End of the Disaster Declaration Disastrous for Licensees

Tuesday evening, the Pennsylvania Liquor Control Board (PLCB) sent out an email notification indicating that, effective immediately, certain measures that were in place during the COVID-19 pandemic have been eliminated.  The most notable changes relate to the temporary authorization that the PLCB granted to allow for the use of expanded outdoor seating areas and the sale of mixed drinks to go by retail licensees.

What’s the genesis of this? Why is the rug seemingly being pulled out from under an industry that generates over $24 Billion in sales?  The industry surely deserves better. Today’s post will explain how and why they’re making these decisions as the disaster declaration ends.

Constitutional Amendments Give PA Congress New Powers

As the PLCB explained in its email yesterday, during the most recent primary, voters approved certain constitutional amendments that restricted the Governor’s ability to continue a disaster declaration. This result gave the Pennsylvania House and Senate the ability to vote to terminate a disaster declaration after a certain period.

The House and Senate held that vote on June 10th and voted in favor of ending the disaster declaration that has been in place since March of 2020. The impact of that vote had been delayed as the State had to formally certify the election results.  That certification happened yesterday, which is what prompted the PLCB’s email.

Mixed Drinks To Go Law Badly Muddled

The law that initially approved the sale of mixed drinks to go during the pandemic was specifically tied to the Emergency Declaration issued by the Governor.  It provided for those sales only during the emergency declaration. When that ended, so did the authority to continue those types of sales for retail licensees (distilleries may continue to sell their own products to go in bottles or as mixed drinks).

Ready-to-Drink (RTD) Cocktail Addendum

Licensees then put their hope in a new bill in the Senate that would allow for the permanent sales of mixed drinks to go.  The PA House of Representatives overwhelmingly passed that bill, but when it arrived in the Senate, something happened.

Senator Mike Regan, who chairs the Law and Justice Committee, decided he wanted to include in that bill an expansion of the law and allow for grocery stores, convenience stores, and beer distributors to sell ready-to-drink cocktails (RTDs).  These are prepackaged, mixed drinks (vodka, rum, whiskey, etc.) made by High Noon, Fugu, Sazerac Company and many others.  They are becoming hugely popular and are currently available in Pennsylvania, but only through the state stores and the PLCB.

Unlike malt-based beverages like hard seltzers, RTDs contain liquor, so they cannot be sold to go by any licensees or beer distributors.

Certain Veto of RTDs

There is no question that the law needs to address RTDs and establish a better way of selling and distributing them in the state. However, now was not the appropriate time to jam that issue into a bill that was only aimed at preserving the ability to sell mixed drinks to go and help an industry that was devastated by the pandemic.

The Governor has openly indicated that he will veto any bill that includes a change to the way RTDs are sold, so the bill that Senator Regan has amended is destined to be vetoed. Adding salt to the wound, there are not nearly enough votes in the House and Senate to override a veto.

So to make a political statement and help those that don’t need it nearly as much as restaurants, Regan’s actions will now cause the entire industry to suffer.

Outdoor Seating Bill Likely to Stall

To make matters worse, there was also a bill in the Senate that would preserve the emergency expanded outdoor seating through December 31, 2022.  It was meant to give licensees the ability to continue to use expanded outdoor seating areas for an extended period and provide some predictability for when it would end.

Unfortunately, that bill has also stalled in the Senate and is unlikely to pass now that the emergency declaration has formally ended.

One Way Left: an Extension of Premises Application

If anyone has expanded outdoor seating areas that they would like to make permanent, you do have another option. You can file an extension of premises application to make those areas permanent.  You may have some interruption in your ability to use that area, as the PLCB will need to do an investigation and formally approve it as a permanent licensed area. But if it’s a popular area, having it available permanently may be worth the interruption.

You may need to take parking lots, driveways and other similar areas out of service, though, to accommodate the permanent outdoor areas as the PLCB will typically not permanently license those types of areas.  If permanently removing parking areas, you may also need to discuss that with your local municipality to make sure you are not violating zoning regulations regarding parking requirements.

Contact the attorneys at Russell Krafft & Gruber, and we’ll do our best to help your business keep what it needs as the law continues to change.