Maryland Revises RTD Distribution Rules

Previously, Maryland regulations required suppliers to select only one licensed wholesaler to distribute brands of wine or distilled spirits for the entire state (COMAR 14.23.01.08). As a result, many suppliers with product portfolios that included beer, wine, and spirits implemented a daisy chain system of distribution in Maryland. Under this system, one “master distributor” was appointed to service the entire state, and sub-distributors were then used throughout the state to allow suppliers to better streamline the distribution footprint of their entire catalog of products.

Under the revised rules, Maryland has established a “non-conforming beverage” designation, defined as “an alcoholic beverage that (1) is intended as a single serving in an individually sealed commercial container with a non-resealable lid or cap; (2) contains 20% or less alcohol by volume (ABV); (3) contains wine or distilled spirits, in whole or in part; and (4) contains a non-alcoholic beverage component” (COMAR 14.23.01.20). Suppliers may now appoint different wholesalers to distribute the same brand of products that qualify as “non-conforming beverages” in different Maryland counties, subject to certain requirements and limitations. Suppliers may also submit “exemption requests” asking the executive director to designate a product that does not meet the definition of a “non-conforming beverage” or to approve an exception to the packaging requirements. 

Key Requirements and Practical Considerations

• For non-conforming beverages, Maryland now prohibits the “daisy chain” distribution system that many suppliers had implemented to streamline distribution footprints.
• Partial county designations are prohibited. Suppliers attempting to align their RTD distribution footprint with their beer portfolio (beer franchise appointments can be made for partial counties) will need to pick one wholesaler per county, including Baltimore City.
• Suppliers changing wholesalers must give the affected wholesalers and the Maryland Alcohol, Tobacco, and Cannabis Commission 30 days’ notice. Territory designations must be exclusive, except during the 30-day transition window.
• Suppliers should consider the best distributor fit for their non-conforming beverages during this window, which may not necessarily match the footprint for the beer products in their portfolio.
• Existing statewide appointments do not need to be resubmitted if they are unchanged.
• These new rules do not impact wine and distilled spirits distribution requirements. Products that do not satisfy the “non-conforming beverage” definition (or that have not received an exemption from the executive director) will continue to be subject to COMAR 14.23.01.08, which requires appointment of a single wholesaler for the entire state.

Suppliers with questions about how these changes affect their Maryland distribution arrangements should contact a member of our Beverage & Food team.