It’s Time to Privatize the Sale of Wine, Liquor and Beer in PA

Where and when alcohol can be purchased in the Commonwealth of Pennsylvania is the subject of constant legal battles, generally between existing monopolies, the Pennsylvania Liquor Control Board and enterprising businesses trying to work around the state monopoly in order to sell beer to their patrons in grocery and convenience stores.

The current system dates back to 1933 when, attempting to blunt the impact of the 21^st Amendment and limit citizens’ post-Prohibition access to alcohol, Pennsylvania created a state monopoly responsible for the sale of wine and spirits as well as the licensing of businesses to sell beer.

Seventy-seven years later, the state monopoly system remains intact with the state purchasing wine and spirits in bulk and selling them in 621 Wine and Spirits stores owned and operated by the state. On wine and spirits, Pennsylvanians pay a 30 percent markup on the wholesale price, an 18 percent “Johnstown Flood Tax” hidden in the cost of the item and a sales tax based on the county in which the alcohol is purchased.

The Commonwealth further regulates the sale of beer through a number of licenses that provide the following:

• Beer in cases and kegs may only be purchased from licensed distributors and only purchased for off-premises consumption between 8:00 AM and 11:00 PM Monday through Saturday.
• Six packs, twelve packs and individual beers may be purchased at restaurants, convenience stores and bars until 2:00 AM.
• Businesses possessing an “Eating Place (E) Liquor License” may not sell more than 192 fluid ounces of beer in original containers to a single customer for off-premise consumption.
• Liquor licenses further regulate aspects of business operations from how many chairs an E licensee must have on the premises to when live entertainment must stop (2:00 AM) at businesses possessing a “Restaurant (R) Liquor License.”

These convoluted and arcane regulations harm Pennsylvania consumers by limiting their choices and subject businesses to unnecessary regulatory burdens that don’t appear to benefit the community in any substantial, tangible way. The main reason that a state monopoly conceived in 1933 still controls wine and spirits sales and licenses the sale of beer is that legislators are perennially unwilling to challenge the system’s 4,000 unionized workers and privatize a system that raises roughly $100 million in income for the state every year.

Although serious attempts to privatize the state monopoly failed under governors Dick Thornburgh and Tom Ridge, Republican majorities in both houses of the state legislature and Republican control of the Governor’s Mansion suggest that another attempt at privatization is near at hand.

House Majority Leader-elect Mike Turzai proposed a bill in April that would privatize the sale of wine and spirits while still maintaining the Liquor Control Board’s role in licensing the sale of beer. Turzai proposed to phase out the Liquor Control Board’s role as wholesaler and retailer over a two-year period and to auction off 100 licenses for private wholesalers and 750 licenses for private retailers with the goal of raising at least $2 billion for the Commonwealth.

While Turzai’s plan for privatization is certainly a step in the right direction and his desire to eliminate the Johnstown Flood Tax is a position shared wholeheartedly by The Publius Foundation, Turzai’s proposal is regrettable in that it seems largely designed to raise revenue rather than fully privatize an industry that the government has no business being in in the first place. Turzai’s plan would, after all, maintain the outdated licensing regime that controls the sale of beer and further expand the mandate of the Liquor Control Board by requiring that the Board train all operators and employees of the new private wine and spirits retailers.

Rather than a plan that raises revenue for the government, mandates Liquor Control Board training of private employees and maintains an outdated licensing regime, Pennsylvania requires a plan that brings our alcohol laws into the 21^st century and allows Pennsylvanians to purchase beer, wine and liquor in retail locations whether they be bars, restaurants or grocery stores. If Pennsylvanian Republicans are serious about increasing economic liberty in our Commonwealth, they will create a bolder initiative that favors consumers and entrepreneurs over existing monopolies and politically connected unions of Liquor Control Board employees.