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 Sales Tax Coming on Breweries

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 Alcoholic Slushies – New Opportunity for Beer Distributors

The Pennsylvania Liquor Control Board announced its seventh auction of expired restaurant liquor licenses and will be accepting bids until October 30th.

While this may sound like good news if you are an aspiring restaurateur in the mid-state area, don’t get your hopes up just yet. As with its prior auctions, the PLCB is only auctioning licenses in the counties where there remains a quota of unexpired licenses, so there are no licenses available in York, Lancaster, Chester, or Cumberland counties. There is one license available in both Lebanon and Dauphin counties; however, even if you are interested in a license in one of those counties, be aware that the PLCB requires that the full purchase price for the license be placed in escrow with the PLCB within two weeks of being notified that they were the successful bidder in the auction. As a practical matter, and as has been the case throughout the license auction process, that eliminates nearly all new restaurateurs or small business owners who do not have the cash immediately available to deposit with the PLCB. It is for that reason that the overwhelming majority of auctioned licenses have been sold to large convenience and grocery store chains.

While the PLCB may have thought they were helping the marketplace and providing additional licenses for restaurateurs, the reality is that because of the way the purchase structure is set up, the only beneficiaries of this license auction have been large grocery and convenience store chains that can afford to put hundreds of thousands of dollars of cash toward the purchase of a license.  So if you’re in the market and don’t mind bidding against large central Pennsylvania retailers, good luck.  Otherwise, consider purchasing an existing business or finding another option to obtain a liquor license.

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

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 Double (IPA) Standard for Craft Breweries?

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 Changes to Pennsylvania Liquor Law Part of Budget Negotiations

I have the pleasure of working with numerous clients who own bars, restaurants, hotels and breweries, so when Nate Bunty asked me to participate in an Expert Interview on Liquor Liability I was happy to share some of the knowledge and experience I have gained over the years. Nate is the Managing Partner of Heritage Insurance Agency and the interview included many topics of interest unique to the hospitality industry. Nate specializes in meeting the insurance needs of businesses in the hospitality sector, and we had a chance to discuss some of the specialized issues that confront that industry, both from an insurance perspective and from a legal one.

Check out Nate’s blog to find additional information for those in the hospitality industry with regard to their insurance needs.

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

The results of the latest PLCB auction of restaurant licenses were announced yesterday and, to no one’s real surprise, the prices for licenses remained high on average around the state.  As expected, many of the licenses were purchased by grocery stores or convenience stores.  LNP obtained information about the bids on the license that was auctioned for use in Lancaster County.  For that license, the only bidders were Turkey Hill, Rutter’s, Sheetz, Giant Food Stores, and Weis Markets.  Every bid was in excess of $300,000, with the winning bid coming from Turkey Hill for a sale price of $407,600.00.

As I’ve noted previously, with the present competition for restaurant liquor licenses coming from grocery stores and convenience stores, it leaves the true restaurateur priced out of the market.  It is becoming increasingly difficult to find a license that is available for sale and, even if a license is found, the current prices place an unrealistic burden on an individual who is trying to get started in the business.  Frankly, even established restaurants who would like to add alcohol service to their business or open a new location with a liquor license have difficulty justifying the expense.  Unless the legislature steps in and changes the current system, this problem is likely to get worse before it gets better.

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

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.  Continue Reading More Liquor Code Changes – Six-Packs, Individual Bottles & Cans, Growlers now Available at PA Beer Distributors

As the supplies of candy dwindle in our homes from the Halloween harvest, our attention turns to the day of giving thanks. After running across Affinity Consulting’s awesome annual collection of Tech for Which We Are Thankful, I was inspired to survey our blog’s authors for their tech favorites. Here is some of the tech we are grateful for (and yes, we have lots of tech here in the heart of Lancaster’s farm country): Continue Reading “Techsgiving” in Lancaster County: The Tech We Are THANKFUL for is…

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. Continue Reading Liquor License Auction Update