The Business of Liquor Laws

April 26, 2010

New Hampshire’s Liquor Commission keeps a close eye on the 6,100 liquor license and permit holders in the state, but at least one lawmaker thinks someone should be keeping a closer eye on the commission.

Rep. Rip Holden (R-Goffstown) sponsored three bills this term to do just that. They didn’t make it far, but a fourth bill, sponsored by Sen. Lou D’Allesandro (D-Manchester) is close to becoming law.

And the three-member Liquor Commission has found itself in the spotlight again. In February, Mark Bodi, the commission’s chairman, was placed on a paid leave of absence while the Attorney General investigates whether he interfered in an enforcement action against the Railroad Tavern in Keene. Meanwhile, Gov. John Lynch fired commissioner Richard Simard on April 19, following news that he was arrested for drunk driving and refused to take a Breathalyzer test.

“There’s no immediate checks and balance, and there is no balance, to my knowledge, from any branch, in the commission itself,” Holden says.

Commission Oversight

Holden’s House Bills 421 and 1504 called for an oversight commission to monitor the Liquor Commission’s enforcement division. The House voted both down, handily. House Bill 1503 would establish a board to review decisions about the revocation or suspension of liquor licenses and to hear related appeals. This was referred for interim study and will be taken up again next year.

Yet the Liquor Commission may still get a closer look. Senate Bill 181 has been passed by the House and Senate and now awaits Finance Committee approval and Gov. Lynch’s signature. It will repeal a proposed transfer of the Liquor Commission’s enforcement division to the Department of Safety, and establish a committee to study how the commission operates.

The transfer—soon to be repealed—was meant to save money, but the commission convinced lawmakers it would cost more than it would save, due to personnel replacements.

The study committee would look at ensuring the commission’s appeals process is impartial and the enforcement division avoids an “overly broad interpretation of its function.” The committee also will look at the commission’s organizational structure, including whether the commission should have a single “executive director.”

Currently, three full-time commissioners are appointed by the governor and approved by the Executive Council to head the commission. Their work includes oversight of divisions for marketing and merchandising; enforcement and licensing; and administration. The commissioners also manage appeals.

“I feel if there’s one commissioner, it’s too much power to give to one person,” says Joseph Mollica. He’s currently the lone active member of the Commission until Gov. John Lynch appoints someone to fill Simard’s vacancy. Mollica, of Sunapee, joined the commission in December 2009. He has 25 years experience in the restaurant business and has owned restaurants in New Jersey, Massachusetts and New Hampshire.

“It’s a position that requires a certain amount of business expertise and political expertise. It’s a very unique business and I don’t know if you’d expect a business to be overseen by one person.”

While Holden says any sort of study of the commission’s workings is a “step in the right direction,” he’s skeptical that the study committee will take an in-depth look at the commission’s operations.

Liquor sales are big business in New Hampshire. In addition to managing over 6000 licenses and permits, the commission oversees 78 liquor stores. In the 2009 fiscal year, total liquor sales reached $493.5 million, with $122.5 million in net profit.

Because so much money and power is at stake, Holden believes an oversight committee is needed to ensure the commission deals fairly. A representative for 10 years, he also has worked in restaurants for 25 years, currently as a waiter in Boston.

Appealing Enforcement

Holden says license holders have approached him with concerns about the “overstepping” of the enforcement division and a lack of appeal options. He couldn’t offer specific examples, though, stating that the licensees were “so intimidated that they wouldn’t speak to me on the record.”

“I want (business owners) to feel comfortable going to somebody without fear of retaliation,” Holden says.

Licensees can appeal decisions by the commission, but those appeals must be filed with the commission itself. Holden says liquor license holders are reluctant to come forward with any grievances about the commission because “the commission holds their livelihood and they’re very intimidated.”

If the enforcement division finds a licensee has violated one of the state’s liquor laws, the first step in the hearing process is a sort of pre-trial hearing, in which the licensee will meet with the enforcement division to arrange a settlement. If a settlement agreement is reached, the settlement goes before the three liquor commissioners, who can either approve or deny it.

If an agreement is not reached, a full hearing with the commission is scheduled. The chief of the enforcement division acts as the prosecutor, and the licensee can provide evidence and witness testimony in his or her defense.

Licensees can ask for a re-hearing if they believe the commission violated its own rules during the hearing or overlooked important evidence. The commission then decides if a re-hearing should take place; if not, the licensee can appeal to the state Supreme Court.

“When you have a business or organization or agency of a state that is dealing with a (half-)billion dollars in revenue, it only lends itself to oversight,” Holden says. “For any one of the commissioners to say they don’t need oversight … and to have other branches of that commission say, ‘We don’t want oversight,’ why don’t you want oversight?” he asks.

Eddie Edwards, chief of the commission’s enforcement division, says that it’s natural for anyone to feel a certain level of intimidation when dealing with a regulatory body like the Liquor Commission. However, he says, the commission works closely with licensees to keep them in compliance—which, in turn, keeps them in business and keeps revenue coming into the state. Intimidating licensees would run counter to that mission.

Last year brought 29 cases in which licensees over-served a customer, according to Edwards— a relatively small number. “We can’t have this heavy-handed approach and be coming down on everybody … when you see the statistics don’t line up for that. If that was overwhelming energy in (the) alcohol industry … then you’d see more violations,” he says.

Edwards adds there are plenty of avenues for licensees to air grievances. “The enforcement division is overseen and regulated by the Police Academy, the Attorney General’s office, the Liquor Commission itself, and the Legislature,” he says. “With the commission, their boss is the governor and the Executive Council.”

While “oversight is always a good thing,” Mollica says, an oversight committee would slow down the commission’s ability to do business and bring in revenue for the state. He added that the commission’s operations are “very transparent” and pointed out the commission’s meetings are open to the public and its financial records readily available.

“I don’t feel the commission has anything to hide as a business. We are a public entity working for the good of the people of New Hampshire,” he says, adding that the appeals process is fair and the oversight of the enforcement division is “very good and very thorough.”

Holden, meanwhile, expects that, in light of Bodi’s leave of absence and Simard’s arrest, other legislators will come around to his point of view. “We’re down to one commissioner who was just recently appointed,” Holden says. “I don’t understand how anybody could say, ‘Oh, things are fine.’”

Other News

Any hopes that gambling might expand or small amounts of marijuana might be decriminalized were dashed last week by the House and Senate, respectively. Gov. Lynch indicated he would have vetoed both bills if they made it to his desk.

The House voted to kill Senate Bill 489, which would have opened the door for casinos and video slot machines in the state, with a 212-158 vote. The Senate had passed the bill in March 14-10.

Meanwhile, the Senate killed House Bill 1653, which would have reduced possession of a quarter-ounce of marijuana to a violation.

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Filed under: Commerce, Food & Drink, Government, Uncategorized, liquor

Tags: 2010, HB 1503, HB 1504, HB 421, Joseph Mollica, legislation, Liquor Commission, liquor license, Lou D'Allesandro, Mark Bodi, New Hampshire, NH, Richard Simard, Rip Holden, SB 181, state house