For our clients seeking a liquor license in Maryland, one of the most common hurdles is the legal requirement that at least one of the applicants reside in Maryland or, in many cases, the particular county in which the license is sought. For out-of-state operators, even those from neighboring D.C. and Virginia, we often must find creative ways to satisfy this residency requirement in order to obtain the liquor license, and deal with some of the unintended consequences that result. Those days may, however, be over soon.
In late June, the U.S. Supreme Court struck down Tennessee’s liquor license residency requirement, declaring that the State’s prohibition on out-of-state residents from obtaining a retail liquor license was unconstitutional. In that case, a married couple who had recently moved to Tennessee sought a retail liquor license, but did not satisfy the state’s two-year residency requirement (notably, Maryland also requires two years of residency). Although Tennessee regulators were not commonly enforcing the requirement, an industry trade group representing local retailers sued to require them to do so and deny the couple the license. The case made it all the way to the Supreme Court, which found that the law was solely for purposes of protecting in-state retailers and thus violated the U.S. Constitution’s Commerce Clause.
The argument made in favor of Maryland’s residency laws are that they make retailers and restaurants with liquor licenses more responsive to the local community and its concerns, and thus more responsible in their sale and service of alcohol. While that is an admirable goal, in practice the local resident is often someone who is paid an annual fee to serve as the resident on the license and has little, if anything, to do with the operations of the establishment. Thus, the laws create a regulatory hurdle for out-of-state operators (and sometimes deter such operators from opening a new Maryland location at all), but serve little practical benefit. As such, these laws have frequently come under scrutiny, and been modified, but have thus far remained largely in place.
Regardless of such arguments on each side, unless Maryland regulators can argue the Tennessee case is inapplicable or distinguishable in some way, it seems likely Maryland’s liquor license residency requirements’ days are numbered. For those hoping to make it easier for out-of-state restaurant chains, or local D.C. or Virginia-based restaurant operators, to expand here in Maryland, that is a good thing.