by Wallace McKelvey Penn Live June 8, 2016
The most substantial overhaul of Pennsylvania’s liquor system since Prohibition became law Wednesday, a product of bipartisan cooperation after last year’s protracted budget battles.
“This bill, as all of us know, is truly historic,” Gov. Tom Wolf said, before signing the legislation. “It’s the most significant step we’ve taken in this area in 80 years.”
Changes to how Pennsylvanians purchase and consume alcohol include wine sales at grocery stores, longer state liquor store hours and 24/7 beverage service at casinos. They would also be able to receive direct shipments of wine through the mail.
Wolf emphasized the collaborative effort that took place to see those changes to fruition as a contingent of lawmakers from both parties stood at his side. As he signed the bill, he was flanked on his right by two of the plan’s architects — Rep. Paul Costa, D-Allegheny County, and Sen. Charles McIlhinney, R-Bucks County — and on his left by House Speaker Mike Turzai, R-Allegheny County, the bill’s sponsor whose blessing allowed it to come to a vote on Tuesday.
Many see the compromise bill, which contains many of Wolf’s favored modernization initiatives, as a sign that 2016 won’t see a repeat of last year’s protracted budget impasse.
“I’ve been very pleased with the discussions we’ve had with the governor on many fronts,” Turzai said on Tuesday, prior to the bill’s passage in a 157-31 vote. His overriding approach to this year’s negotiations has been to separate items like liquor reform from the larger budget debate, he said.
In advance of its signing, Turzai repeatedly said that the bill would serve as a first step toward privatization. Indeed, his bill originally called for dismantling the state-run liquor stores before the Senate gutted and returned the bill in its current form. When the bill initially returned to the House, Turzai chose not to bring it to a floor vote.
When asked about House Republicans’ privatization goal, Wolf said he was committed to keeping and modernizing the stores.
“This is an asset that the people of Pennsylvania own and we need to try to make it better,” he said. “We need to try to respond to what the citizens want in terms of a better experience.”
A number of key stakeholders have criticized the legislation — which was part of the budget framework Wolf negotiated with Republican leaders last year — for what they see as unfair treatment. It does not, for example, contain any new features for beer distributors or liquor distilleries. It also creates much more competition for the wine business currently dominated by the Pennsylvania Liquor Control Board’s stores, as grocery stores and restaurants with the requisite licenses can now sell up to four bottles.
Proponents, including Wolf, say the changes help improve convenience for customers. The House Appropriations Committee estimated that the expansion of alcohol access could generate $150 million in new revenue for the state.
Observers from both sides believe the new law will mark the death knell of the state stores, which key Republican leaders have sought to privatize for years.
“It’s an unsustainable model and, unless there are changes down the road, this will kill the PLCB,” said Wendell Young IV, president of United Food and Commercial Workers Local 1776, which represents about 3,500 of the agency’s 5,000 employees.
Pennsylvanians will soon be able to receive wine via direct shipment, joining a long list of other states that allow for it already.
Citing similar reforms in Virginia and Washington state, Young said he believes the stores would be shuttered and their employees left jobless in three-to-five years.
“Every bottle of wine that gets sold at a grocery store, convenience store or a bar or restaurant is one less bottle being sold by the PLCB,” he said, “and that bottle of wine is being sold to those businesses at a discount.”
In the meantime, Young said, the union will work with the Wolf administration and the PLCB — which will be tasked with implementing the law — to enact changes to blunt the blow. So far, he said, the union hadn’t isolated specific areas that could be addressed.
And the union wasn’t the only stakeholder to see its position undermined.
It’s the most significant step we’ve taken in this area in 80 years.” Gov. Tom Wolf
The Distilled Spirits Council, which represents distillers who rely on the state stores to sell their products, called for expanding access to liquor, in addition to wine and beer, at grocery stores.
“Consumers want a level playing field for beer, wine and spirits,” said the council’s vice president, David Wojnar.
Similar concerns were expressed by the Malt Beverage Distributors Association. The distributors will watch as competitors gain the ability to sell wine and the law codifies the ability for gas stations to sell alcohol.
“Consumers will have less selection and higher prices unless they shop in a state store,” said Frank Pistella, the MBDA’s first vice president. “Distributors will lose and so will their customers.”
Amy Christie, executive director of the Pennsylvania Licensed Beverage & Tavern Association, saw the bill as a mixed bag. The establishments the association represents gain the ability to sell up to four bottles of wine, but also a powerful competitor in the form of casinos with the ability to serve alcohol around the clock.
“This is a win in a way that we can sell more product to go out the door,” she said, but it underlined the need for taverns to be able to add video gaming machines to compete with the casinos.
But December’s vote in the Senate, which gutted a Turzai bill to replace it with the reforms, and Tuesday’s vote in the House showed strong bipartisan support for the modernization efforts—even if not all of the stakeholders are pleased.
“I’ve been working on this (issue) over a period of years and it’s very rare the speaker and I agree on an issue,” Costa said. “We do now.”
And a number of local supermarket chains have already expressed interest in selling wine.
“Wine is something we’ve wanted to offer our customers, and we plan to do so when this is enacted,” said Giant Food Stores spokeswoman Samantha Krepps.
PLCB Chair Tim Holden said the agency has sought many of the bill’s provisions for years.
“Sunday sales, the ability for variable pricing, consumer convenience and rewards system,” he said. “A lot of these are things we’ve been working on.
Holden, whose agency operates more than 600 state stores and oversees the larger distribution system, believes those measures will bring more revenue into the PLCB and, in turn, the state. And private businesses are still purchasing the wine from the agency, he said, even at 10 percent discount.
On Wednesday, the chair said the PLCB had pledged its support to Wolf and the General Assembly. The agency will be working out the details for some time, he said, and there’s no timeline yet for full implementation.
And he remains optimistic that the changes won’t kill the state stores.
“As the governor said, this is not full-blown privatization,” he said. “This is modernization.”