Maryland Attorney General Opinion 99OAG031

Gen. 31] 31

ALCOHOLIC BEVERAGES
LIQUOR BOARDS – WORCESTER COUNTY DEPARTMENT OF
LIQUOR CONTROL QUALIFIES AS A WHOLESALER UNDER
ANTI-PRICE-DISCRIMINATION PROVISIONS WHEN IT
PURCHASES ALCOHOL FOR RE-SALE TO RETAILERS

March 14, 2014

The Honorable James N. Mathias, Jr.
Senate of Maryland
The Honorable James C. Church
President, Board of County Commissioners

You have asked our opinion about whether the Worcester
County Department of Liquor Control (“DLC”) should be treated
as a retailer or as a wholesaler when it purchases alcohol from a
licensed Maryland wholesaler. Your request stems from the fact
that the DLC can act as either a retailer or a wholesaler in such
transactions. Like a retailer, the DLC purchases alcohol for sale
to consumers in its own retail stores—called “dispensaries”—and,
like a wholesaler, it distributes alcohol to bars, restaurants, and
other privately-owned retailers. Until 2013, Maryland’s excise
tax laws treated the DLC like a retailer when it bought from a
wholesaler in that the alcohol the DLC purchased had to be “tax-
paid,” i.e., the wholesaler had to pay the excise tax on the alcohol
before selling it to the DLC, as is the case for retailers generally.
Based on these tax provisions, the wholesalers that supply much
of the DLC’s stock treat it exclusively as a retailer and charge it
the same price as they charge other retailers. Materials you
included with your request indicate that this situation undermines
the DLC’s ability to supply alcohol to Maryland retailers, and its
own dispensaries, at prices that are competitive with nearby
Delaware retailers.
Your request involves two related questions: First, when
purchasing alcohol from a wholesaler, must the DLC (like other
retailers) always buy products on which the Maryland excise tax
has already been paid? And second, is the DLC a “retailer” or
“wholesaler” for purposes of Article 2B § 12-102(a), which
prohibits wholesalers from “discriminat[ing] . . . in price,
discounts or the quality of merchandise sold between . . . one
32 [99 Op. Att’y

wholesaler and another wholesaler or between one retailer and
another retailer”?
In our opinion, the answer to both questions depends on
whether, in a particular situation, the DLC is distributing alcohol
to retailers or selling it directly to consumers in its dispensaries.
As to the first question, legislation enacted in 2013 clarifies that
the alcohol the DLC purchases must be “tax paid” when acquired
for re-sale to consumers, but must be “non-tax-paid” when
acquired for re-sale to bars, restaurants, and other licensed
retailers. With respect to the second question, a wholesaler must
charge the DLC the “wholesale price” it charges other
wholesalers (to the extent it sells to other wholesalers) when the
DLC acquires the alcohol for re-sale to retailers, but must charge
the DLC a “retail price” when the DLC acquires the alcohol for
re-sale to consumers in its dispensaries.
I
Background
A. Departments of Liquor Control and Liquor Control Boards
Maryland has a complicated scheme for licensing and
regulating the sale and distribution of alcoholic beverages. The
overarching purpose of this scheme is “to foster and promote
temperance, to prevent deceptive, destructive, and unethical
business practices, and to promote the general welfare of its
citizens by controlling the sale and distribution of alcoholic
beverages.” Md. Ann. Code, art. 2B, § 1-101(b)(1).1 Maryland
furthers this purpose primarily through a statewide system
designed to license and oversee private producers, wholesalers,
and retailers of alcohol. Generally speaking, boards of license
commissioners located in each county license and regulate retail
sellers of alcoholic beverages within that county, § 15-112, see
also 95 Opinions of the Attorney General 164, 165 (2010),
whereas the State Comptroller is in charge of licensing and
regulating manufacturers within Maryland, dealers who import
alcohol from other jurisdictions, and wholesalers. See, e.g., §§ 2-
101(a), 10-101(a). The Comptroller also collects the excise tax
required under Title 5 of the Tax-General Article. See Md. Code
Ann., Tax-General (“TG”) § 5-301.
1
Unless otherwise indicated, all statutory references in this opinion
are to Article 2B of the Annotated Code of Maryland (2011 Repl. Vol.,
2013 Supp.).
Gen. 31] 33

In a small number of counties, a “liquor control board” or a
“department of liquor control”2 regulates the sale and distribution
of alcohol through the operation of liquor dispensaries, which
make retail sales of certain alcoholic beverages (typically wine
and spirits, but not beer or “light wine”). 94 Opinions of the
Attorney General 134, 136 (2009). Because of the importance of
the liquor control boards to this opinion, we step back to develop
the history of the liquor control boards and how they have
evolved.
History of Liquor Control Boards
Liquor control boards were initially created in four counties
in 1933 on the theory that direct public control over the sale of
alcohol might “eliminate[] the profit motive that otherwise would
stimulate excessive consumption.” 95 Opinions of the Attorney
General at 168; see also 1933 Md. Laws, ch. 2 (sp. sess.). Each
liquor control board was established by a separate code section
that established its powers and, except for Montgomery County,
each section included language specifying that the alcohol the
board purchased from wholesalers must be tax-paid. See, e.g.,
§ 48D(2) (1935 Supp.) (authorizing Worcester County liquor
control board to purchase wine and liquor “upon which the tax
imposed by this Article has been paid”).3

