Big Changes for the Pennsylvania Liquor Code

You may have been surprised to see the news on the front page of the newspaper this morning:

More convenient beer and wine sales? Sure, say shoppers

Q&A: What does Pennsylvania’s new liquor law mean for you?

Believe it or not, the PA House of Representatives and Senate have been able to agree upon a bill which significantly expands and reforms the Pennsylvania Liquor Code.  Given the level of discord between Republicans and Democrats as well as between the House and Senate (not to mention the Governor), it came as a great surprise to many that a liquor bill was able to be passed, not to mention a bill with rather broad updates to the Liquor Code.  Governor Wolf signed this bill yesterday enacting it into law in 60 days.

Some of the highlights of this bill which have the potential to offer significant benefits to both consumers and existing operators include:

• A wine permit which will allow restaurant licensees (including grocery stores and convenience stores which currently operate using a restaurant liquor license) to obtain a permit allowing them to sell up to four (4) bottles of wine for off-premises consumption. A separate permit will need to be acquired from the PLCB in order to sell wine to go, and it’s likely that this will be used in large part by the grocery stores and convenience stores which are currently scooping up available restaurant liquor licenses.

• Speaking of convenience stores, this bill potentially resolves the issue that has been working its way through Pennsylvania courts regarding whether or not a business that sells liquid fuels can also hold a liquor license. This codifies some of the recent rulings by the Pennsylvania Liquor Control Board and clarifies that permission can be received from the Board for a business which sells liquid fuels to also sell alcohol, provided certain additional requirements are met.

• Mug clubs are also expressly dealt with and resurrected from the dead with this bill. You may recall that a number of years ago, the Liquor Control Board issued a ruling which essentially prevented most breweries and restaurants from being able to operate what is traditionally thought of as a mug club.  Licensees will now be able to reinstitute those programs provided that they charge an annual fee to be a member of the program and otherwise meet the requirements set out in this bill.

• Also relevant to consumers is that the law will now allow for direct wine shipment to consumers. Currently, if consumers order wine on the internet, it must be shipped to a local liquor store where the consumer would have to pick it up.  This bill will allow cases to be shipped directly to a consumer’s home provided it’s for personal use and not for resale.  Wineries or distributors will still need to have a license to ship wine into the state; however, this license will now allow them to ship up to 36 cases per year directly to a resident of the Commonwealth who is at least 21 years of age.

• Of note for current operators or prospective operators, this bill also attempts to activate what were commonly known as “dead” licenses throughout the state. Previously, if an operator went out of business and didn’t sell their license before doing so, if they chose not to renew their license, or if they were found in violation of the Pennsylvania Liquor Code and the PLCB revoked their license, those licenses were never recirculated or otherwise available for anyone else to use.  The PLCB will now auction on an annual basis restaurant liquor licenses that have expired.  All interested bidders would have to be approved by the PLCB. The high bidder in an auction will have to submit an application to transfer that license to the location where they intend to ultimately use it.

• Finally, for current licensees, this bill also allows for the PLCB to deliver to a licensee its liquor order, rather than having the licensee go to the liquor store and pick it up, and also reduces the markup on special liquor orders. For breweries and limited distilleries, this new bill allows them to sell products beyond simply what they make on their premises.  Breweries will now be able to sell Pennsylvania wines produced by a limited winery as well as liquors produced by a limited distillery in Pennsylvania.  Wineries would also be able to sell beer produced by a licensed brewery and liquor produced by a limited distillery.

It remains to be seen whether this is the first of more legislative amendments to the liquor code which further try to modernize or expand the current liquor system in Pennsylvania or whether this was the final compromise short of a major overhaul of the system.  Also, given the size of this bill (it is 164 pages), we are just beginning to understand the scope of the changes.  I’ll get into additional details in future posts but this Bill appears to also dramatically expand the offerings available at Pennsylvania wineries and distilleries.

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 and restaurant and bar owners, breweries, distilleries, and wineries to facilitate the sale and transfer of PA liquor licenses.