February 27, 2017
Central Penn Business Journal
Wine sales in Pennsylvania supermarkets and convenience stores are so 2016. Will the state make way for hard liquor to-go in 2017?
Facing a growing budget deficit, state lawmakers are going back to the bottle to solve the commonwealth's revenue shortfall. Both the House and Senate have seen bills surface this year that would create a "spirit expanded permit" in Pennsylvania, similar to the wine permits approved as part of last year's Act 39.
Act 39 opened up takeout wine sales in supermarkets and convenience stores that already sold takeout beer, let vineyards ship wine directly to consumers and launched a statewide auction system for expired restaurant liquor licenses to give more businesses opportunities to sell booze, among other changes to statutes that were left untouched for decades.
Lawmakers chased Act 39 with Act 166, which allowed beer distributors to sell beer in a variety of packaging configurations, including six-packs.
Now lawmakers want to take the next step in the name of consumer convenience and allow private-sector businesses to sell spirits for the first time since Prohibition. The bills that are circulating, Senate Bill 306 and House Bill 438, would allow restaurant and hotel liquor license holders who currently sell wine to apply for the $2,000 spirit permits.
The permits would allow those businesses to sell up to three liters in a single transaction, and could be renewed for an annual fee of 2 percent of the cost of spirits purchased from the Pennsylvania Liquor Control Board.
If approved, supermarket and convenience store chains that have been buying up restaurant liquor licenses will likely reconfigure stores again to make room for hard liquor.
In his budget proposal, Gov. Tom Wolf is projecting an additional $137 million in PLCB revenue in 2017-18 from last year's liquor-law changes.
Meanwhile, a memo has been circulating in the House for future legislation that would add a direct shipment component to the spirit debate.
Under the proposal from Rep. Justin Simmons (R-Lehigh), hard liquor producers could obtain a direct shipper license allowing them to ship up to nine liters per month per year to state residents.
And House Speaker Mike Turzai (R-Allegheny), who has long championed liquor privatization in Pennsylvania, has been circulating a memo seeking co-sponsors for a bill to sell the state's wholesale wine and spirits system.
"Divestiture of the wholesale system will allow importers, who are already operating within the commonwealth, to bring in a larger variety of products and will allow our licensees the ability to negotiate pricing on the products they purchase," Turzai said. "The legislation will allow for the movement of products direct from manufacturers to importers and finally retailers without necessitating that shipments come to rest in the hands of the PLCB before the agency resells it to its private competitors in the retail market."
A recent report from consultant McKinsey & Co., which was hired by the Wolf administration to find potential state savings and new revenue, found that the PLCB had relatively high operating costs and paid more for wine and spirits than did other states.