Could Baltimore City's liquor board force a Class B-D-7 licensee to keep running an actual bar or restaurant instead of just a package goods store?

Plain-English summary

Baltimore City's Board of Liquor License Commissioners asked the Attorney General to interpret the scope of the Class B-D-7 beer, wine, and liquor license, a seven-day license created in 1965 for restaurants that could not maintain the food-sales requirements of a full Class B restaurant license. Over the years, many B-D-7 licensees had scaled back or eliminated their restaurant operations entirely, in effect running seven-day, extended-hours package goods stores, something Baltimore City did not otherwise permit as a separate license category. The board wanted to know whether the statutory phrase "on the premises or elsewhere" meant a B-D-7 licensee had to maintain some real on-premises operation, or whether it authorized off-premises sales alone.

The Attorney General concluded that the statute's language was not decisive: the word "or" in "on the premises or elsewhere" was likely borrowed from other license categories rather than a deliberate choice to permit pure off-premises operation, and the most plausible reading of the 1965 legislative history was that lawmakers meant to let struggling Class B restaurants scale back their food operations, not to create a new category of package-only stores through the back door. But because the statute did not clearly say so, and because the board had not adopted any regulation defining a minimum on-premises operation, the opinion concluded the board could not enforce such a requirement against existing licensees as things stood. The opinion pointed to a 1990 amendment giving the board express authority to adopt regulations on "the manner of operation" of B-D-7 establishments, and concluded the board could use that authority to define, by regulation, what a legitimate on-premises operation for these licenses would look like, consistent with what the opinion viewed as the General Assembly's likely intent.

Currency note

This opinion was issued in 1991. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule mentioned here. The opinion's own Editor's Note already flags that in 1992 the General Assembly authorized certain Class B-D-7 licensees to convert to a Class A-2 off-sale package goods license (permitting sales every day except Sunday), and Maryland's alcoholic beverages laws have since moved out of Article 2B into the Alcoholic Beverages Article.

Common questions

Did Baltimore's Class B-D-7 liquor license legally require the licensee to run a real bar or restaurant?
Not under the statute as it stood at the time of this opinion. The Attorney General concluded the statutory phrase "on the premises or elsewhere" did not clearly require any minimum level of on-premises operation, so without a board regulation on the subject, a B-D-7 licensee could not be forced to maintain one.

Could Baltimore's liquor board require B-D-7 licensees to maintain a real restaurant or bar going forward?
Yes, according to the opinion. A 1990 amendment gave the board express authority to adopt regulations governing "the manner of operation" of B-D-7 establishments, and the opinion concluded the board could use that authority to spell out what a legitimate on-premises operation required.

Why couldn't the Attorney General just say what the 1965 law meant?
The opinion explained that no legislative history documented the General Assembly's specific goal in enacting the emergency 1965 law creating the B-D-7 license, so while the opinion offered its best guess based on context (that it was meant to relieve struggling Class B restaurants of strict food-sales requirements, not create a package-store category), that inference alone was not a strong enough basis for the board to penalize existing licensees without a clear regulation.

What happened to licensees operating as package stores under a B-D-7 license?
The opinion's Editor's Note reports that in 1992 the General Assembly authorized certain Class B-D-7 licensees to convert to a Class A-2 off-sale package goods license permitting sales every day except Sunday, offering a legislative path for licensees who were effectively already operating as package stores.

Background and statutory framework

Before 1965, Baltimore City's liquor licensing scheme distinguished package-goods-only Class A licenses, restaurant-based Class B licenses (which required roughly one-third of gross sales to come from food under the board's own restaurant definition), private-club Class C licenses, and tavern-based Class D licenses. Chapter 197 of the Laws of Maryland 1965 created the Class B-D-7 license as Article 2B, §29A to give Class B restaurants that could not meet the food-sales requirement a way to keep a seven-day license, authorizing sale of alcoholic beverages "for consumption on the premises or elsewhere." The opinion noted that of the roughly 750 Class B licensees in Baltimore City in 1965, 480 promptly converted to the new B-D-7 category, consistent with the theory that the license was meant to ease the burden on marginal restaurants rather than create an entirely new off-premises category.

