June 07, 2016

Much to the frustration of Pennsylvania liquor consumers, wine and spirits are only available for purchase at state-run liquor stores. The system, often described as irritating, antiquated and inconvenient, has been at the heart of discussions surrounding the state budget since Gov. Tom Wolf took office in 2015. House Republicans, led by Speaker Mike Turzai (R-Allegheny), have consistently considered proposals from expanding wine and liquor sales to the outright deconstruction of the Pennsylvania Liquor Control Board (PLCB) as a means to raise revenue at a time when the Commonwealth is not only faced with its annual need for a balanced budget, but is also facing an ever-growing structural deficit.

However, on Tuesday- quite unexpectedly- the House passed a liquor modernization bill that had been parked in the House Rules Committee since December. The bill, H.B. 1690 (Turzai, R-Allegheny) was originally a full-blown privatization measure, but it was pared down by the Senate in December and returned to the House for concurrence, where it was referred to the Rules Committee

and there it sat for the last six months. The bill was not amended by the House; therefore, on its passage (by a vote of 157-31) it was signed in both chambers and then sent to the Governor for his approval.

The bill, described by House Majority Leader David Reed (R-Indiana) as a first step toward fully privatizing the Commonwealth’s liquor system, is chock full of consumer friendly goodies and is predicted to generate nearly $100 million in new revenue in year one.  The 163-page measure includes something for everyone: consumers, liquor license holders, brewers, wineries and casinos. Of note:

  • The PLCB will set hours of operation for liquor stores as is deemed appropriate. Currently, hours of operation are set by statute;
  • Self-service instant lottery ticket vending machines will be allowed at PLCB stores;
  • The PLCB will be allowed limited authority for flexible pricing; it may price its top selling 150 wine and 150 spirits in order to maximize profits. It will also be able to offer discounts on discontinued products and offer customer loyalty programs and coupons;
  • Winer producers will be allowed to obtain a direct shipper license to ship product directly to PA consumers. Up to 36 cases of wine per year can be shipped to an individual over the age of 21 for their personal use;
  • Up to four bottles of wine may be sold by restaurants, hotels and grocery stores that hold an existing license for consumption off premises;
  • There is now a new liquor license just for casinos;
  • The bill establishes a “Wine and Spirits Wholesale and Retail Privatization Commission,” charged with studying and reporting to the General Assembly on the economic impact of full-blown liquor privatization. The bill also establishes a marketing board for wineries and one for brewers;
  • Limited distilleries may have up to five additional locations, up from two in current law;
  • The bill allows for increased sales at airports and allows bed and breakfasts to provide overnight guests with one bottle of wine from a limited winery;
  • The bill bans powered alcohol;
  • The maximum alcohol by volume for alcoholic cider is raised from 5.5 to 8.5 percent. This means that, by definition, a greater variety of beverages will qualify for sale as a malt or brewed beverage (as opposed to a wine or liquor product);
  • Municipalities may vote on whether or not to issue a liquor license to a ski resort;
  • Licensees may offer discounts and promotions to bona fide “mug clubs”; and
  • The PLCB may issue special occasion permits to the Pittsburgh Development Corporation and neighborhood improvement district management associations, among other entities.

To read the bill in its entirety, go to: http://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?syear=2015&sind=0&body=H&type=B&bn=1690

However, don’t pop open that last bottle of champagne that you’ll ever buy at an LCB store; the Governor hasn’t affirmatively stated whether or not he plans to sign the bill. In a press release issued this afternoon, the Gov. simply stated that he would examine the bill once it’s on his desk.

Read the full press release here: http://wallaby.telicon.com/PA/library/2016/2016060772.HTM

While the Governor recently urged the PLCB to “free the six pack,” so that might indicate that that he is on-board with the measure, it’s hard to predict what he might do, especially in the context of a looming state budget and since the legislature has yet to approve special occasion permits necessary for alcohol service at the Democratic National Convention, to be held in Philadelphia this summer. Be sure to stay tuned to this blog or follow us on Twitter @BuchananLobbyists for updates.