The Pennsylvania House last month passed a measure backed by Governor Tom Corbett that would, if passed by the Senate, privatize the current state-run liquor control system.
The groundbreaking vote approved House Bill 790, which would create 1,200 private wine and spirits retail licenses over four years and allow grocery stores and convenience stores to sell beer and wine. It would give beer distributors the ability to add the sales of wine and spirits and they would have first refusal on bidding for the 1,200 new liquor and wine licenses for up to one year. Those licenses would be allocated by county, based on the number of beer distributors located in each. At the end of 12 months, any remaining licenses would be made available to the public. The state’s 600 stores would be phased out, after which an additional 600 licenses could be created.
The current network of state-run liquor stores overseen by the Pennsylvania Liquor Control Board (PCLB) was established by Republican Governor Gifford Pinchot in 1933 as the Prohibition Era was ending. Today, Pennsylvania and Utah are the only two states in the country that have complete control over wholesale and retail liquor operations. Currently, PLCB stores sell wine and spirits and privately owned beer distributors and craft beer stores sell beer.
Last month’s vote reflected a mostly united GOP majority and was solidly opposed by Democratic lawmakers. The bill now moves to the Senate, where it faces committee hearings and deliberations during the next two months.
An issue that is expected to take up much of the debate is how well the differing concepts of liquor modernization and privatization can be blended into one bill. The recently passed House bill offers a plan totally based on privatization, but a number of senators of both parties have co-sponsored bills to instead modernize the state run stores through such steps as allowing more stores, removing the cap on stores open on Sundays, and allowing beer distributors, restaurants and taverns to sell beer in different quantities.
At issue for many of those opposing privatization are concerns about the fate of PLCB store employees and employees of beer distributors and licensed establishments. Also of concern is the belief that privatizing sales of wine and liquor may lead to greater alcohol abuse, illegal sales to minors and an increase in drinking related diseases and DUI-caused accidents. Still others fear that giving supermarkets and convenience stores the right to sell wine could damage the current network of beer distributors in the state as well as decrease revenue.
Proponents of HB 790 argue that the proposed legislation would provide an opportunity for beer distributors as the new licensing regulations would enable them to be the only outlets selling beer, wine and spirits under one roof. And, the provision giving current beer distributors the first shot at the 1,200 licenses being made available also gives them the edge over potential competition. Also included in the legislation is a provision that would allow distributors to better compete with six-pack shops and restaurants that currently have tavern licenses by allowing them to sell growlers, six-packs and 12-packs in any quantity.
The proposed bill also includes provisions designed to assist current PLCB store employees with transitioning to new jobs by giving them points toward the civil service exam as well as grants for part-time and full-time schooling. Proponents of privatization claim that current state-store employees will be much sought after for positions with privately run retail alcohol operations, in part because of their prior experience and in part because the legislation would provide incentives for employers who hire displaced PLCB store workers.
The Pennsylvania Food Merchants Association (PFMA) has come out in favor of privatization. PFMA president Dave McCorkle said of the proposed legislation, “We’re asking all PFMA members, their employees and customers to ask their legislators to bring convenience and choice to Pennsylvania. This plan will also return wine, spirit and beer sales that are now going to Maryland, Delaware, New Jersey, Washington, DC and Ohio and other surrounding states.”