Booze News: Distilled in Room 215

A blog about the Baltimore City Liquor Board

Liquor Board Rules & Regs Committee #3

Written by Becky Witt

Rules & Regulations Committee Meeting #3

The writer of this recap arrived to the meeting as the group was preparing to begin Chapter 2 of the proposed Rules and Regulations. The text of the rule below will be bolded and the discussion summarized in regular type below it.

Rule 2.01 – Applicants

(a) Applications by Sole Owner: A person who applies for an alcoholic beverage license or transfer of license as a sole owner must have resided in Baltimore City for two (2) years immediately preceding the application for the license, and must continue to reside in the City for the duration of the alcoholic beverage license.

There is no section of Article 2B that directly covers sole proprietorships, so the committee attempted to determine how to create a rule that covers applications by a sole owner who has not created a separate corporate entity. Mr. Melvin Kodenski argued that the Board couldn’t impose residency requirements on a sole proprietor, since the code does not impose those requirements, as it is silent on sole proprietorships. Ms. Minda Goldblum, for the city solicitor’s office, stated it would be illogical not to subject sole proprietors to the same requirements that all of the other categories of applicants have to follow, which is that one person on the license has to be a Baltimore City resident.

There was also a lengthy discussion of the Liquor Board’s longstanding practice of allowing Baltimore City property ownership to substitute for Baltimore City residency. Mr. Stanley Fine, the Chairman of the committee, surmised that Article 2B once probably stated that Baltimore City property ownership was sufficient to qualify a licensee, but the law must have changed. Mr. Johnson suggested that the Baltimore City property ownership option should stay in the rules, but Ms. Goldberg disagreed that the Board would have the power to do so, if the state legislature had removed that qualification from the statute.

The committee decided to remove section (a) until the state law addresses the sole proprietorship issue and not to add the alternate qualification that someone can be a licensee if they own property in the City.

The committee also decided that they would recommend to the Board that the Board ask that the legislature remove the Baltimore City residency requirement. Mr. Hurdle commented that, since Maryland is supposed to be “open for business,” the government should not make it harder for them to open by imposing residency restrictions.

(b) Applications by Partnerships: If an application is made for a partnership, the license shall be issued to all the partners as individuals, all of whom shall have resided in the City of Baltimore for at least two (2) years prior to the application, and must continue to reside in the City as long as the licensee holds the alcoholic beverage license. If there is only one (1) general partner, the license shall be issued to that partner as an individual, if that individual is a registered voter and has resided in Baltimore City at the time of application, and must continue to reside in Baltimore City as long as the licensee holds the alcoholic beverage license.

(c) Applications by Corporations or Clubs: If an application is made for a corporation, or a club, whether incorporated or unincorporated, the license must be applied for by, and be issued to, three (3) of the officers of that corporation or club, as individuals, for the use of the corporation or club, and at least one (1) of the individuals must be a registered voter and taxpayer of the county or city, or State of Maryland when the application is filed and shall also have resided therein in for at least two (2) years prior to the application. The application must set forth the names and addresses of all officers of the corporation or club, and must be signed by the president or vice-president as well as by the three (3) officers to whom the license will be issued. In the case of a corporation where there are less than three (3) officers or directors of the corporation, all officers or directors must make the application as provided in this section. In the event that there are no officers or directors of a closed corporation, at least one (1) stockholder may make the application as provided in this section, if there is an affirmative vote of the stockholders holding a majority of the stock.

(d) Applications By Limited Liability Companies: If an application is made for a limited liability company, the license must be applied for by, and issued to, three of the authorized persons of that limited liability company, as individuals, and at least one of these authorized persons must be a registered voter and taxpayer of Baltimore City when the application is filed and shall have also resided in Baltimore City for at least two (2) years before the application and must continue to reside in the City as long as the licensee holds the alcoholic beverage license. If the limited liability company has less than three authorized persons, then all of the authorized persons must make the application An authorized person of a limited liability company who holds an alcoholic beverages license for the use of the limited liability company that was granted on or before June 1, 2012 need not be a registered voter in Baltimore City.

The above sections were left as-is, as they are taken directly from Article 2B.

