oCo’s Liquor Retail Stores

Even with a Monopoly, MoCo’s Liquor Retail Stores Lose Money

oCo’s Liquor Retail Stores
MoCo’s Liquor Retail Stores

No Montgomery County government activity is harder to justify or to even explain, than its unique liquor monopoly. Maryland state law prohibits the county’s liquor sellers, retail stores and restaurants, from selling any alcohol not purchased from the county’s government-operated monopoly. Additionally, distilled spirits or hard liquor can only be sold at county-owned and operated retails stores. The monopoly, renamed earlier this year as the Alcohol Beverage Service, is one of county government’s most flagrant examples of its hostile business climate. [i]

The Montgomery County Republican Party called for an end of the arrangement in December 2015. Then Chairman Michael Higgs put it succinctly: “It is time for Montgomery County voters to decide whether to free our restaurants and catering industry from having to purchase liquor only from a government bureaucracy. Let’s join the rest of the country and allow private distributors.”

The monopoly’s apologists, however, defend the agency because it has generated about $20 to 30 million in net profit each year for the county. Reform plans have faced the issue of replacing these liquor profits as a county revenue source.   Then County Executive Ike Leggett told a legislative public hearing that privatizing liquor sales would cause local taxes to go up. “This is irresponsible. This will not help our county, it will set us back,” Leggett said at the time. [ii]

It turns out that Montgomery County’s liquor profitability was only partly true. According to a more detailed financial analysis finally conducted for the County Council, all the net profit is entirely due to the warehouse operation. The County’s retail operation, its twenty-five stores with a monopoly on selling hard liquor, in fact loses money. The loss is about $5 million a year.[iii] <more>