PA Booze Reforms Bringing in More State Revenue


(Civilization failing to end as wine sold in PA supermarkets | Photo: Jon Geeting)

Charles Thompson at the Patriot News reports that Liquor Control Board sales revenues are up in the year since the state legislature dipped a toe into liberalizing alcohol retailing laws with Act 39:

The PLCB reported record retail sales of $2.01 billion for the year, not including state liquor and sales taxes, up 3.9 percent from 2015-16 and a single-year record.

But here's the tricky part: That number includes both the board's direct sales to consumers at its state-owned liquor stores, and the bulk sales to restaurants, bars and even grocers that are now selling wine-to-go.

[B]ecause PLCB is the wholesale supplier to the private-sector outlets, that arm of the business has likely grown.

Everyone is familiar with the state store system for wine and liquor, the most consumer-facing part of the Liquor Control Board's operation, but fewer people realize that the state of Pennsylvania also has a monopoly on wholesale alcohol sales that puts them in the ridiculous position of selling wine and liquor directly to restaurants all across the state. 

The state wholesaler doesn't carry every kind of wine available in world, of course, so restaurants—and especially higher end restaurants—will frequently place orders through the state's special liquor order system (which goes by the hilarious acronym SLO) to order wines that the state doesn't carry.

The state wholesale monopoly still has to approve all these sales, for some reason, and the reason appears to be that they collect a fee on this and want the money. 

Act 39 was supposed to open the door to allowing direct shipments of wine from other retailers, but now Peter Brubaker at the Inquirer reports that they're doubling down on the SLO system in a particularly stupid and cumbersome way for restaurant owners.

Starting Oct. 1, restaurant owners and other licensees ordering through the state’s special liquor order (SLO) system will have to pay 100 percent up-front, and they won’t be allowed to inspect an order when they pick it up at the state store. To fix an order or get their money back, a convoluted seven-step process is involved.

The agency is implementing this new model on relatively short notice and at the beginning of the restaurant industry’s busiest season [...]

It wasn’t supposed to be this way, industry representatives said. One of last year’s tweaks to Pennsylvania’s alcoholic beverage control system said the board “shall” establish a procedure for direct shipment from distributors to restaurants and other licensees...But subsequent legislation said the PLCB “may” establish a procedure to allow direct shipment to restaurants.

Why did it change? Speculation in the industry is that the PLCB was smarting from the reduction in the margin and worried about the loss of a SLO fee.

The SLO fee brings in just $8 million a year, according to Brubaker, out of $1.9 billion in gross revenue—a drop in the ocean. That's insane, and state lawmakers need to step in. 

While Charles Thompson says the growth in LCB sales revenue could be attributable to a mix of greater convenience and wholesale sales revenue, there's a lot more room to raise revenue—and a whole lot more revenue than just $8 million—by building on the recent progress on expanding supermarket wine sales, rather than nickel-and-diming everyone with special order fees. 

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  • Jon Geeting
    published this page in Blog 2017-09-29 15:18:00 -0400