2
The principal difference between a “liquor control board” and a
“department of liquor control” is its governance: Liquor control boards
are State entities the members of which are appointed by the Governor,
see § 15-201(c)(1), while the two departments of liquor control—in
Montgomery County and Worcester County—are departments of
county government with their members appointed by the county. See
§§ 15-201(a)(2)(i), (c)(7) (Montgomery DLC); 15-201(a)(3)(i)1, (c)(5)
(Worcester DLC), see also 94 Opinions of the Attorney General 134
(2009). Despite the differences in name and governance, the
departments of liquor control play much the same role that liquor
control boards play. See § 15-201(a)(2)(ii) (providing that the
Montgomery County DLC shall have “the powers of a liquor control
board as defined in § 15-205 of this subtitle”), (a)(3)(i)2 (same, for
Worcester County DLC).
3
The several county-specific provisions requiring that liquor
control boards purchase wine and liquor upon which the excise tax had
already been paid were consolidated in 1947 as part of the wholesale
recodification of Article 2B and made applicable to all liquor control
34 [99 Op. Att’y

Under the 1933 legislation, only Montgomery County was
given the authority to operate retail dispensaries and sell certain
kinds of alcohol at wholesale to “licensed dealers [within the
county] . . . who [were] authorized to resell such beverages.”
§ 48A(2) (1935 Supp.). The liquor control boards in three other
counties—Worcester, Wicomico, and Queen Anne’s—were given
the power to operate retail dispensaries but not to sell alcohol
wholesale because no mechanism existed for retail sales of wine
and liquor in these counties other than through the dispensaries.4
See, e.g., § 48D (1935 Supp.) (relating to Worcester County); see
also Leonard V. Harrison & Elizabeth Laine, “After Repeal: A
Study of Liquor Control Administration,” 108, 237 (1936)
(observing that Montgomery, Worcester, Wicomico, and Queen
Anne’s counties had “the exclusive right to sell spirits and wine
within their borders”). At that time, therefore, all of the control
boards except Montgomery County functioned solely as retailers
within their counties.
Over the ensuring years more control boards were given the
authority to sell certain alcoholic beverages at wholesale to other
retailers in their counties and, like Montgomery County, began to
function in a dual role as both a wholesaler and a retailer. In
1937, for example, the Worcester County liquor control board
was given the authority to purchase beer and light wine and then
distribute that alcohol to private retailers in the county.5 1937
Md. Laws, ch. 301.
Then, in 1947, Article 2B was revised and re-codified in its
entirety and, for the first time, incorporated all Public Local Laws
relating to alcoholic beverages. See 1947 Md. Laws, ch. 501; see

boards through what now appears as § 15-205(b). See 1947 Md. Laws,
ch. 501 (§ 146(b)).
4
Liquor control boards may theoretically have been able to make
wholesale sales to retailers in other counties. See Art. 2B, §§ 48D
(1935 Supp.) (permitting the Worcester County liquor control board
“[t]o sell and ship outside of Worcester County any containers or
packages of alcoholic beverages kept for sale in the dispensaries”); 48F
(similar provision for Queen Anne’s County). We have not, however,
found any evidence of the extent to which they did so.
5
Unlike Montgomery County, however, the Worcester County
liquor control board could not sell this beer in its own retail
dispensaries and did not have a monopoly over this wholesale
distribution. See 22 Opinions of the Attorney General 111, 111-12
(1937).
Gen. 31] 35

also Grillo v. State, 209 Md. 154, 158 (1956). As part of that
revision, all liquor control boards were expressly given an
“absolute monopoly” on the sale and distribution of the alcoholic
beverages they were authorized to sell. 1947 Md. Laws, ch. 501
(adding former § 145(a), currently codified at § 15-204(a)). In
most of the counties with liquor control boards, this still meant
that wine and liquor within the control counties was available for
retail purchase by consumers only in dispensaries.
In at least Montgomery County and Worcester County,
however, the 1947 legislative revision also reflected a wholesale
role for the liquor control board. In Montgomery County, all
licensed private retailers had to purchase their alcohol from the
liquor control board. 1947 Md. Laws, ch. 501 (§ 145(b)). And, in
Worcester County, the Legislature provided for the first time that
hotels and restaurants in Ocean City could acquire a license to sell
wine and liquor but required that they purchase their wine and
liquor from the Worcester County liquor control board. See 1947
Md. Laws, ch. 501 (§ 17(j)). The Legislature extended this
requirement beyond Ocean City to the rest of the county in 1959.
See 1959 Md. Laws, ch. 415.
Other liquor control boards acquired this wholesaling
function over time. By 1968, it appears that all of the boards in
existence had the power to distribute wine and liquor wholesale to
private retailers that were authorized to sell such beverages. See,
e.g., §§ 19(f) (Dorcester), 19(f-1)(5) (Garrett), 19(f-2)(4)
(Harford), 19(j-1)(4) (Somerset), 19m (Worcester), 20(m-2)(3)
(Wicomico), 161(c) (Kent), 162(b) (Montgomery), 162(c)
(Caroline) (1968 Repl. Vol.).
Liquor Control Boards Under Current Law
Today six counties—Garrett, Harford, Montgomery,
Somerset, Wicomico, and Worcester—have some form of liquor
control board. See § 15-201. Of these six, only Montgomery,
Somerset, Wicomico, and Worcester counties still operate local
retail dispensaries for the sale of alcohol to consumers,6 and, like
6
The Harford County Liquor Control Board, though nominally a
liquor control board, has since 1979 operated as a board of license
commissioners without the power to operate dispensaries. See 94
Opinions of the Attorney General at 139. The Garrett County Liquor
Control Board is authorized to exercise dispensary powers but does not
do so. Id. at 138.
36 [99 Op. Att’y

