ANNAPOLIS – Mail-order alcohol presents a sobering problem for Maryland, House members learned Thursday.
The problem is twofold: Businesses that directly send alcohol via mail dodge state taxes. Also, their liquor could fall into minors’ hands.
Charles Ehart, administrator of the Comptroller of the Treasury’s Alcohol and Tobacco Tax Unit, said that although the state prohibits interstate direct shipment of alcoholic beverage to consumers, businesses like “beer-of-the-month clubs” prove difficult to regulate.
“This is not just a Maryland issue, it’s a national issue,” Ehart told a Ways and Means subcommittee.
The mail-alcohol trade emerged in California during the mid- 1980s, Ehart said.
When he personally confronts business people who ship alcohol to Maryland consumers, “They would say, `You’re in Maryland, We’re in State X, what are you going to do about it?'” Ehart said.
But it’s as difficult to measure the impact of mail-order alcohol as it is to regulate the business, Ehart said.
“There is a tax loss to the state of Maryland and other states that could be significant,” he said.
While there are no precise estimates, for each illegally sold gallon, Maryland loses $1.50 for distilled spirits, 40 cents for wine and 9 cents for beer.
Ehart believes the mail-order liquor business generates as much as $300 million annually nationwide.
In December 1994, the comptroller’s office confiscated more than 1,000 bottles of wine illegally shipped into Maryland, he said.
Direct alcohol shipments defy the traditional three-tier system, which Ehart said “has worked very well.” In a three-tier system, alcoholic beverages travel from supplier to wholesaler, wholesaler to retailer and retailer to consumer.
Without the three-tier system, “control over interstate product shipments is potentially lost,” Ehart said. “Also, there is no assurance that a person over the phone who uses a credit card … is 21 years old.”
Nick Manis of the Maryland Beer Wholesalers Association agreed. “We are not against any mail-order beer or wine clubs as long as [business] is done within the three-tier system,” he told the subcommittee.
Del. Jean Cryor, R-Montgomery, said she would likely support a measure to crack down on mail-order outfits.
“The aspect of alcohol being delivered to a home where just anyone can pick it up should not be permitted,” she said. “I don’t regard this regulation as anti-business, it’s pro- business.”
Del. Bennett Bozman, D-Somerset, said he worries mail-order alcohol could be abused by young adults.
“When I think back to my college days, I can imagine that it would be pretty easy for college students to milk this type of service through fictitious post office boxes,” he said. “Alcohol is a pretty tightly regulated commodity, and I’d like to see it stay that way.”
Ehart suggested that the state require retail licensees, not public carriers, to deliver all direct mail-alcohol purchases. “Public carriers have less incentive to verify age, and they have no formal training on fake ID’s,” he said.
Alcohol retailers in Maryland are required to take alcohol management courses, which include sessions about spotting fake licenses. -30-