Will the New Year Bring Hybridized Alcohol Sales to Pennsylvania?

This past weekend, countless Pennsylvanians brought in the New Year with beer, wine and spirits at their get-togethers. However, if they wanted to give their guests a choice among the categories of alcohol, they had to make multiple stops beforehand, at least one being a state liquor store. Currently, Pennsylvania offers fewer options of where to purchase alcohol than states such as Virginia and Florida, where alcoholic beverages are more readily available from private retailers. Based on recent changes to liquor regulations and proposed legislation, it may not be long before some of Pennsylvania’s alcohol revenue trickles onto the shelves of private businesses.

Throughout 2011 there was ongoing conversation about the Governor’s intention to privatize the state’s liquor sales. I previously commented on the possibility and how the Pennsylvania Liquor Control Board (PLCB) has reacted to this idea by expanding some of their policies and regulations when it comes to sales of alcohol (Changes to PA Liquor Code, PLCB Looks to Expand Sales). The PLCB and the privatization issue now seem to be back in the headlines as PLCB policies continue to evolve and as lawmakers take steps to hybridize the sale of liquor in Pennsylvania.

Late in 2011, the PLCB further relaxed regulations pertaining to the direct shipment of alcohol. The PLCB had previously required that any alcohol bought out of state be shipped directly to a state store where the item could then be picked up. The PLCB announced that they no longer require pick-up at a state store and will now permit wine or liquor to be shipped directly to buyers’ homes.

A new twist on the privatization issue also emerged in the final weeks of 2011 when Republicans introduced a new bill to hybridize alcohol sales by keeping state stores open, expanding opportunities for the private sale of alcohol and giving consumers more choices of where to buy beer and wine. Although the bill was not passed by the New Year, it contained the following opportunities that are likely to come up again in 2012:

• Beer distributors could apply for licenses to sell wine for a price of $50,000.
• Restaurants and distributors would be permitted to sell more diverse quantities of alcohol (i.e., restaurants could sell take-out beer in larger quantities, and distributors could sell smaller quantities).
• Wholesale wine licenses would be available for $100,000, which would allow holders to compete with state stores on a wholesale level, selling to distributors and restaurants.

The 2011 hybridization bill represents a transitional approach to privatization. It promotes boosting profits in state stores by allowing them to increase the hours they are open, while avoiding the mass layoffs that sudden privatization would cause. Also, under the bill, state stores are the only places where consumers can buy hard liquor, another factor that would help keep their revenues up.

Because the bill expired when the 2011 session went into holiday, a new bill will have to be reintroduced this year. Even though this bill was not passed in time, it confirms that the discussion of privatization is alive and will continue to be a hot topic in 2012. It remains to be seen what changes the New Year will bring – will Pennsylvania continue down a gradual path to hybridization, or will the Governor veto legislation that does not fully privatize liquor sales? Either way, the PLCB will continue to update its practices and procedures to keep pace with the calls for change in the state’s liquor sales. Whatever changes occur may take some time.

Maybe by this time next year, Pennsylvanians will have to make one less stop as they prepare for their holiday festivities.

Aaron Zeamer is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He received his law degree from Widener University and practices in a variety of areas including Business Law and Liquor License matters.