarding beer making — be it by production breweries, microbreweries or farm breweries — get a lot of the attention, it is often the minutiae of local zoning ordinances and county alcoholic beverage laws that delineate the ability of people to make, sample, and sell their beer.

 

 

 

Things To Consider Before Signing a Restaurant Lease: Liquor Licensing

Restaurants have a notoriously high failure rate and, for many restaurants, their fate is sealed at the time they sign their lease.  If a restaurateur is not careful, she can be saddled with lease terms that make the restaurant’s success even harder than it need be.  It is absolutely critical to identify those lease terms before signatures are affixed and keys handed over.  Moreover, with the assistance of experienced counsel, many of these lease terms are negotiable and can be adjusted to ensure that they do not present unnecessary hardships in running your business.

Over the next couple of days and weeks this blog will be highlighting some of the most important questions a tenant should ask before signing a lease.  These are not, however, intended to be an exhaustive list nor to replace the legal advice you should obtain prior to signing any lease.  But, with that said, I hope it is helpful to think about these things.

What will it take to get a liquor license?

Many restaurant concepts require alcohol sales to have any chance at succeeding.  In particular, many fast casual franchises may require that their franchisees obtain a license to sell beer and wine because such sales are inherent to the franchise concept itself. It therefore never ceases to amaze me when a would-be operator of such a concept signs a lease committing them to paying thousands of dollars a month in rent without considering whether they can obtain a liquor license for the location, or what efforts or expenditures will be necessary to do so.

In many counties in Maryland, for example, there is a restriction on the number of licenses the local authorities will issue.  In Washington, DC, moreover, there are areas of the city where there is a wholesale moratorium on the issuance of new licenses.   In addition, there could be something about the tenant operator himself — either where the operator lives, something in his background, or other business affiliations —  that will make it difficult for him to obtain a license.

Before signing a lease, therefore, it is absolutely imperative the tenant investigate whether it can obtain a liquor license for the site.  And if there is any doubt whatsoever on the matter, the tenant should be sure the lease contains a contingency that allows it to void the lease if it cannot obtain such a license.