Public Commission Meeting #55
Meeting Transcript
ATCC Public Meeting #55, JULY 2025 at 3:00pm – 2025/07/17 14:40 EDT – Transcript
Transcript
Thomas Akras -ATCC-: Mr.
Alan Silverstein: Kane, welcome Thomas.
Jeffrey Kelly -ATCC-: Good to see you.
Eric Morrissette: Hello.
Jeffrey Kelly -ATCC-: Sorry, ob. I looking over here I turned my speaker on because I couldn’t hear anything. I got to do that before I turn the camera on, but I’m never good at it.
Alan Silverstein: Come on.
Alan Silverstein: Okay. It is 3:00 p.m. the ATCC agenda and July 17, 2025, we’ll do an open meeting roll call. So we have myself, Alan Silverstein, chairman, Eric Morsette, vice chair, Robert P,…
Robert Poole: I’ll second it.
Alan Silverstein: secretary, and Durane Rosarian, commissioner. So we have a quorum. I need a motion to approve the June 26, 2025 meeting minutes.
Eric Morrissette: A motion.
Alan Silverstein: Okay, Got a motion, second. All in favor I. Okay. Executive director’s report. Mr.
Alan Silverstein: Kelly.
Jeffrey Kelly -ATCC-: Thank you,…
Jeffrey Kelly -ATCC-: And Mr. Vice Chair and Commissioners. Good to see you all. Happy Hard to believe it’s July already. That goes fast. so I’m going to turn it over in just a moment to Jeff Hearnen for our update on the enforcement activities and then Andrew Waters who has some, I think, exciting news on how we’re doing so far with our new online system. It’s been phenomenal. But very quickly, I’ll just report that this past Monday, we had our fourth and so far final webinar on our alcohol series and Monday featured retailers and kind of how you get into the business of being a retailer, what some of the processes are and then we had a couple of outstanding retailers, give presentations and provide questions, answering questions that people had. So, it was a really good webinar series that does wrap up what we were originally slated to do.
Jeffrey Kelly -ATCC-: We did get some information from commerce that they’d be interested in continuing with some others if we wanted to do something else as And so we’ll be considering that. But overall worth doing it. It was a fun exercise and it was really nice to get out into the field and meet these different license holders that we have and see them where they are and how they operate and the passion they bring. By the end of the month right around there anyway, each of these webinars will be available on our website. So, if you hadn’t seen them and you’ve got a little bit of time, it might be worth going through it. You can certainly fast forward through the stuff which is whenever you see me talking or any of our people from our agency, you probably understand what we’re doing and maybe zip to the presentations by our license holders because they’re a It was a lot of fun doing it with them. They’re really done very well. So, I think it’d be worth taking a look at if you get the opportunity.
Jeffrey Kelly -ATCC-: We are looking considering at least one additional webinar that would get into resources that are available for people who might be interested in being a ly. We’ll see if there’s enough material for that and…
Alan Silverstein: What?
Jeffrey Kelly -ATCC-: enough interest, but that’s in the offing. And before we get into the inspection report that Jeff will give, I do want to talk a little bit about an inspection update if you will since Jul And July 1st was significant because that’s when our labeling bill regarding THC went into effect. and we were out there on beginning to do on July 2nd, we inspected three wholesalers. These are licensed tobacco wholesalers that would be the kinds of businesses just generally speaking that might be involved in the maybe hemp derived, but THC products. Happy to report that two of the wholesalers we went to did not have products.
Jeffrey Kelly -ATCC-: One of them told specifically, one of them just didn’t had it and really never did in previous inspections. One of them did before it was a banned product, but with the labeling issues, they said, ” we heard We understand the laws changed. we feel educated now and we’re not selling the stuff any longer.” So, they did not have it. We did do an inspection at a third location and we did find product there and seize that product and that’s following the course. that happened in and around Baltimore County. We went to Ocean City at the boardwalk in the Ocean City area rather at the request of Ocean City itself. The town asked us to come down and do the similar type enforcement with a few of the retailers that they targeted. We went down and did seven using underage enforcement opportunities. Of those seven, four of them did sell to the underageed cadets. So there’s four violations. Two did sell, they checked ID.
