The Pennsylvania State House of Representatives approved a historic measure this evening to get the Commonwealth out of the business of selling wine and spirits at the same time it is supposed to regulate alcohol – a situation Governor Tom Corbett, who supports privatization, regards as a conflict of interest. The majority Republican lower chamber of the General Assembly approved the measure to end the state monopoly on the wholesale of alcohol and gradually end the state-owned system of the retail of alcohol that will now move to the Senate, where passage is less certain.
Pennsylvania has had a socialist system of a state monopoly on the wholesale of alcohol and a system of state-owned liquor retail stores since the repeal of Prohibition eighty years ago, as part of a system of alcohol regulation intended by prohibitionists to be as expensive and inconvenient as possible. For example, beer is sold by beer distributors, but only by the case, and in taverns, but only in six-packs or individual bottles. Wine and spirits are sold only in state-owned stores, with the few exceptions of wineries and winery outlets, as well as by the bottle or glass if a restaurant holds a liquor license. Only a small number of grocery stores that have such a restaurant license and designate a seating area for the consumption of wine and spirits are thereby permitted to sell them. Because the selection of wine and spirits in state stores is less than in privately-owned stores in other states, the Commonwealth loses much business to illegal cross-border purchases by Pennsylvanians who travel to each of the six neighboring states. The
State and Utah are the only two States in the American
Union with a state-owned system. The Commonwealth of Pennsylvania
is the largest purchaser of alcohol in the United States. It controls which brands are permitted to be
sold in the state, as well as the distribution of all alcoholic beverages.
Among the reforms in the House liquor store privatization bill, it gets the Commonwealth completely out of the wholesale alcohol business and gradually out of the retail alcohol business by allowing the sale of the 618 state liquor stores by selling 1,200 licenses to operate the wine and spirit stores by region, unless there are no buyers in a particular region. Private stores would be opening as “state stores” are sold or closed, under the bill. Once there are fewer than 100 state stores remaining, the remainder would close. Without the state monopoly on such stores, there would finally be competition in alcohol retail sales. Beer distributors, who would get the first opportunity to purchase the stores, as well as state financing to purchase them, would be permitted to sell wine and spirits. They would also be able to sell six-packs. Beer would also be permitted to be sold in gasoline stations. Because beer distributors would be able to sell wine and spirits and there would also be more availability of sales of all three types of alcoholic beverages by those businesses holding a restaurant license under the bill, Pennsylvanians would now legally be able to purchase all of their alcohol in one-stop shops. Grocery stores which purchase a license to sell wine would be able to sell an unlimited number of bottles of wine per customer, while restaurants with a license to sell bottles of wine would be allowed to sell a limited number per customer.
Several measures to sell off the state stores were offered last year, but did not gain significant legislative traction, although they did generate much discussion. Governor Corbett, a Republican, submitted his own plan, which the House offered, amended and approved. Two previous GOP Governors, Richard Thornburgh and Tom Ridge, had also supported privatizing liquor stores, but encountered strong resistance from the state store workers union. Under the privatization bill approved by the House, state store workers would be given training and education grants, preference in state civil service jobs and businesses would receive tax credits for hiring them. Proponents predict that many state store workers would be hiring by the new store owners. Much of the opposition to this time was also based on the idea that the state stores generate hundreds of millions of dollars in annual revenue, but proponents argue that the sales of the licenses, would not only generate one-time revenue of hundreds of millions of dollars, but the Commonwealth would continue to receive tax revenue from the sales of alcohol. They argue that sales would increase as Pennsylvanians would not have to travel to other states to purchase wine and spirits that are currently unavailable in the
because of the state wholesale monopoly. Keystone State Pennsylvania
residents could legally purchase alcohol from other states under the bill and
bring it home, if they pay a tax.
See also the Commonwealth Foundation blog, a link to which appears on my blog homepage, which provides useful information on this subject. It has been a leader in promoting a free market in alcohol sales.
In conclusion, the historic House bill would end the Commonwealth’s conflict of interest in selling alcohol while regulating it, end its monopoly on alcohol wholesale, allow greater choice in purchasing alcoholic beverages, introduce competition in the retail of alcohol while ending its monopoly on wine and spirit stores, improve convenience for customers and end the loss of revenue to other states, while giving the state a large one-time boost of revenue. I commend the Pennsylvania House of Representatives for passing the bill and call upon the Senate to approve the legislation.