Rule 2.02 – New/Transfer/Amendment Applications

(a) An application for a new license, transfer, extension of the premises, change of officers, change in resident agent, or class change of a license, shall be made to the Liquor Board upon such approved forms prescribed by the Comptroller and issued by the Liquor Board. The information requested therein shall be filled in by the applicants or under the applicants’ personal supervision and shall be typewritten and/or printed in black or blue ink so as to be legible.

(b) All applications must be made under oath subject to the penalties of perjury and attested to by a Notary Public.

(c) All applications must be fully completed before submission to the Board. A hearing date will not be scheduled until the Board receives a completed application.

(d) The Board will examine each application for the issuance or transfer of a license within 45 days of receipt of application.

(e) The application is not complete unless the applicant has obtained zoning approval or verification of zoning from the Board of Municipal Zoning Appeals of Baltimore City, if the application is for renewal.

Mr. Fine commented that the Board will not be obtaining zoning approval and verification from the BMZA but from the Zoning Administrator. Fine suggested that the rule be amended to read “from the City” instead of “from the [BMZA].”

Mr. Hurdle suggested that the Board could give contingent approval without obtaining verification of zoning first before a public hearing. However, subsection (c), which says that an application must be completed before submission to the commissioners for a public hearing, precludes this.

(f) The application is not complete unless all required documents outlined in the application have been submitted and all fines and fees that are due to the Board have been paid in full.

(g) Before any new license, transfer of an existing license, extension of the premises of an existing licensed premise, or renewal of an existing license is issued, the licensee(s) must comply with the requirements of Article 2B of the Annotated Code of Maryland, including obtaining a Bulk Transfer Permit and paying all personal property, retail sales, and withholding taxes, if required; (1) the Rules and Regulations of all State and Baltimore City agencies; and (2) any other conditions or restrictions placed upon the issuance of the license by the Board.

Mr. Fine commented that there may not be a bulk transfer permit and suggested an addition of the phrase “if required” or “if applicable.”

Rule 2.03 – Substitute Applications

(a) Any changes in the pertinent information contained in any application filed with the Board must be reported to the Board in a timely manner. This includes, for example, change of name, change of telephone number, change of address, death of a licensee, dissolution of a corporation, election or change of an officer or authorized person who is listed as an applicant or licensee.

Ms. Goldberg suggested that the Board define what it means by a “timely manner.” Kodenski also asked the definition of “pertinent information.”

(b) Any change on a licensee’s application concerning the removal, addition, or substitution of a licensee must be accompanied by a $250.00 processing fee and a $200.00 application fee.

The committee redefined the $200 fee to be an “issuance fee” instead of an “application fee.”

(c) Substitution of Corporate Officers or Members of a Partnership: Any change concerning a corporate or limited liability company application also requires: (i) an application for substitution of corporate officers or authorized persons on the form provided by the Board; and (ii) a signed letter of resignation from the outgoing corporate official(s) or authorized person(s); and/or (iii) a signed copy of the contract indicating that the holder(s) of a license transfer(s) less than 51% of the ownership interest of the licensed premises and the name and information of the transferee; and/or if applicable (iii) a certified copy of the corporate or limited liability company minutes or resolution indicating the substitution of corporate officer(s) or authorized person(s).

Mr. Kodenski said that the rule used to be that a holder of less than 50% interest didn’t need to file a transfer of ownership; they agreed to update the rule to say 50%.

(d) Substitution of a Secured Party: If a Secured Party applies to the Board to substitute its position in place of a licensee in default, a Secured Party’s application shall also include: (i) A copy of the security agreement, such as a copy of the signed contract or lease, between the licensee and the secured party; and (ii) A copy of the letter of default, which was sent to the licensee indicating that the licensee was in default concerning the terms of the security agreement and stipulating that the secured party would take action to secure his/her interest created by the security agreement; and (iii) A copy of a receipt or certified copy of the recorded security agreement that has been recorded with the Circuit Court of Baltimore City or State Department of Assessments and Taxation.

Mr. Fine said that, since the law doesn’t require recording of a financing statement, the Board shouldn’t require a copy of it.

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