Applying ordinary tools of statutory construction, the opinion observed that courts frequently treat "or" as used loosely for "and" where context supports it, and that the "on the premises or elsewhere" phrase appeared to be copied from the sections governing Class B and Class D licenses, both of which plainly covered establishments selling for both on- and off-premises consumption. Because the statute's history did not clearly establish the General Assembly's intent to allow a purely off-premises operation, and because the board had adopted no regulation defining any minimum on-premises requirement, the opinion concluded existing B-D-7 licensees could not be forced to change how they operated under the law as it stood. The opinion also pointed to a 1990 amendment, enacted specifically to clear up doubt about the board's regulatory authority over B-D-7 licenses, which gave the board express power to adopt regulations on "the manner of operation" of these establishments, a power the opinion read as strong evidence the General Assembly did not intend the license to become a pure package-goods category and as the board's clearest path to fixing the situation going forward.

Citations and references

Statutes:

• Article 2B, §29A, creating the Class B-D-7 beer, wine, and liquor license and describing its scope of operation
• Article 2B, §29A(1), the "on the premises or elsewhere" language construed in this opinion
• Article 2B, §29A(2), making conversion to a B-D-7 license optional for existing Class B licensees
• Article 2B, §29A(6), the 1990 amendment giving the board authority to adopt regulations on the manner of B-D-7 operation
• Article 2B, §85, prohibiting Class A package goods licensees from Sunday sales and requiring midnight closing
• Article 2B, §2(p)(1), the board's authority to define "restaurant" by rule or regulation
• Article 2B, §§19(a) and 21(a), the Class B (hotel/restaurant) and Class D (tavern) license provisions from which the "on the premises or elsewhere" phrase was likely drawn
• Chapter 197 of the Laws of Maryland 1965, the emergency legislation creating the Class B-D-7 license
• Chapter 108 of the Laws of Maryland 1990, adding the board's regulatory authority over B-D-7 manner of operation
• Chapter 24 (Senate Bill 396) of the Laws of Maryland 1992, noted in the Editor's Note as authorizing conversion of certain B-D-7 licenses to a Class A-2 off-sale package goods license

Cases:

• DeSylva v. Ballentine, 351 U.S. 570, 573 (1956), on courts treating "or" as a loose substitute for "and" in statutory text
• Willis v. United States, 719 F.2d 608, 612-13 (2d Cir. 1983), cited on the same interchangeability of "and" and "or"
• Schuler v. United States, 628 F.2d 199, 201 (D.C. Cir. 1980), cited on the same point
• Comptroller v. Fairchild Industries, 303 Md. 280, 286, 493 A.2d 341 (1985), cited on circumstances requiring a court to construe "and" to mean "or"
• Park v. Board of Liquor License Comm'rs for Baltimore City, Case No. 90-073-064/CL 110490, a circuit court appeal remanding a B-D-7 licensing decision to the board for clarification of its position

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1991/Volume76_1991.pdf (this opinion appears at printed pages 25-30 of the bound annual volume; Maryland's site does not publish a standalone PDF of this opinion)

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ALCOHOLIC BEVERAGES

Licenses - Liquor Board - Scope of Class B-D-7 License -
Authority of Baltimore City Board to Require Some
Legitimate On-Premises Operation

                              March 20, 1991

Mr. Aaron L. Stansbury
Executive Secretary
Board of Liquor License Commissioners
for Baltimore City

   You have requested our opinion on the scope of a Class B-D-7

beer, wine, and liquor license, authorized in Baltimore City since 1965
by Article 2B, §29A of the Maryland Code.1 Specifically, you ask us
to interpret the phrase "on the premises or elsewhere" in §29A(1) in light
of the legislative intent and the policies of the Board of Liquor License
Commissioners. The issue is whether a Class B-D-7 licensee may
operate a seven day package goods store with little or no on-premises
consumption.

  For the reasons stated below, we conclude as follows:

  Lacking clear documentation of the General Assembly's goal in

enacting §29A, we cannot offer definitive guidance about the meaning
of this language. Our sense is that the General Assembly expected Class
B-D-7 licensees to maintain a legitimate on-premises operation, but the
statute does not convey that expectation clearly. Given a statute that is
not dispositive, and given no pertinent regulation by the board, a Class
B-D-7 licensee cannot at present be required to maintain any particular
minimum level of on-premises operation.2

1
All statutory references in this opinion are to Article 2B.
2
In this respect we agree with the conclusion of the prior advice of counsel
letter to you from Assistant Attorney General Gerald Langbaum, dated December
18, 1990.