Montgomery County in 1933, each of these four also acts as the
exclusive wholesale provider of specified alcoholic beverages to
other private retail dealers in the county. See 94 Opinions of the
Attorney General at 136-38; see also §§ 15-201, 15-203, 15-204.
For this reason, these four counties are sometimes referred to as
“control counties.”
Although liquor control boards and county dispensaries are
included in Article 2B’s definition of “license holder,” § 1-
102(a)(15)(i), they need not apply to the Comptroller or local
board of license commissioners for a license. See 1987 Md. AG
LEXIS 42, *4-6 (1987) (Opinion No. 87-017, unpublished)
(March 17, 1987); see also 72 Opinions of the Attorney General
375 (1987) (Synopsis of Opinion No. 87-017). That does not,
however, place them beyond the Comptroller’s regulatory
authority. As clarified by the Legislature in 2012, the
Comptroller may “enforce the provisions of [Article 2B]
applicable to: (1) [t]he purchase or importation of alcoholic
beverages by a department of liquor control or a liquor control
board; and (2) [t]he sale of alcoholic beverages to a wholesaler or
retail dealer by a department of liquor control or a liquor control
board.” 2012 Md. Laws, ch. 642 (adding § 16-407.1).
In 2011 the General Assembly abolished the Worcester
County Liquor Control Board, which was a State agency, and
replaced it with the Worcester DLC, which is a “department of the
county government.” See 2011 Md. Laws, ch. 304; § 15-
201(a)(3)(i)1. As relevant here, the Worcester DLC has
essentially the same functions and powers as the liquor control
board that preceded it. See § 15-201(a)(3)(i)2 (providing that the
Worcester DLC “has the powers of a liquor control board”).
Those powers include an “absolute monopoly [over] the sale and
distribution” of wine and liquor (but not beer) within its
jurisdiction, § 15-204(a), and the responsibility to act as the
exclusive source of wine and liquor for private retailers in
Worcester County.7 §§ 6-201(y)(7), 8-224(g). Moreover, the
State empowered the new department to “acquire . . . wine and
liquor from any source for resale,” § 15-205(l)(1)(ii), and to
operate retail “county liquor dispensaries” in Pocomoke City,
Snow Hill, Berlin, and Ocean City, “or in a housing development
with a population of at least 10,000” that meets other special

7
The DLC may not, however, charge the private retail dealers
more than 85 percent of what it charges consumers in its own retail
stores. See, e.g., §§ 6-201(y)(7), 6-401(y)(2)(vi), 8-224(g)(3).
Gen. 31] 37

requirements not relevant here. § 15-203(f). The DLC’s mono-
poly over distribution in Worcester County will expire on July 1,
2014; after that date, retail dealers will be able to purchase
alcohol from private, licensed Maryland wholesalers. § 15-
204(e)(3)(i). However, the DLC will still have the authority to
operate its own retail stores and to supply retail dealers who wish
to purchase wine and liquor from it.
B. The DLC’s Status Within Maryland’s Regulatory System
The Worcester County DLC and other liquor control boards
that act as both wholesalers and retailers occupy a unique place
within Maryland’s regulatory and licensing scheme. Maryland—
like a number of states—has established a three-tier system that
ordinarily requires separation among producers, wholesalers, and
retailers. See generally 91 Opinions of the Attorney General 174
(2006) (discussing three-tier system). In general, “[a]lcoholic
beverage manufacturers, or suppliers, sell their products to
wholesalers, who resell the alcoholic beverages to retailers.”
Maryland Taxes § 3.8 (MICPEL 4th ed. 2008); see also COMAR
03.02.01.03A(1) (“Properly licensed wholesalers and nonresident
winery permit holders are a licensed retail dealer’s source of
supply for alcoholic beverages.”).
At the top tier of this structure are manufacturers and
producers. A “manufacturer” is “a person operating a plant within
this State for distilling, rectifying, blending, brewing, fermenting
or bottling any alcoholic beverage.” § 1-102(a)(20) (emphasis
added). Most manufacturers are prohibited from selling their
products directly to Maryland retailers or consumers. See
Maryland Taxes § 3.8 (observing that, under Maryland’s three-
tiered system, “[a]lcoholic beverage manufacturers, or suppliers,
sell their products to wholesalers, who resell the alcoholic
beverages to retailers”); see also § 2-401(b) (prohibiting manu-
facturers and wholesalers from selling to “any person in this State
other than a licensee or permit holder”). These manufacturers are
permitted only to sell to licensed wholesalers, persons outside the
State who are authorized to acquire the products, and certain
permit holders who are not relevant to our analysis here. See,
e.g., §§ 2-203(2)(ii), 2-204(2)(iii), 2-206(a)(iii). Some categories
of manufacturers, such as wineries, small distilleries, and pub
breweries, may sell directly to Maryland consumers, but only
under certain circumstances. See, e.g., §§ 2-202(a)(6)(iii), 2-
38 [99 Op. Att’y

