Shifting drinks law landscape in Pennsylvania is a maze for businesses
The evolution in our drinks law is welcome and overdue. But in the short term, it has meant chaos for small businesses struggling to keep up and left some consumers confused about what the changes actually mean.
For decades, Pennsylvania’s unique mess of odd options embodied in its archaic post-Repeal liquor code was tweaked only incrementally. Gradually, we got shelves in our state monopoly wine and liquor stores (before, we had to order at a counter, by catalog number); we were allowed to pay for beer with a credit card; and a fraction of the state stores opened for a few hours on Sundays. These were all tiny changes.
The beverage alcohol retailer/wholesaler situation had been pretty quiet, as well. The state maintained its monopoly on wine and liquor wholesale operations and off-premise retail sales. Beer was supplied by privately owned wholesalers and sold by the case and keg only at retail stores (“beer distributors”) and in 12-bottle maximum purchases at bars and restaurants. Producers were allowed to sell directly. It was confusing, but we were used to it, and family businesses planned major investments based on this system.
Much has changed in the past year, as we’ve entered an activist phase in liquor law. Beer distributors first were granted the ability to sell 12-packs as well as cases. Nine months later, the policy was changed to no minimum sale. It’s also no longer always illegal to sell beer at gas stations, so long as the station also has a restaurant license and a 30-seat “café.” License holders may also sell up to four bottles of wine to go, as long as the price is no lower than that charged by the state’s monopoly stores. Grocery stores are buying licenses (and adding seating) to take advantage of this change.
We’re pathetically overjoyed by this. Almost everyone who talks about it says: “We can buy beer and wine at supermarkets and gas stations now!” This isn’t exactly true – less than 300 of the state’s thousands of gas stations and supermarkets have licenses. With the licenses going for as much as $560,000 (yes, just the license), it’s clear that this is not a business opportunity for Mom & Pop’s Corner Market.
A tiny number of new licenses are being created in the tax-abatement Keystone Opportunity Zones, but nowhere near enough to meet this new demand. The price of transferable licenses is spiraling upward, and will soon only be affordable to chain stores and restaurants.
The solution could be a new license for off-premise sales: plentiful, affordable and nontransferable. But every time a grocery or convenience store buys a tavern license for more than $200,000, that solution becomes less attractive to legislators, who are not moving to do anything to fix this situation.
Another recent change allowed Pennsylvania wineries, breweries, distilleries, cideries, and meaderies to sell each others’ products, and also allowed each to have up to two off-premises stores. It was quickly realized that this created a loophole that potentially allowed a privately owned Pennsylvania-only full-service booze store. One has already opened in Pittsburgh, the first private liquor store in the state since Prohibition.
To be fair, the Legislature is moving in the right direction. State House Speaker Mike Turzai, R-Marshall, has promised a bill to privatize the state’s wholesale booze business this session. State Sen. Randy Vulakovich, R-Shaler, has reintroduced a bill that would add spirits to the wine and beer sales allowed to licensees (with the same four-bottle limit as wine), and news outlets are already anticipating its passage. Gov. Tom Wolf and the Democrats in the Legislature seem willing to compromise on more booze freedom, so long as it doesn’t mean outright privatization of the state monopoly stores (and their unionized workforce). The forecast is wet.
Meanwhile, the state’s longtime private beer retailers are being shut out. I recently talked to one who was furious about the lobbying performance of his industry’s trade group, the Pennsylvania Malt Beverage Distributors Association (MBDA). “They could have made a deal,” he spat out, “they could have gotten us wine sales. But there’s only one word in their vocabulary: ‘No!’”
The MBDA for years stonewalled on changes to the liquor laws, rightly seeing the state’s monopoly as crippling their wine and liquor competition. They fought mightily to keep beer sales out of groceries and gas stations. But when things started to change, it would have been smart to cut a deal. Now they’re looking at a shrinking business; “the volume-value end” in cases and kegs, as my source put it.
When things move this quickly, a business has to be nimble and knowledgeable in the ways of lobbying and legal interpretation. That’s practice Pennsylvania businesses simply haven’t had, and it represents skills they’re going to have to acquire as the liquor landscape continues to slip, slide and slowly advance toward privatization.
Image by ra2studio
Guest blogger Lew Bryson is the author of “Tasting Whiskey” (2014) and books on the breweries of Pennsylvania, New York, Virginia, Maryland and Delaware.