00:05:00
Jeffrey Kelly -ATCC-: they would not sell to the underage cadetses, but they did sell to one of our agents who’s clearly of age to buy. and the seventh one, one of them said, we understand the laws changed and we’re just going to stay out of this. We’re not doing it anymore. So, I look at those as successes with the wholesaler that heard us and said, we’re not selling this anymore. The law has changed. We’re not doing it. With this retailer that said, “We understand the law’s not doing it.” That’s as much of a success as going to a place that is and taking action. We’d much rather have that level of compliance. I’m happy to say that. And then out in western Maryland as well in Hagerstown, our crew went out there. I’m not sure just what the result of that was. I believe there was a violation. But all told, since July one, we’ve done 13 targeted inspections. Did uncover nine violations, three no violations, complete compliance, I’m sorry, four three, yeah, three no violations, and one just don’t know yet if there’s violations. So, just happy to say that we’re really trying to hit it hard.
Jeffrey Kelly -ATCC-: I know that’s a big concern of the legitimate cannabis industry that we go out and try and stem the illegal operations and we’re taking that to heart and really giving a big effort. So with that, I’d like to turn it over to Jeff Hearn to give us our standard monthly update on other enforcement activity. Jeff.
Jeffrey Herndon -ATCC-: Thank you, Good afternoon, ladies and gentlemen. I’m Jeff H. Hearnen. I’m the director of field enforcement division here at the ATC. I’m going to jump right on to the end of the conversation that Jeff was just having with you as far as our cannabis enforcement efforts. Jeeoff, we have those numbers. the location in Hagerstown was a violation and they came up with over 200 packages of illicit product that was seized out of that store. so like Jeff said, we’re going to be moving all over the state from Ocean City to the east to Deep Creek to the west and taking advantage of the new legislation and new laws as far as packaging goes. In other news, July is the first month of the new fiscal year, which means June was the last month of last fiscal year. So we have our totals for the reportable period of the fiscal year.
Jeffrey Herndon -ATCC-: And I’m pleased to report that for alcohol inspections for that 12-month period, we did 2,266. During that same time period, we did 3,216 tobacco inspections at retail locations. And we also did 2,312 inspections specifically looking for THC products in the stores with the unlicensed dispensaries and so forth.
Jeffrey Herndon -ATCC-: From those inspections, the agents had 72 reportable incidents with seizures of product that either came from unlicensed wholesalers other than a Maryland licensed wholesaler from other sources. And with that, we seized almost 370,000 sticks of other tobacco products. That represents an estimated tax loss to the state of Maryland of $267,000.
Jeffrey Herndon -ATCC-: along with that, we did seize 31,584 packs of cigarettes that were either transported into the state unlawfully with other state stamps like Virginia, no state stamps like Carolina or the recent trend of a fixing counterfeit Maryland stamps on them. So, those 31,500 packs, that represents a tax loss to the state of $154,171. And then in the spare time they were able to seize elicit alcohol products mostly brought in from unauthorized sources unlicensed wholesale were through trade practice violations and that yielded because we use this for our accounting 4,610 gallons of the alcohol product.
Jeffrey Herndon -ATCC-: So, that wraps up our fiscal year and this new one’s just starting off that it’s going to be a challenge for us, but we’re looking forward to it.
Jeffrey Kelly -ATCC-: Thanks, Jeff.
Jeffrey Kelly -ATCC-: And while I got you real quick, and if I’m putting you on the spot, I apologize. And if you don’t know, that’s okay to say you don’t know. But very quickly, and commissioners, this is something we have to provide every year is a report on our performance. We have to predict performance the year before and then report on our performance after the year and it’s called MFR or managing for results. So each year during our budget submission, we also put in what our performance expectations are going to be. I know we exceeded those expectations in each of these three categories, alcohol, tobacco, and cannabis. Do you recall off hand, Jeff, any if you don’t worry about it. If you do, do you recall off hand…
00:10:00
Jeffrey Kelly -ATCC-: what those numbers were this past fiscal year? Yeah. Yeah.