204(2)(iv), 2-207(b), 7.5-101–114 (Direct Wine Shipper’s
Permit).8
Out-of-state and foreign producers may also sell their
alcohol in Maryland using a nonresident dealer permit or a
resident dealer permit. A nonresident dealer permit is available to
out-of-state producers, agents of out-of-state producers, and
importers of foreign alcohol. § 2-101(i)(1). The holder of such a
permit may sell, from a location outside of Maryland, any
alcoholic beverages it produces or imports to “persons in
Maryland who are authorized to receive them.” § 2-101(i)(3).
Retailers, however, generally are not authorized to buy directly
from nonresident dealers. § 12-107; COMAR 03.02.01.03A(1).
Therefore, these permit holders sell only to wholesalers. Along
the same lines, a resident dealer permit is available to Maryland
residents who import alcohol directly from foreign producers.
§ 2-101(v). A resident dealer may only sell to a licensed
wholesaler or a person outside of the State authorized by the
Comptroller. § 2-101(v)(4).
The next tier of this structure includes wholesalers, also
known as “distributors.” Wholesalers are permitted to acquire
alcoholic beverages from manufacturers and holders of
nonresident and resident dealer permits and to sell and deliver
those alcoholic beverages to licensees and permit holders, e.g.,
retailers or other wholesalers. See § 2-301(b); see also § 1-
102(a)(27)(i) (defining “wholesaler”). A wholesaler may not sell
or deliver alcoholic beverages directly to a consumer. § 2-301(b).
Retailers occupy the third tier of this regulatory structure.
As explained above, with limited exceptions, “retail dealers” may
only buy from wholesalers. Retail dealers may sell alcohol to
consumers, but not to other license holders such as wholesalers,

8
Until recently, Maryland wine manufacturers were permitted to
sell directly to retailers. Lauren Dunnock, Quaffable, But Far From
Transcendent: Maryland’s Twenty-First Century Prohibition, 36 U.
Balt. L. Rev. 271, 284-85 (2007). Now, only small wineries that
produce not more than 27,500 gallons per year may apply for a “limited
wholesaler’s license,” which allows them to act as their own
wholesaler. Id.; see also § 2-301(b). These small wineries thus can
still sell directly to retailers, but they do so as a wholesaler, not as a
manufacturer. A similar limited wholesaler’s license is available for
Maryland breweries and micro-breweries that produce not more than
22,500 gallons of beer per year. § 2-301(b)(4).
Gen. 31] 39

manufacturers, or other retailers.9 See, e.g., § 1-102(a)(23)
(defining “retailer”); see also § 12-107(a) (restricting retail dealer
sales to other retailers). Along these same lines, Maryland law
generally prohibits “tied houses,” which are retail outlets
controlled by a manufacturer, wholesaler, or other entity in the
supply chain. See §§ 12-101 and 12-104(b). In short, as a general
rule, alcoholic beverage retailers in Maryland cannot operate as
wholesalers, and vice versa.
Liquor control boards and departments of liquor control are
an exception to this rule. The prohibition on tied houses does not
apply to them because they are subject to the more specific
regulatory provisions of Title 15, Subtitle 2 of Article 2B, which,
as discussed above, authorize them to act as both a wholesaler and
a retailer. See supra at 5; see also § 1-103 (providing that specific
provisions prevail over general rules where there is a conflict or
inconsistency between them). Thus, the Worcester DLC performs
the functions of a wholesaler when distributing alcohol to bars,
restaurants, and other private retailers within the county, and it
performs the functions of a retailer when selling alcohol directly
to consumers in its own retail dispensaries. The Legislature has
acknowledged a liquor control board’s dual role by explicitly
including “a county dispensary” within the code’s definition of
“retail dealer,” § 1-102(a)(23), and a “liquor control board and a
county wholesale dispensary” within the definition of
“wholesaler.” § 1-102(a)(27)(ii); see also U.S. v. Maryland State
Licensed Beverage Ass’n, 138 F. Supp. 685, 699 (D. Md. 1956)
(stating that Article 2B “permits the [liquor control] boards in
[Montgomery County and the other monopoly] counties to act as
both wholesalers and retailers”), rev’d on other grounds, 240 F.2d
420 (4th Cir. 1957).
C. The Controversy Over the DLC’s Status
The dual role played by liquor control boards within
Maryland’s regulatory system raises some difficult questions.
Under Maryland law, manufacturers, wholesalers, resident
dealers, and nonresident winery permit holders10 may not

9
A retailer that is going out of business, however, may obtain a
private bulk sale permit that would allow that retailer to sell to another
retailer. See § 12-107(a).
10
Similar provisions apply to certain other entities. See § 12-102(a)
(making it unlawful for a nonresident dealer and nonresident unlicensed
40 [99 Op. Att’y