  However, the board is fully empowered to adopt a regulation that

would require at least some degree of on-premises operation and that
would specify the minimal requirements of that operation. If the board
were to adopt such a regulation, in our view it would be acting in
harmony with the General Assembly's probable intention.3

                                     I

                        Class B-D-7 Licenses

A. Background

  Section 29A(1) provides in relevant part as follows:

           The Board ... may authorize the issuance of
     an additional license, to be known as a Class B-
     D-7 beer, wine and liquor license. Such special
     license shall authorize the holder thereof to keep
     for sale and sell all alcoholic beverages at retail
     at the place therein described, for consumption
     on the premises or elsewhere during the hours
     from 6:00 a.m. to 2:00 a.m. on the following,
     seven days per week.

  Your opinion request arises out of the board's concern that, over

the years, many Class B-D-7 licensees have sharply reduced or
eliminated the restaurant or tavern operation they had prior to their
converting to the Class B-D-7 license, thereby effectively transforming
their businesses into package goods operations open for extended hours
seven days a week; and yet in Baltimore City, there is no seven-day
package goods license.4

3
Of course, the General Assembly itself may resolve the matter through
further legislation. Two bills on the subject, Senate Bill 565 and Senate Bill 629,
are currently pending.
4
Article 2B, §85, expressly prohibits Class A package goods licensees
from Sunday sales and requires that they close at midnight.

  The board is deeply concerned that these extended hours of

operation, coupled with physical changes that make on-premises
consumption uninviting if not impossible (the installation of plexiglass
barriers, for example), have detrimental effects on the community.
Patrons congregate near the entrance, often consuming alcohol nearby
and creating problems for the neighbors. These problems are made
worse by the fact that many B-D-7 licensees operate in residential areas.

  Your question in essence is whether this method of operation

reflects the purpose of the B-D-7 license category.

B. Legislative History

  Prior to the establishment of the B-D-7 license in 1965, the board

was authorized to issue only the following classes of beer, wine, and
liquor licenses:

           Class A - package goods only, six days a
    week, no on-premises consumption, no Sunday
    sales.

           Class B - restaurants serving a variety of
     hot and cold foods, with package goods
     privileges, seven days a week, 6:00 a.m. to 2:00
     a.m.

           Class C - non-profit private clubs.

          Class D - taverns, on- or off-premises
     consumption, six days a week, 6:00 a.m. to 1:00
     a.m., no Sunday sales.

           Special Amusement License - a seven-day
     license issued only in conjunction with the Class
     D beer, wine and liquor license to establishments
     furnishing live entertainment in form of singing,
     dancing, floor shows, etc.

  Under §2(p)(l), the board is authorized, "by rule or regulation,"

to prescribe a definition of "restaurant." Pursuant to this authorization,
the board promulgated regulation 1.02(g), defining "restaurant" for
purposes of Class B licenses. This definition spells out the physical
equipment and staffing characteristics of a conventional restaurant.5
See also Rule 2.08A(1). Although not made a part of the regulation, the
board has long required Class B licensees to operate so as to garner
restaurant sales of at least one-third of total gross sales.

5
Under the regulation, a "restaurant" is a place "where hot meals are
habitually prepared, sold and served to the public." It is to be "equipped with a
public dining room" and "with a kitchen having complete facilities and utensils for
preparing and serving hot and cold meals to the public." A restaurant must employ
"a sufficient number of cooks, waiters and waitresses to serve the number of
patrons provided for in the dining room."

  As we understand it from both your opinion request and previous

correspondence, the Class B-D-7 license evolved as a result of the
inability of a substantial number of Class B license holders to maintain
a true restaurant and to meet the one-third food sale requirement. As a
result, Chapter 197 of the Laws of Maryland 1965 enacted §29A.

                                 II

                    Construction of §29A(1)

  The phrase "on the premises or elsewhere" certainly permits sales

for consumption off the premises. The real question is whether the
General Assembly meant to authorize off-premises operation entirely,
or whether it meant to authorize sales for off-premises consumption
together with an on-premises operation.

  In this instance, the statutory language is not decisive. To be sure,

if the General Assembly had intended a Class-B-7 licensee to maintain
an on-premises operation along with off-premises sales, it could have
phrased the statute "on the premises and elsewhere." But "[w]e start
with the proposition that the word 'or' is often used as a careless
substitute for the word 'and'; that is, it is often used in phrases where
'and' would express the thought with greater clarity." DeSylva v.
Ballentine, 351 U.S. 570, 573 (1956). See also, e.g., Willis v. United
States, 719 F.2d 608, 612-13 (2d Cir. 1983); Schuler v. United States,
628 F.2d 199, 201 (D.C. Cir. 1980). Cf. Comptroller v. Fairchild
Industries, 303 Md. 280, 286, 493 A.2d 341 (1985) (circumstances may
require a court to construe "and" to mean "or"). As the leading treatise
on statutory construction summarizes, although the words "and" and "or"
ought not to be used as if they were interchangeable, "[t]here has been,
however, so great laxity in the use of these terms that courts have
generally said that the words are interchangeable and that one may be
substituted for the other if consistent with the legislative intent." 1A
Sutherland Statutory Construction §21.14, at 127 (4th ed. 1985).