Jeffrey Herndon -ATCC-: As far as the estimates,…
Jeffrey Herndon -ATCC-: and I know we exceeded what we put down because we picked a percentage of the licensed establishments, we were going to go for a 40% compliance checks and 60% compliance checks. And the formulas came out to where each one of the numbers that I’ve reported on exceeded our goal for that. I don’t know exactly what and I have them right here in front of me. So, just give me a second.
Jeffrey Kelly -ATCC-: And that’s on me because I should have prepped you for that because I wasn’t thinking about it till you’re reporting it. …
Jeffrey Herndon -ATCC-: That’s okay.
Jeffrey Kelly -ATCC-: I know it was pretty impressively beyond what the minimum standard or minimum performance measures were.
Jeffrey Herndon -ATCC-: What we wanted to do is we set out to inspect 40% of all licensed tobacco retailers in the state. And that was a number of 2,500.
Jeffrey Herndon -ATCC-: So with the tobacco you can see we 3,200 far exceeded that and as far as the alcohol was concerned we wanted to do 25% of all the licensed alcohol retailers in the state with the 25% and that wanted us to be that put us right around the 2,000 mark and we exceeded that not by a whole lot but we exceeded it. So it was 2,266. And a lot of these estimates that we had to give were before the cannabis factor came into play. And it’s going to change the field for us as far as…
Jeffrey Herndon -ATCC-: where it’s going to take some of my manpower for the enforcement issues, but we’ll still be doing the other routine inspections as well.
Jeffrey Kelly -ATCC-: Thank you.
Jeffrey Kelly -ATCC-: And just as a quick primer on this, Jeff said it’s a 40% rate of tobacco inspections. There are about about 6,500 tobacco licenses in the state. The reason we can do 40% of those is generally speaking is they don’t take as long to do as alcohol inspections. we store checking records, but there are certain things like stamps on cigarettes which help a lot to see that the stamp is there And the tobacco it’s 25% but there are about 8,000 to 8,500 alcohol licenses across state and those inspections do take a lot longer to do.
Jeffrey Kelly -ATCC-: just to give you a sense of that and also interesting when Jeff commented about the third category of our contraband seizures are dealing with counterfeit stamps. For decades, Maryland rarely had counterfeit stamps. And I mean rarely as in maybe single digits of stamps would come in as potentially counterfeit. and now with our new tax rate of $5 a pack, so $5 per stamp. As of a couple of months ago, we start it’s only been out a few months. These new stamps are only a few months old and they’re already being counterfeited because there’s such value to them. So, that really adds a whole another level to us. They look good up front. Sometimes they look too good, maybe even, better than the stamp should look. but we’re seeing much more in the area of counterfeit stamps that we ever seen really over the years. It’s just rather significant. So, thanks Jeff.
Jeffrey Kelly -ATCC-: And I’m going to turn it over to Andrew Waters to give you a rundown on our licensing program, which is going to include a little bit on our licenses from April 30th, May 1st, which are our traditional licenses, as well as our direct wine shippers permits, which occurred through June and July. and in that I think an update on…
Jeffrey Kelly -ATCC-: how things are working with our new completely automated one-stop Salesforce program where people go online set up their own account and kind of control their own destiny for licensing and renewal. So Andrew, why don’t you go ahead and tell us about that?
Eric Morrissette: I had one quick question…
Eric Morrissette: if it’s okay and…
Jeffrey Kelly -ATCC-: Yeah, sure.
