Thank you to Chad Umble at LNP for another informative article regarding Pennsylvania liquor laws.  This one is concerning legislation pending in the PA House of Representatives that would impact the way that grocery stores and convenience stores could operate.

More specifically, the article highlights a bill currently being considered in the House’s Liquor Control Committee that would create a “customer convenience permit” which would enable those holding the permit to deny patrons the ability to consume alcohol on their premises, and also allow them more flexibility in terms of where they have to physically locate the beer and wine within their store.  It also proposes to remove some of the restrictions on how many ounces of alcohol can be purchased in any given transaction. As you might imagine, despite this being called a “customer convenience permit”, it is really a permit that was crafted solely by and for the grocery stores and convenience stores. As correctly pointed out in the article, Walmart is a major proponent of this bill and likely provided much, if not all, of the input on the bill as it was drafted.
Continue Reading

Thank you to Chad Umble for another informative article about the changing landscape for PA liquor licenses.  I’m sure there are many who read the article and wonder why the PLCB doesn’t just increase the number of available licenses or create a different kind of license for grocery stores and convenience stores to alleviate the pressure on the restaurants.  The answer to that question is neither simple nor clear, but I can give you some thoughts on why those options are unlikely to occur.

First, simply issuing more licenses would involve a change to the liquor code in Pennsylvania, which would have to pass through the legislature.  It is not as simple as the PLCB simply saying that the quota should be updated or more licenses should be issued.  Any time a bill is introduced regarding changes to the liquor code, it usually generates a lot of attention from many industry groups.  The Brewer’s Association, Restaurant and Lodging Association, Tavern Owners Association, the Malt Beverage Distributors Association, and more recently the Convenience Store Council and the Food Merchants Association, all are trade groups that are impacted by even small changes to the liquor code.  Each of these organizations represents members in various aspects of alcohol sales in the state and any change to the liquor code often impacts each of these groups very differently.  As a result, when liquor bills are advanced in the house or the senate, enormous pressure is placed on our legislators to recognize the interests of these various groups and not change the landscape to hurt any particular industry.  What often happens as a result of this is little or no change. 
Continue Reading

If you have been paying attention to what is happening in the brewing industry in Pennsylvania, you’ve noticed that there has been much discussion about the imposition of sales tax on beer manufactured in Pennsylvania and how that might affect consumer prices.  There was a lot of uncertainty about how new regulations from the Department of Revenue will be instituted and how sales tax will be charged on beer produced within the state. You may have read my post Sales Tax on Breweries back in the fall when we knew that it was coming but nobody was certain how it would ultimately be implemented. Now we have some guidance. As part of the 2019-2020 budget for Pennsylvania, the General Assembly was able to include some language that clarifies from a legislative standpoint (as opposed to internal regulations that the Department of Revenue was applying) how sales tax will be charged.

The issue that made this particularly difficult was the potential for inconsistencies in the amount of tax imposed, based on how the beer was sold.  For instance, in my previous post, I used the example of a $40 keg of beer that is sold at wholesale.  For a restaurant or other brewery buying that keg at wholesale, sales tax is paid and remitted to the Department of Revenue based on the $40 wholesale price, so $2.40 would be remitted for sales taxes.  Contrast that with the same keg of beer that is sold on site by the brewery that produced it.  If that brewery does not wholesale beer, under the guidelines issued by the Department of Revenue, the brewery would have to impose sales tax on each pint of beer sold from that keg.  Assuming approximately 120 pints of beer are sold from that keg and each pint is sold for $5.00, the brewery would have to charge and remit a total of $36.00 in sales tax.   With this new legislation, there should now be some consistency in terms of how sales tax is charged, regardless of whether a brewery wholesales its beer or whether they sell it entirely at their own property.
Continue Reading

The Pennsylvania Department of Revenue, somewhat quietly, has issued a sales tax bulletin recently setting forth some guidance which lays the groundwork for the Department of Revenue to begin imposing a 6% sales tax on products served by Pennsylvania breweries in their taproom to customers. This would include draft beers that are sold onsite and six packs and growlers which are sold for off premises consumption.

There didn’t appear to be a lot of buzz when this guidance was passed by the Department of Revenue. Central Penn Business Journal published an article highlighting the double hit that many breweries are currently taking given the tariffs  that have been imposed by the Trump Administration on steel. What is of particular concern is the seemingly unfair and inconsistent manner in which the sales tax would be imposed on the sales made by breweries when compared to a restaurant.
Continue Reading

When the Pennsylvania Liquor Code was amended recently to allow distributors to sell growlers, some savvy individuals realized that the boundaries could be pushed, and other types of ready-to-consume beverages may be able to fit within the parameters of what beer distributors may now sell in a “growler”. One of the biggest trends in the beer distributor business has been the sale of alcoholic slushies. When this first started, there was much discussion and debate as to whether the liquor code actually permitted this practice and what position the Pennsylvania Liquor Control Board would take regarding the practice. Fortunately, within the last couple of months, the General Counsel’s office for the PLCB has issued some additional guidance which clarifies that under the right circumstances, a beer distributor may sell slushies for off-premises consumption.

The PLCB in its most recent guidance has acknowledged that the Liquor Code broadly defines what is considered to be a “refillable growler”, and any refillable container that can be resealed would generally meet the definition. In the context of the sale of these slushies, most distributors have been placing them in refillable plastic cups which have a lid which must be removed before the beverage can be consumed, or if the lid has a hole for a straw or a place to drink, a sticker or other seal is placed over that so that the container is completely enclosed.
Continue Reading

It was announced on Wednesday that one of the more popular craft breweries in the country, Wicked Weed Brewing out of Ashville, North Carolina, was acquired by Anheuser-Busch, the world’s largest producer of beer.  Interestingly (but not surprising if you follow the craft beer industry) the announcement was met with significant backlash from the craft beer community.  The acquisition garnered significant criticism on Twitter, with many accusing Wicked Weed of “selling out.” The deal even generated a statement from the North Carolina’s Craft Brewers Guild, saying that they were “disheartened” by the announcement.  In another example, when Elysian Brewing Company out of Seattle announced its sale to Anheuser-Busch in 2015, the owner reported that customers were buying beers and dumping them onto the floor in protest of the sale!

Why are craft brewers treated so differently in the business world than other startups?  Why are they accused of “selling out” when in other industries, startup companies are celebrated and their founders turned into celebrities when they successfully sell off their company for millions (or hundreds of millions) of dollars?

The answer is not so simple and there seems to be reasonable arguments that can be made on both sides of the issue (beyond just pouring out a perfectly good beer).  Customers and craft beer enthusiasts often express concern that the takeover by a large, international corporate giant is going to impact the quality of the beer.  In some cases, this seems to be a justifiable concern.  The article from Thrillist cites a number of examples including Goose Island and Ballast Point where, after the acquisition, the original ownership left, recipes were changed, and in one case, a coveted batch of beer had to be recalled because of a non-toxic bacteria that infected the beer required its recall.  These issues were all blamed on the takeover and many people swore off drinking these beers as a result.
Continue Reading

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.
Continue Reading