“discriminate directly or indirectly in price, discounts or the
quality of merchandise sold between one dispensary and another
dispensary, between one wholesaler and another wholesaler or
between one retailer and another retailer purchasing alcoholic
beverages bearing the same brand and trade name and of like age
and quality.”11 § 12-102(a). This provision was added in 1943
for the purpose of “eliminat[ing] the undue stimulation of the sale
of alcoholic beverages and the practice of manufacturers and
wholesalers in granting secret discounts, rebates, allowances, free
goods or other inducement to selected licensees which contribute
to a disorderly distribution of alcoholic beverages.” See 1943
Md. Laws, ch. 996 (§ 44A).
Because the definitions of both “wholesaler” and “retail
dealer” in Article 2B include county dispensaries, it is not clear
whether a liquor control board is supposed to be a “wholesaler” or
a “retailer” for purposes of this anti-discrimination provision. As
we understand it, Maryland wholesalers have long considered
their sales to liquor control boards to be retail sales and, hence,
have charged the Worcester DLC and other Maryland
dispensaries the same price as they charge private retailers. See
Letter from Robert Douglas to Adam Snyder, Chief of Opinions
and Advice (Sept. 7, 2012); see also U.S. v. Maryland State
Licensed Beverage Ass’n, 168 F. Supp. 431, 435 (D. Md. 1958)
(observing that the liquor control boards in monopoly counties
other than Montgomery County “have customarily purchased
liquor from licensed wholesalers at prices similar to those charged
by wholesalers to licensed retailers”). The Worcester DLC,
however, believes that it is essentially a wholesaler (distributing
alcohol both to its own retail stores and private retailers) and

manufacturer, among other entities, “to use or promote the use of any
such practices [described above in § 12-102(a)]”); see also § 2-
101(i)(3) (providing that the holder of a nonresident dealer’s permit
“may not discriminate directly or indirectly in price between Maryland
licensees”).
11
Although the plain language of the provision would prohibit
wholesalers and manufacturers from offering even volume discounts to
their largest customers, the United States Court of Appeals for the
Fourth Circuit has held that such a ban on volume discounts would
violate the Sherman Antitrust Act. TFWS, Inc. v. Franchot, 572 F.3d
186 (4th Cir. 2009). Therefore, a Maryland wholesaler presumably
may offer volume discounts as long as it offers the same opportunity to
all licensees within a given class, if they can buy enough alcohol to
qualify for the discount.
Gen. 31] 41

should receive the same price offered to other wholesalers. See
Opinion of Worcester County Attorney John E. Bloxom (June 13,
2012) (“Bloxom Opinion”).12
To support their interpretation of the anti-discrimination
provision, the wholesalers contend that Maryland’s alcohol excise
tax system shows that the liquor control boards must be
considered retailers when they purchase from Maryland
wholesalers. Under Maryland’s system, the wholesaler usually
pays the excise tax on spirits or wine sold or delivered to retail
dealers in the State. TG § 5-301(f). And while the tax must,
under some circumstances, be paid by manufacturers, nonresident
permit holders, or resident permit holders, see TG § 5-301(b)-(e),
it appears that “retail dealers” never pay the tax, and always
purchase alcohol on which the tax has already been paid.
Article 2B, § 15-205—which sets forth the general powers
of liquor control boards—provides that liquor control boards and
departments of liquor control must purchase alcohol from
wholesalers and in-state manufacturers “upon which the tax
imposed by § 5-102 of the Tax-General Article has been paid.”13
§ 15-205(b). The statute thus requires that a liquor control board,
when purchasing alcohol from a wholesaler, must purchase the
alcohol “tax-paid”—like retailers do—regardless of whether it
plans to sell the alcohol in its own stores or to other retailers. If
extrapolated to the anti-discrimination provisions, § 15-205(b)
12
This is not the first time that the dual nature of a liquor control
board or department of liquor control has generated controversy. See
Maryland State Licensed Beverage Ass’n, 168 F. Supp. 431 (addressing
the anti-trust implications of suppliers’ efforts to enforce “fair trade”
agreements that were designed to prevent manufacturers from
supplying alcohol to the Montgomery County DLC at or near
wholesale prices rather than at retail prices).
13
Historically, the only exception to this rule appears to have been
the Montgomery County Department of Liquor Control. As originally
created, the Montgomery County liquor control board “had the
privilege of purchasing alcoholic beverages tax free from wholesale
dealers.” See Letter from William R. Pyle, Director of the Comptroller’s
Alcohol and Tobacco Tax Division to Edward T. Conley, Superintendent
of the Worcester County Liquor Control Board at 1 (Jan. 13, 1988)
(“Pyle Letter”). Because the portion of the 1947 statute in which § 15-
205(b) was first enacted was thought to be a non-substantive
recodification, the Comptroller’s Office concluded that the new law
could not change the existing rules for Montgomery County. Id.
42 [99 Op. Att’y

might suggest that liquor control boards should always be treated
as “retailers” when they buy alcohol from wholesalers.
D. Past Advice from the Comptroller and Attorney General’s
Office
There is some support for the wholesalers’ interpretation of
§§ 12-102(a) and 15-205(b) in past advice from the Comptroller
and the Attorney General’s Office. Since at least 1988, the
Comptroller’s Office has interpreted § 15-205(b) to require that
liquor control boards always purchase their alcohol from
wholesalers “tax paid.” See Pyle Letter. And in 2003, an
Assistant Attorney General advised the Comptroller’s Office that
sales of products from the Worcester County liquor control board
to another county liquor control board14 must be viewed as “retail
sales” because the excise tax has already been paid, and, as such,
the Worcester County liquor control board must, under § 12-
102(a), charge the same price that it charges private retailers.
Memorandum of Assistant Attorney General Gerald Langbaum,
Counsel to the Comptroller, to Charles W. Ehart, Director of the
Alcohol and Tobacco Tax Division (May 6, 2003); see also Letter
from Charles W. Ehart to Robert L. Cowger, Jr., Executive
Director of the Worcester County Liquor Control Board (May 8,
2003) (relaying this legal interpretation to Worcester County).
Although the question answered in that advice memorandum
did not involve sales from private wholesalers to liquor control
boards, the same logic would dictate that “tax paid” sales from
wholesalers to county control boards would also be treated as
retail sales and that wholesalers would therefore have to charge
liquor control boards the same price as they charged other retail
dealers. Indeed, the Comptroller’s Office advised the Worcester
County DLC as recently as 2012 that private wholesalers must
treat the DLC as a “retailer” under § 12-102(a) because the DLC
buys all of its products from wholesalers “tax paid.” See Letter
from Jeffrey A. Kelly, Director of the Field Enforcement
Division, to Robert L. Cowger, Jr., Director of the Worcester
County Department of Liquor Control (May 1, 2012). According
to the Comptroller’s Office, this has been the agency’s position
since 1987. Id.