Eric Morrissette: it might not be something that’s answerable on the call but might be something that you can get back to me on. I’m just thinking about the 40% kind of target of enforcement efforts and just the bandwidth of the team that you all have on the enforcement side and the possible concentration in particular areas just on logistics like how far is the distribution of enforcement along that kind of percentage range. I wonder because I assume that certain counties might get it get hit harder as a consequence of just manpower and getting to that 40% target than others. how do you all arrive at the distribution across the state to get to that 40%.
Jeffrey Kelly -ATCC-: And we might be able to break that down.
Jeffrey Kelly -ATCC-: I’m not sure if we can, but we might be able to break it down by jurisdiction, but I feel like it’s fairly evenly spread out. But Jeff, do you want to comment on that?
Jeffrey Herndon -ATCC-: Yeah, I’ll take that,…
Jeffrey Herndon -ATCC-: Eric, is that 6,500 number is what’s registered throughout the state. And that’s every county and the cities withinapolis and Baltimore. Yes, we have a higher concentration of the businesses in the metro areas of Montgomery Baltimore County, Baltimore City. but we do have our manpower spread and allocated regionally.
Jeffrey Herndon -ATCC-: So we do have a squad that is assigned for and responsible for Frederick, Carol, Montgomery County and West and so Washington, Alageney and Garrett. So there will be agents that work specifically and only those Same way as down south and St. Mary’s, they’re assigned to work specifically in only those counties. Now they’re statewide. So if we have a special project that needs to be done, obviously we’re going to call them in, but we have agents that are assigned to the shore.’s so everybody has their own counties, their own areas, and that’s how we go about we pick the overall number at the 40% of how many inspections do we think we can conduct throughout the year based on our manpower.
00:15:00
Eric Morrissette: Got it.
Eric Morrissette: That’s super helpful. Thank you.
Jeffrey Kelly -ATCC-: And we don’t have one agent who’s doing 80 inspections and…
Jeffrey Kelly -ATCC-: one who’s not doing any.
Eric Morrissette: Yeah, right.
Jeffrey Kelly -ATCC-: That’s not happening.
Eric Morrissette: Perfect. Thank you.
ANDREW WATERS -ATCC-: U. So, just checking in. Obviously, we’re roughly one month away from the launch of our one-stop program. now that it is up, we’ve seen a significant decrease in the amount of physical checks that we’re receiving. which has been wonderful. it helps just with everything. to give you kind of a perspective on that, since June 11th, we’ve issued 250 new licenses and permits. of that 215 of them came through online. we’ve also renewed about 175 entities via onetop. so we’re able to churn out renewals, new licenses, permits much faster. it has significantly contributed to our much higher renewal compliance rates. for April we’re at 99% renewal which especially for this time of year is wonderful.
ANDREW WATERS -ATCC-: We hope to be at a point where when that expiration date hits, everybody is renewed. That is the goal. back when we’re using checks in the mail, that wasn’t a very realistic hope, but now everything is online. we’re very excited for the future and making sure that everybody’s in compliance on time. As we move into June, obviously just a couple weeks ago that expiration date hit for our direct wine shippers. right now we’re at a 92% renewal. there’s less than a 100red DWS that haven’t renewed. We’re tracking them down and making sure that they get everything above board. As we’re kind of wrapping up FY25, we’ve issued and renewed over 8,000 total licenses and permits. we’ll have a much more depth breakdown in our annual report which will be coming out in the next few months.
ANDREW WATERS -ATCC-: our main reporting season. It’s really from July to November as we accumulate statistics and…
ANDREW WATERS -ATCC-: publish those for the public. And I will pass back to Jeff.
Jeffrey Kelly -ATCC-: Thanks, Andrew.
Alan Silverstein: Andrew, I’m sorry.
Jeffrey Kelly -ATCC-: And just I’m sorry. No, Mr.
Alan Silverstein: Quick question. So, they’re renewing with credit cards, debit cards,…
ANDREW WATERS -ATCC-: So credit cards our application portal has two options essentially credit cards or…
Alan Silverstein: credit cards. And you Okay.