  In this context, there is good reason not to regard the General

Assembly's use of the word "or" as a decisive expression of its
legislative objective. The phrase "on the premises or elsewhere" is
simply a replication of language from the sections governing Class B and
Class D licenses, both of which plainly refer to establishments that sell
alcoholic beverages for both on-premises and off-premises consumption.
See §§19(a) (hotels and restaurants) and 21(a) (taverns).

  Unfortunately, we can find no documentation explaining the

General Assembly's goal in enacting as emergency legislation Chapter
197 of the Laws of Maryland 1965. At the same time, we have no
reason to doubt the board's understanding that the purpose was to relieve
Class B licensees of the economic burden of maintaining a full-scale
"restaurant," with extensive kitchen facilities and serving staff.
Significantly, we are told by the board, of the 750 Class B licensees in
Baltimore City in 1965, 480 promptly converted to become Class B-D-7
licensees.6

6
Conversion was optional. See §29A(2).

  In short, the most logical conclusion is that Chapter 197 was

meant to achieve the limited purpose of allowing Class B licensees to
scale back their food operations and yet continue to have a seven-day
license. We think it unlikely that the General Assembly intended to
create, through the back door, a wholly new category of seven-day,
extended hours package stores.

  Yet that is the reality of how many Class B-D-7 licensees now

operate, and our assumption about the probable intention of the General
Assembly in 1965 is an insufficient basis on which the board might act
against these licensees. Indeed, a Class B-D-7 licensee could
legitimately point out that, even if §29A(1) is to be construed as
requiring some degree of on-premises operation, neither the statute nor
any board regulation tells a licensee what degree of on-premises
operation is necessary.7

7
In a recent appeal on a board decision to the Circuit Court for Baltimore
City involving the application of §29A, the case was remanded to the board, in part,
for clarification of the board's position on the proper use of a B-D-7 license. "What
the Board meant and what their position is with respect to this [B-D-7 license] must
be known to the court before the court can rule." Park v. Board of Liquor License
Comm'rs for Baltimore City, Case No. 90-073-064/CL 110490.

  Evidently one reason for the lack of regulation was the question of

the board's authority to regulate B-D-7 licenses. To resolve this
question, the General Assembly enacted Chapter 108 of the Laws of
Maryland 1990, amending §29A by adding a new paragraph (6): "The
Board ... shall adopt regulations to determine the manner of operation
of an establishment that is operated under a Class B-D-7 beer, wine and
liquor license." The wording of this provision is itself an indication that
the General Assembly likely did not intend the Class B-D-7 license to
devolve into an off-premises only operation, for there is little need of
"regulations to determine that manner of operation" of a package goods
store.

  The board, therefore, may use this grant of authority to spell out

the details of what constitutes a legitimate on-premises operation short
of a full-blown restaurant.8 In other words, the board should give effect
to what was likely the General Assembly's objective in creating the
Class B-D-7 license. But until the board does so, or until the General
Assembly itself addresses the nature of a B-D-7 license more
specifically, we see no basis on which the current practices of Class B-
D-7 licensees may be challenged.

8
We understand that the board sought unsuccessfully to adopt just such
a regulation last year.

                                  III

                             Conclusion

  As a result of the ambiguity of Article 2B, §29A, coupled with the

lack of any pertinent regulation, many Class B-D-7 licensees are in
reality operating package goods stores seven days a week for extended
hours. If the board, giving effect to what we believe is the better view
of the General Assembly's objective in enacting §29A, determined that
Class B-D-7 licensees should not operate in this manner, the board may
remedy the situation by regulation. Alternatively, the General Assembly
is free to resolve the issue by legislation.

                               J. Joseph Curran, Jr.
                               Attorney General

                               Jack Schwartz
                               Chief Counsel
                                 Opinions & Advice

                               Mary O. Lunden
                               Staff Attorney

Editor's Note:

  In Chapter 24 (Senate Bill 396) of the Laws of Maryland 1992, the

General Assembly authorized certain Class B-D-7 licensees to obtain a
Class A-2 off-sale package goods license, permitting sales every day
except Sunday.