14
In 1987, we issued an unpublished opinion concluding that a
county liquor control board could sell alcohol to other county liquor
control boards. See 1987 Md. AG LEXIS 42. We have no occasion in
this opinion to revisit that conclusion.
Gen. 31] 43

The Worcester DLC did not agree with the Comptroller’s
position. Worcester County believed that the logic of the
Comptroller’s analysis was at best “debatable” and that the timing
of the excise tax should have “no bearing” on whether the liquor
control board purchased as a wholesaler or as a retailer. Bloxom
Opinion at 3. But whatever merit there once may have been to
the Comptroller’s analysis, Worcester County asserted, it
evaporated in 2011 when the Worcester County liquor control
board was replaced by a newly-formed Worcester DLC with the
“expanded power[]” to purchase wine and liquor “from any
source for resale.” Id. (quoting § 15-205(l) (2011 Repl. Vol.))
(emphasis supplied). Because the newly-amended subsection (l)
granted DLC the power to acquire alcohol without reference to
the imposition of the excise tax, Worcester County argued that the
tax provisions of § 15-205(b)—upon which the Comptroller’s
prior analysis hinged—no longer applied. Id. To resolve the
disagreement between the Comptroller’s analysis and the County
Attorney’s, Worcester County asked the members of the General
Assembly representing the county, including Senator James N.
Mathias, to request an official opinion from the Attorney General
on whether the DLC should be treated as a “wholesaler” or a
“retailer” under § 12-102(a). Senator Mathias forwarded the
opinion request to the Attorney General’s Office.
E. The 2013 Amendments to § 15-205
During the 2013 session, while this opinion was pending, the
General Assembly adopted legislation amending a relevant
portion of the statute governing the powers of the Worcester
County DLC. 2013 Md. Laws, ch. 584. As originally introduced,
the relevant bills had no effect on the DLC and instead concerned
other aspects of alcohol regulation in Worcester County. See
Senate Bill 949 (2013) (First Reader); House Bill 999 (2013)
(First Reader). But both were ultimately amended to add the
following language to § 15-205(l) of Article 2B, which governs
the powers of the Worcester DLC:
(2) (i) 1. Acting as a wholesaler, the
Department of Liquor Control may purchase
wine and liquor, on which the excise tax has
not been paid, from a licensed wholesaler.
2. The Department of Liquor Control
may only resell the wine and liquor
purchased under this subparagraph to a
44 [99 Op. Att’y

nondispensary, licensed retailer, and only
after the excise tax has been paid.
(ii) Acting as a retailer, the Department
of Liquor Control may purchase wine and
liquor, on which the excise tax has been paid,
from a licensed wholesaler for retail sale in
dispensary stores.
2013 Md. Laws, ch. 584 (emphases added). The Senate adopted
this language as a floor amendment proposed by Senator Mathias,
see Senate Proceedings No. 55, 2013 Reg. Sess. (March 28,
2013), while the House added the language as part of a committee
floor amendment, see House Proceedings No. 54, 2013 Reg. Sess.
(March 25, 2013). Ultimately, the Senate Bill became law, and
the House Bill was vetoed by the Governor as duplicative. 2013
Md. Laws, ch. 584; see also id., Vol. VII at 6125 (Governor’s
veto letter, explaining that HB 999 was vetoed as duplicative).
II
Analysis
We begin our analysis by considering the argument that the
excise tax provisions of § 15-205(b) require the DLC to be treated
as a retailer for purposes of the anti-price-discrimination
provisions of § 12-102(a). As discussed above, § 15-205(b)
requires that liquor control boards and departments of liquor
control, when purchasing from wholesalers, must purchase wine
and liquor “upon which the tax imposed by § 5-102 of the Tax-
General Article has been paid . . . .” Because retailers also
purchase their alcohol from wholesalers “tax paid,” the
wholesalers have traditionally argued that the DLC and other
liquor control boards must be considered retailers for purposes of
§ 12-102(a). This rationale has similarly formed the basis of the
Comptroller’s traditional position that liquor control boards are
always “retailers” when buying from wholesalers—a position that
was underpinned by prior advice from this Office.
At the outset, we must acknowledge some doubt that the
General Assembly intended the tax rules of § 15-205(b) to govern
how the anti-discrimination provisions of § 12-102(a) should be
applied. The provisions were not enacted at the same time and
serve different purposes, and there is no indication from the
statutory language, statutory structure, or legislative history that
the Legislature intended the two provisions to be read in tandem.
The Legislature may simply have intended to create an easy-to-
administer rule to ensure that confusion about the liquor control
Gen. 31] 45