ANDREW WATERS -ATCC-: a checks. So when you pay with a credit card,…
Alan Silverstein: And on the credit cards, the discount the rate that’s charged by the credit card companies, you add that in so you get the full amount the back end.
ANDREW WATERS -ATCC-: there is a 3% fee that is put on the customer.
Alan Silverstein: Okay.
ANDREW WATERS -ATCC-: And that fee does not come to us,…
Alan Silverstein: That’s Yeah.
ANDREW WATERS -ATCC-: just to be clear. Sure.
Alan Silverstein: Appreciate it. Yeah.
Jeffrey Kelly -ATCC-: I think the question is we’re getting our full amount.
Jeffrey Kelly -ATCC-: If it’s a $100 fee, we’re getting a $100 the credit and…
ANDREW WATERS -ATCC-: Yeah, correct.
ANDREW WATERS -ATCC-: Yes, absolutely.
Jeffrey Kelly -ATCC-: the hundred or so of the direct wine shipper permits. It’s even reasonable, I suspect, to think that some of them are just no longer interested in conducting business. there always adds and subtracts every year.
ANDREW WATERS -ATCC-: A part of our process is after the initial expiration date hits and everything has been received, then we need to go into sort of an investigatory period and research each entity that did not renew. Maybe they went out of business, maybe they, just forgot. These things happen, but it’s our job to make sure that if they are still operating, they have a license, they have a permit. and that just takes research.
Jeffrey Kelly -ATCC-: Thanks, And I just want to say relative to that whole project, this has been something that probably for the last decade or longer, the industry that we regulate, we license, has wanted the ability to do this stuff online. And for a whole host of reasons,…
Alan Silverstein: That’s it.
Jeffrey Kelly -ATCC-: it just never happened. And then finally on July 11th, it happened. And it’s working really well. And clearly by the percentage of people new and existing who are renewing with us by using their portal the word’s out and they like it. it’s just happening. Is it safe to say Ander that the time period between especially for renewals for renewing and…
Jeffrey Kelly -ATCC-: reissuance has dramatically shortened
00:20:00
ANDREW WATERS -ATCC-: Absolutely. renewals by far have increased dramatically.
ANDREW WATERS -ATCC-: Even the issuance of new licenses and permits were getting the documentation so much faster and the previous sort of checklist process required the applicant to do a lot of research that sometimes discouraged applicants. when they go to the website everything is there in order to complete the application everything’s already laid out that they need to give us which has led to easier submissions.
ANDREW WATERS -ATCC-: So yeah, absolutely.
Jeffrey Kelly -ATCC-: Yeah, and…
Jeffrey Kelly -ATCC-: that’s what’s so nice is it mandates them to complete the application as opposed to sending it in and complete and it sits on a desk somewhere waiting. So, it also, I guess, stops some of us having checks cashed and having incomplete applications sitting around for months and months and months and then having to clean those up later. So, it’s a good program all the way around because it was a good year for us for that. So, Thanks, Ed. Mr. Chair, that’s our report for this month.
Alan Silverstein: Do we have any new business?
Jeffrey Kelly -ATCC-: No, sir.
Alan Silverstein: If not, I take a motion for adjournment.
Eric Morrissette: I’ll move.
Alan Silverstein: Need a second, please. All right.
Robert Poole: I’ll second it.
Dourakine Rosarion: I love everyone.
Alan Silverstein: All those in favor signify by saying I.
Robert Poole: All right.
Alan Silverstein: I. Motion carries.
Jeffrey Herndon -ATCC-: All right.
Eric Morrissette: right.
Alan Silverstein: All Thank you. We’ll see you next month.
Robert Poole:
Robert Poole: Thanks, guys.
Jeffrey Kelly -ATCC-: Thank you all. Byebye.
Robert Poole: See you.
Jeffrey Herndon -ATCC-: Thank you.
ANDREW WATERS -ATCC-: Completes.
Meeting ended after 00:21:54 👋
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