Alcohol and Tobacco Regulation in the State Changes Hands ― With Many Political Overtones

30 January 2021

Maryland Matters

A bitter, years-long political dispute ended quietly over Zoom on Friday, in a short meeting full of procedural jargon and bureaucratic niceties.

With that, the regulation of alcohol and tobacco in the state of Maryland officially changed hands.

It was the first meeting of a new entity called the Maryland Alcohol and Tobacco Commission ― and the end-product of a political fight between the Maryland General Assembly and Comptroller Peter V.R. Franchot (D).

By law ― a bill passed during the 2019 legislative session after years of acrimony ― regulation of the alcohol and tobacco industries in the state of Maryland was stripped from the comptroller’s office on Jan. 1. With Friday’s action, those duties were officially turned over to the Maryland Alcohol and Tobacco Commission (ATC), a new agency under the administration of Gov. Lawrence J. Hogan Jr. (R).

By ratifying a memorandum of understanding Friday, the five commissioners, all of whom were appointed by Hogan, officially decreed that 27 employees of the comptroller’s Field Enforcement Division are now employees of the Field Enforcement Bureau, governed by the ATC. But in the four weeks between New Year’s Day and Friday’s vote, the workers ― and the state’s licensing and enforcement functions ― were in limbo.

“Without that MOU in place, everything’s at a standstill. So it’s an urgent matter,” said Tony Hatcher, a supervisory field enforcement agent in the comptroller’s office for more than two decades, who now becomes the executive director of the ATC.

Hatcher said there has been a “seamless transition” between the two entities ― and that there has been no physical disruption in the lives of the 27 state employees who had been working for the comptroller. They’re keeping their offices in the Louis L. Goldstein Treasury Building in Annapolis, and Jeffrey A. Kelly, director of the field enforcement division in the comptroller’s office, will play an equally prominent role in the new agency.

So it sounds like a happy ending to a very chaotic and politically-charged fight. But it’s worth recalling how the regulatory regime for alcohol and tobacco got to this point. And there does appear to be an unexpected twist.

For a few years running, Franchot pressured the General Assembly to change the state’s byzantine and long-held liquor laws to boost Maryland’s burgeoning craft brewing industry. This was no ordinary lobbying campaign: Franchot and his well-oiled PR machine didn’t just advocate for the brewers, but also went on the attack, highlighting the cozy relationships between “Annapolis bosses” and entrenched liquor interests.

Franchot’s office created a task force called Reform on Tap, which held hearings around the state, often at craft breweries, to promote their cause ― which invariably ended in alcohol-fueled gripe sessions about the legislature.

Many lawmakers ― particularly on the House Economic Matters Committee and the Senate Finance Committee, which have jurisdiction over alcohol and whose members enjoy raking in campaign contributions from the liquor industry ― took it personally. The late Senate president Thomas V. Mike Miller (D) and the late House speaker Michael E. Busch (D), the “bosses” who were often the targets of Franchot’s derision, came to loathe the comptroller.

By 2019, there was sufficient anti-Franchot sentiment in the General Assembly to pass legislation stripping his office of its regulatory powers over the alcohol and tobacco industries. Hogan, a regular ally of Franchot’s, especially when their mutual disdain for Democratic legislative leaders aligns, vetoed the legislation, but the legislature quickly overrode it. Franchot began saying that the bureaucratic switchover could cost the state as much as $50 million.

Things went quiet for a while. Then a public health emergency happened.

Ironically, some of the reforms Franchot was pushing for in state alcohol laws have temporarily been put into effect during the COVID-19 pandemic by Hogan’s emergency orders. Craft breweries can now deliver their beer directly to consumers, stores and restaurants without having to go through a middle man. Bars and restaurants can serve liquor to go. Limits on the volume of beer that craft breweries can produce have been waived.

Even the lawmakers who resisted these reforms during prior legislative debates may not be able to fight them much longer ― now that the metaphorical toothpaste is out of the tube. But the point is probably moot during this General Assembly session anyway, and the provisions are unlikely to be discussed while the state of emergency exists.

Hogan, meanwhile, began appointing members to the Alcohol and Tobacco Commission in the summer and fall. The commission members had to come from certain professional sectors. The appointees are:

— Elizabeth Buck, president of Buck Distributing Company, a politically-connected beer and alcohol distributor in Upper Marlboro, representing the liquor industry.

— Len Foxwell, who at the time of his appointment was Franchot’s chief of staff, representing a slot on the commission for alcohol regulators.

— Eric Morrisette, a staff member for the House Financial Services Committee on Capitol Hill, representing financial regulators.

— Robert Poole, who works for the U.S. Justice Department, filling the commission slot for set aside for someone in law enforcement.

— Barbara Wahl, chief operating officer of Concerted Care Group, a substance abuse treatment center in Baltimore, filling the commission’s public health slot.

All five members have been nominated to five-year terms. Officially, they must be confirmed by the state Senate ― though it isn’t clear, in a legislative session where issues related to the pandemic are paramount, whether their nominations will be taken up.

Hogan officially and quietly appointed Foxwell to the commission in June ― clearly a favor to Franchot, but just as significantly, one of the governor’s occasional jabs to the collective ribs of legislative leaders. But then, in a shocking development, Franchot sought Foxwell’s resignation in October, following revelations that Foxwell had had an extramarital affair. Even though Foxwell had been Franchot’s top political adviser for more than a decade and a half, the two no longer speak.

But Hogan didn’t rescind Foxwell’s appointment to the Alcohol and Tobacco Commission. And on Friday, Foxwell’s fellow commissioners voted him ATC chairman for the first year of its existence.

Now, no longer the state’s chief alcohol and tobacco regulator, Franchot is also without a key ally on the ATC. But the professionals who ran his enforcement division and will now be running the new agency under Hogan seem comfortable with Foxwell and expressed gratitude that they are being reunited with someone who understands and appreciates what they do. Foxwell, at the maiden ATC meeting, returned the sentiment.

“I just want to salute them for their elite service,” he said. “This is the most effective enforcement unit in all 50 states in America.”

At a joint hearing on Feb. 12, the relevant subcommittees of the Senate Budget and Taxation Committee and the House Appropriations Committee will be considering the annual budget proposals for the comptroller’s office and for the new Alcohol and Tobacco Commission. Franchot will presumably be there virtually to defend his agency’s budget request. Scheduled to appear for the ATC: Foxwell.