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Have you picked up a six-pack or refilled your growler lately?  As of this week you have a new option in Pennsylvania.  Act 166 was passed in the fall and went into effect on Tuesday, January 17, 2017.  It allows beer distributors to offer six-packs, individual bottles and cans, and even growlers for sale.

This legislation came in large part because the beer distributors were left out of much of the liquor reform that occurred earlier this summer with the passage of Act 39.  In that bill, which has generated much attention, restaurant licensees were given the ability to sell wine to-go, provided they obtain the appropriate permit, and breweries, distilleries, and wineries in PA were given the ability to sell other Pennsylvania-produced products, even if they had not manufactured it themselves.  Those were some rather sweeping changes to the Liquor Code that benefitted those industries but beer distributors were left out.

Opportunities for beer distributors came in Act 166, which they claim will better allow them to compete with the various bottle shops, grocery stores, and other establishments which sell smaller quantities of beer.  It was not that long ago that the PLCB changed its position and allowed beer distributors to sell 12-packs, but this legislation adds even more options for distributors and consumers. 
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The Pennsylvania Liquor Control Board yesterday released the results of the restaurant liquor license auction which it conducted and where 40 restaurant licenses were available for sale statewide.  As many predicted, the price for liquor licenses was driven significantly higher than historical prices due in large part to grocery stores and convenience stores now being permitted to operate using a restaurant liquor license to sell alcohol.  As reported by LNP and Central Penn Business Journal, the auction generated significant interest, although the vast majority of the bids and nearly all of the successful bidders were large corporations such as grocery stores, convenience stores, or developers.  While the auction was seen as a way to fix the problem currently in the liquor license market in many counties where few licenses are available, the structure of the auction in large part prevents most independent restaurateurs from having a reasonable opportunity to compete for these licenses.  In creating this auction process, the legislature (knowingly or not) created a system where payment for the license has to be received from the high bidder within two weeks of the close of the auction.  In other words, the winning bidder has to be able to pay a significant amount of money to the PLCB immediately after being told they were the high bidder and before they have even received the license or are anywhere close to putting it to use.  This is contrary to the model that most liquor license transactions use, and has never been the practice of the PLCB prior to this auction.
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On Monday, the Pennsylvania State Senate approved amendments to House Bill 1196 which the legislature has identified as a “fix” to the recent and expansive liquor reform law known as “Act 39”.  There has been much written about Act 39 and its expansion of the liquor laws; however, one organization or group of businesses that felt they were left out of that reform was the malt beverage distributors in Pennsylvania.

The Senate, in an attempt to address some of the concerns of the distributors in Pennsylvania, have now approved a bill which would allow distributors to sell beer in any quantity, to include by the single bottle, can, or even by the refillable growler.  While none of this can be done for on-premises consumption, it nonetheless allows beer distributors to compete with restaurants who sell beer to-go, grocery stores, convenience stores, and anyone else that is able to sell beer in smaller quantities.  For years, beer distributors were forced to sell beer by the case only, or in whatever form of “original packaging” was made by the manufacturer of the product.  Last year, the Pennsylvania Liquor Control Board reversed its long-standing position and agreed to permit beer distributors to sell its products in packaging which contain no less than 12 bottles or cans.  This was seen as significant reform for the distributors at the time and most, if not all, now carry significant quantities of 12-packs.
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The Pennsylvania Liquor Control Board released some big news yesterday.  The much anticipated auction of Restaurant Liquor Licenses is slated to take place at the end of October.  The PLCB issued a press release on Sept 13th announcing that 40 restaurant liquor licenses are going to be auctioned in this first round and inviting bids for those licenses.  For Lancaster County, 2 licenses will be available via this auction.  While this appears to be great news and may provide some much needed restaurant licenses to the market, the news is not without its problems.  Initially, from the language contained the PLCB’s release, it appears that a condition of the auction is the successful bidder will have to post the full amount of the purchase price within 2 weeks of being notified they were the highest bidder.  If licenses sell for anything close to the current market value, that could mean a successful bidder would have to pay in cash or other available funds upwards of $300,000.  That probably eliminates most true restaurateurs from the process and opens the door for large chain restaurants, grocery stores, and convenience stores to buy these licenses.
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The new liquor license legislation in Pennsylvania, commonly referred to as Act 39, is rapidly being implemented by the Pennsylvania Liquor Control Board.  The law, passed by the legislature in June and signed shortly thereafter by the governor, went into effect on August 8, 2016 and consumers around the Commonwealth are already quickly seeing its effects.  Most notably, many Pennsylvania liquor stores are now open expanded hours and selling lottery tickets and the PLCB has already approved a number of expanded wine permits which would allow grocery stores, restaurants or hotels to sell wine to go.  Consumers in Pennsylvania can now also receive shipments directly to their door from wineries across the country, provided that wineries obtain a new direct wine shipment permit.   These permits certainly provide for added convenience although the PLCB does impose some additional taxes on those purchases in exchange.
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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.

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The Pennsylvania Liquor Control Board, through its counsel, issued an advisory opinion this afternoon appearing to clear the way to allow beer distributors to sell 12-packs of beer.  This ruling is completely separate from any of the recent modernization or privatization movements which have been discussed by the governor and the legislature.

The opinion closely

There has been a significant amount of liquor license topics which have garnered media attention recently, especially in the Lancaster area.  Last Monday, the Beer Café in the Weis Markets in Ephrata opened.  Also throughout the week, there was daily coverage of the Liquor Privatization Bill which was debated and passed in the House of Representatives.  There was also coverage of a hearing before the House Gaming Oversight Committee where it was pointed out how costly and burdensome the Applications are for tavern gaming licenses. It was also pointed out that a mere 38 tavern gaming licenses were issued in the state.  When the tavern gaming license was introduced in 2013, the Legislature anticipated that it would generate in excess of $100 million dollars of revenue for the state.  Needless to say, they have fallen woefully short of that projection. 
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