board’s dual role did not prevent collection of the excise tax. Or,
it may be that the “tax-paid” provision of § 15-205(b), as applied
to purchases from wholesalers, merely reflects the fact that, at the
time the predecessor provisions were originally enacted in 1933,
the liquor control boards to which those tax provisions applied
functioned only as retailers. But we see no obvious reason why
the interpretation of § 15-205(b) should dictate the interpretation
of § 12-102 in the current regulatory scheme.
The Comptroller, however, has traditionally interpreted the
anti-discrimination provision in light of the tax rules applicable to
wholesaler-to-DLC sales. As the longstanding interpretation of
the agency charged with administering Article 2B, the
Comptroller’s construction is entitled to some measure of
deference. Sanchez v. Potomac Abatement, Inc., 417 Md. 76, 83
(2010). Employing that construction here, we conclude that the
2013 amendments to the tax rules of § 15-205—enacted while
this opinion request was pending—resolve the questions you
present. Under the plain language of the statute as it now reads,
the DLC may purchase wine and liquor from a wholesaler without
paying the excise tax when it is “[a]cting as a wholesaler” or, in
other words, when it “resell[s] the wine and liquor” to a private
retailer. § 15-205(l)(2)(i). But when “acting as a retailer” and
selling the alcohol in its own retail dispensaries, the DLC must
still purchase “alcohol on which the excise tax has been paid.”
§ 15-205(l)(2)(ii). Thus, even if the DLC qualifies as a “retailer”
for purposes of § 12-102(a) whenever it purchases alcohol on
which the excise tax has been paid, the 2013 amendments now
make clear that the DLC’s status depends on whether the DLC is
“acting as a retailer” or “acting as a wholesaler.”
We would reach the same conclusion even if were we to
depart from the Comptroller’s interpretation and apply what we
see as a functional approach to defining a liquor control board’s
status when purchasing alcohol from wholesalers. Under that
approach, a liquor control board qualifies as a retailer when it
functions as one, i.e., when it purchases alcohol from wholesalers
for re-sale to consumers in its dispensaries. Conversely, a liquor
control board qualifies as a wholesaler when it purchases alcohol
from other wholesalers for re-sale to bars, restaurants, and other
retailers. A number of considerations suggest to us that this might
more closely reflect the Legislature’s intent.
As explained above, liquor control boards are unique
participants within Maryland’s current regulatory structure and
46 [99 Op. Att’y

are specifically granted the power to act at different times as both
wholesalers and retailers. For this reason, the Legislature has
explicitly defined “retail dealer” to include “a county dispensary,”
§ 1-102(a)(23), and “wholesaler” to include a “liquor control
board and a county wholesale dispensary.” § 1-102(a)(27)(ii).
The Comptroller has also recognized that liquor control boards
sometimes function as wholesalers. See COMAR 03.02.01.12G
(excluding a “county dispensary acting as a wholesaler” from the
scope of a regulation concerning other wholesalers); see also
Maryland State Licensed Beverage Ass’n, 138 F. Supp. at 699
(observing that the liquor control boards in monopoly counties
“act as both wholesalers and retailers”). These provisions suggest
that the General Assembly intended, and the Comptroller and
others have recognized, that liquor control boards would function
as retailers in some instances and wholesalers in others.15
Indeed, the plain language of the anti-discrimination
provision itself leaves room for a functional characterization of
the DLC’s status when purchasing alcohol from wholesalers. As
discussed above, that provision prohibits price discrimination
“between one dispensary and another dispensary, between one
wholesaler and another wholesaler or between one retailer and
another retailer . . . .” § 12-102(a). Given that the DLC can
qualify as either a wholesaler or a retailer, we see nothing in the
language of § 12-102(a) that would require the DLC be treated as
one type of entity for all purposes. Instead, it seems more likely
that the General Assembly intended for liquor control boards to
be considered wholesalers when they are functioning like
wholesalers and retailers when they are functioning like
retailers.16

15
Our description of legislative intent is consistent with the
historical context in 1943, when the anti-discrimination provision was
enacted. At that time, the liquor boards in Montgomery County and
Worcester County, at least, had both a wholesale function and a retail
function. See supra at 4. And Article 2B, as of 1943, already defined
the terms “wholesaler” and “retail dealer” to include, respectively, a
“County Liquor Control Board” and a “county dispensary.”
§ 1(g), (h) (1943 Supp.). The General Assembly thus had already
recognized that some liquor control boards had a dual role as both a
wholesaler and a retailer.
16
There is a third possible interpretation of § 12-102(a), under
which a liquor control board is considered neither a “wholesaler” nor a
“retailer” and instead is protected by the provision prohibiting
wholesalers and producers from discriminating “between one
Gen. 31] 47

