Changes to Pennsylvania Liquor Law Part of Budget Negotiations

May 4, 2017
Aaron K. Zeamer

Spring is here… flowers are blooming, lawn mowers are returning to use, the weather is warming, and Pennsylvania lawmakers are furiously trying to fill a huge budget gap.  The budget deficit that lawmakers are tasked with addressing has been reported to be nearly $3 billion dollars.  With a budget deficit that large, it makes sense that all options are on the table.  If you’ve been following the news surrounding the budget, you have probably heard about proposals to legalize marijuana, tax the extraction of Marcellus Shale natural gas, increase the cigarette tax, close prisons, and further cut spending programs.  All of these are relatively new ideas and approaches to reduce the huge shortfall that currently exists.  One idea, however seems to come up every year when it’s time to balance the budget… liquor reform.  And this year is no different.

On Tuesday, the state House passed a liquor reform package designed to further modernize the system of alcohol sales in the state.  The package consisted of four (4) major components.  The first is a “free the wine” bill that seeks to permit grocery stores to sell wine, without the need to have seating and pretend to be a restaurant.  It would also allow grocery stores to purchase wine directly from private wholesalers and wineries, circumventing the Pennsylvania Liquor Control Board.  The second measure would do something similar, but for the benefit of all licensees, not just grocery stores.  This proposal, contained in House Bill 1075, would remove wine completely from the PLCB and allow private wholesalers to sell directly to licensees.

Aside from changes to the sale of wine, the House also passed a bill to allow existing restaurant licensees to obtain a permit to sell take-out liquor.  This measure is intended to mirror the existing permit which allows a licensee to obtain a “wine to go” permit and sell a limited amount of wine to go to their customers.  House Bill 438 would allow licensees to obtain a permit to sell up to three liters of liquor per transaction for takeout and consumption off the premises.

Finally, and likely the change to most impact the public if it makes its way into law would be the bill advanced by the Chair of the House Liquor Control Committee.  Rep. Adam Harris sponsored a bill which would create a retail license allowing holders of the permit to essentially operate a private liquor store in competition with the current state-run stores.  These stores could be stand-alone stores or be coupled with a distributor or a grocery store.  The PLCB would still have some authority over pricing, but it appears the holders of these retail licenses could exercise some discretion over how they price products for sale to a consumer.  Retail licensees would need to collect and remit to the state sales tax and any specific taxes imposed on the sale of alcohol.

These bills have made their way out of the House, but still face an uphill battle to be passed by the Senate.  Even if these bills make it to the Governor’s desk, there has been no comment form his office on whether he would sign them.  Aside from these bills, there are other rumblings of liquor reform by the legislature as a means to raise revenue, cut PLCB spending, and reform the liquor code.  Last year, passage of Act 39 came as a surprise to even those that closely monitor liquor legislation, so it’s anyone’s guess whether these or other measures to reform the liquor code will succeed.  Stay tuned!

Aaron Zeamer is an attorney at Russell, Krafft & Gruber, LLP, in Lancaster, Pennsylvania. He practices in a variety of areas including Business Law and Liquor License matters. Aaron works frequently with commercial real estate agents, brokers, restaurant and bar owners, breweries, distilleries, and wineries to facilitate the sale and transfer of PA liquor licenses.