The 2013 amendments to § 15-205(l) appear to confirm the
Legislature’s intent that the status of the Worcester DLC, at least,
should be determined by this type of functional analysis. Those
amendments make clear that the DLC sometimes “[a]ct[s] as a
wholesaler” and at other times “act[s] as a retailer.” § 15-
205(l)(2). Given that Senator Mathias, having requested this
opinion, sponsored the amendments on the floor of the Senate, we
read those amendments as directly relevant to the issues we weigh
here.17
Ultimately, the resolution of your question does not require
us to decide which approach—the Comptroller’s approach or the
functional approach we suggest—best reflects legislative intent.
The 2013 amendments make clear that, either way, the Worcester
DLC should be treated as a “retailer” when it purchases alcoholic
beverages from a wholesaler for re-sale in its retail dispensaries
and as a “wholesaler” when it purchases alcoholic beverages for
re-sale to bars, restaurants, or other license holders.18

dispensary and another dispensary.” We do not believe, however, that
the Legislature meant to exclude liquor control boards from the
definitions of “wholesaler” and “retailer” simply because it also
mentioned “dispensar[ies]” in the section of the statute. To the
contrary, the definitions of “wholesaler” and “retailer” both specifically
include dispensaries within their terms. §§ 1-102(a)(23), 1-
102(a)(27)(ii). We think it more likely that the Legislature intended
simply to clarify that dispensaries—like wholesalers and retailers—are
entitled to the protections afforded by § 12-102(a).
17
We recognize that the motivations of a legislative sponsor may
not reflect the intent of the legislative body and that, ordinarily, “[i]n a
case for the construction of a statute it is a mistake to refer the court to
reports of the intention of the draftsmen . . . .” Baltimore Retail Liquor
Package Stores Ass’n v. Board of License Comm’rs, 171 Md. 426, 430
(1937); see also 60 Opinions of the Attorney General 444, 478 n.11
(1975). Here, however, where we do not have the benefit of either
adversary presentations on this particular issue or a meaningful
legislative history, and where the subject of the amendments involves
matters of interest specific to Worcester County, we are inclined to
conclude that Senator Mathias—and through him the Legislature—
intended for the amendments to § 15-205(l) to bear on the issues we
consider here.
18
We emphasize, however, that the DLC would be prohibited from
using product purchased from wholesalers at wholesale prices to satisfy
its dispensaries’ retail needs. To allow otherwise would not only
48 [99 Op. Att’y

Before concluding, it is important to clarify the limitations
of this opinion. First, we express no opinion about how our
conclusions today will affect the prices the DLC pays for alcohol
other than to say that, when the DLC is acting as a wholesaler, it
must be charged the same rate that is charged other wholesalers.
If a wholesaler does not offer a discount to other wholesalers or
charges those other wholesalers the same amount as it charges
retail dealers, nothing in the statute would compel it to reduce the
price currently charged to the Worcester DLC. Second, because
the opinion request asked us only whether the Worcester DLC
was a “retailer” or “wholesaler” when purchasing from a licensed
Maryland wholesaler, we have not considered how the DLC
should be treated by manufacturers and producers for purposes of
§ 12-102(a). We note, however, that the 2013 amendments did
not address this issue; they only clarified the tax rules with respect
to the Worcester DLC’s purchases from wholesalers. See § 15-
205(l)(2) (describing tax treatment of the DLC’s purchases of
alcohol “from a licensed wholesaler”). A different analysis may
well obtain when the DLC purchases from manufacturers and
producers.
Finally, we do not decide how the anti-discrimination
provision of § 12-102 applies to the liquor control boards in
Wicomico or Somerset County, or to the Montgomery County
Department of Liquor Control, because the opinion request
concerned only the Worcester County DLC. The 2013
amendments do not conclusively resolve the issue of whether
these other liquor control boards must be treated in the same
manner as the Worcester DLC under the anti-discrimination
provision. Although we have described the reasons why we
believe the General Assembly may have intended a functional
approach more generally, the Legislature has only made its intent
clear with respect to the Worcester County DLC.

violate the new tax provisions of § 15-205(l), but would also undermine
the anti-discrimination provision of § 12-102. Accordingly, it will be
incumbent upon the DLC to make clear at the time of purchase and in
its records what product is being purchased for what purpose. Given
the existing requirements upon the DLC to “keep accurate records of all
purchases of alcoholic beverages” and to prepare an annual report that
contains a “full and complete statement of the business transacted . . .
and the results of operations of the dispensaries,” see § 15-206,
COMAR 03.02.01.03B, this should not substantially change the DLC’s
current administrative burden.
Gen. 31] 49

The answers to these unresolved questions may have
important policy ramifications both for the Worcester DLC and
other Maryland liquor control boards. If, for example, a liquor
control board currently receives the same prices from out-of-state
producers as other private wholesalers regardless of whether the
board is operating as a wholesaler or as a retailer, a functional
approach could change the business model for these boards in
unanticipated ways. The Legislature, therefore, may want to take
a comprehensive look at how the anti-discrimination provision of
§ 12-102(a) should apply across all control counties. As
explained above, the role of some liquor control boards and
certain practical realities have changed substantially from when
the tax provisions and anti-discrimination provisions were first
enacted. Under these circumstances, legislative action could add
some much needed clarity to this area of the law.
III
Conclusion
In summary, we conclude that when the Worcester DLC
purchases alcohol from a wholesaler, it should be treated as a
wholesaler for tax purposes and under the anti-discrimination
provision of § 12-102(a) if it is acting as a wholesaler by re-
selling the alcohol to other retailers. Conversely, the DLC is a
retailer for both of these purposes when it purchases alcohol from
a wholesaler for sale in its own retail dispensaries.
Douglas F. Gansler
Attorney General of Maryland
Brian Oliner
Assistant Attorney General
Adam D. Snyder
Chief Counsel, Opinions & Advice
* Assistant Attorney General Patrick B. Hughes contributed
significantly to the preparation of this opinion.