Pennsylvania’s Privatization Bid Is One Glass Of Wine, Two Glasses Of Bull Honkey

Vinted on November 14, 2011 binned in best of, commentary, wine news

Everybody knows that I “love” the Pennsylvania Liquor Control Board [ Editor’s note: this is a boldfaced lie; I think the PLCB acts like a Communist monopoly and therefore I actually hate the PLCB ].

At least, I loved the recent move by Governor Tom Corbett to appoint Joseph “Skip” Brion (that’s his real nickname, by the way) the new PLCB Chairman, since both Corbett and Brion appear to be in favor of privatizing the state Commonwealth’s monopoly alcohol sales system – and they’re supporting House Bill eleven (HB11) which seeks to amend the existing Liquor Code “providing for the privatization of sales of wine and spirits in this Commonwealth through abolition of the State Liquor Stores.”

But as much as I’d love to see privatization take hold and the free market rein when it comes to alcohol sales in my home state Commonwealth, it’s become clear to me that, technically speaking, HB11 is actually not in the best interests of PA’s wine-consuming public; I would describe HB11 as Bull Honkey. As in, a big, stinking, steaming load of Bull Honkey.

Why?  Two reasons, my vino-loving friends, neither of which portends any favorable outcomes from HB11 when it comes to actually letting the free market into the ring of PA’s liquor sales and distribution…

Reason the first: Direct shipping? What direct shipping?

HB11 won’t do a bull honkey’s worth of diddly-squat when it comes to allowing PA resients to buy the wine they want, when they want it, and have it sent to their homes so that it doesn’t languish in some overheated PLCB storage area somewhere before they have a chance to enjoy it.  As anti-PLCB blogger Lew Bryson put it on his blog (emphasis is original):

“If it [ HB11 ] passes as is, Pennsylvanians are still forbidden by law to bring home a bottle of wine from New Jersey (or Maryland, or Delaware, or New York…). I’ve been assured directly by Representative Turzai that the police will no longer enforce this, but that’s not good enough. You’re a legislator; don’t tell me the police won’t enforce a despicably un-American law; change the law.”

Exactly, Lew.  Why agree in principal not to enforce a law that stays on the books? That makes no sense, and any reasonable person would probably consider that as not really being above-board; it might be a royal pain in the bull honkey organ, but let’s just change the law to reflect reality and do the difficult work of cleaning up the bull honkey instead of sweeping its smelly action under the carpet.

Reason the second: Licenses? Sure, if you’re a big (BIG) business

The big issue with the liquor store licenses in HB11 is that theren’t nearly enough of them – the bill calls for only about 1250 of the suckers.  That doesn’t sound too bad on paper, but on the street it will seriously limit the amount of stores throughout PA’s 46K some-odd square miles.

What’s worse, and what firmly lodges HB11 into bull honkey territory, is that just over half of the licenses (750 of the 1250 Class A) would apparently have to go to stores that are over 15,000 square feet in size.  Here are snippets from the text of Subarticle C:

“…The department shall be authorized to issue 1,250 wine and spirits retail licenses to successful bidders in the retail license auction process… Class A licenses shall authorize the operation of a retail wine and spirits store in a specific retail zone in an establishment that exceeds 15,000 square feet of retail floor space…”

What… the… F*CK?!??

We are not talking about electrical plants or hospitals here, folks, we are talking about stores that sell booze. Why the government would have to effectively mandate store size is beyond me… or is it?… Actually, when taken with the small overall number of licenses in the bill, HB11 makes total sense if your goal is to squeeze out smaller, independent liquor stores in PA in favor of big chains – and that, my friends, is bull honkey of the highest order.

All in all… it’s yet another sad day to be a wine lover living in PA…

Cheers!

44

 

 

    Comments

  • James McCann


    I agree that the bill is not perfect, but I don't necessarily agree with your analysis:

    1. Currently 621 stores… changing to 750 "chain" or "big box" stores plus 500 smaller stores, doubles the total number of retail outlets.
    2. The 750 class A licenses pay double the multiplier for their stores.
    3. Philadelphia is excluded from the square footage requirement.
    4. You can interpret this very differently. What if there were no class B licenses? Theoretically you could have all 1250 stores in the hands of chains, and NO small stores. The bill as written guarentees 500 smaller, private retailers.

    These types of bills are born out of compromise, and if we wait for a perfect bill, we will never get privatization.

    • 1WineDude


      Thanks, James – great points. I suppose it depends quite a bit on where those licenses get distributed. While I can understand compromise is the angel (and the devil, I suppose!) of getting these things done, not allowing direct shipping remains a huge hole in the PA privatization bid – that is also a result of compromise, no doubt, but there are plenty of studies that show that NOT allowing it is effectively leaving money on the table and going against the wishes of PA consumers. I think given your take on the licenses, if direct shipping (and legal changes) were permitted and the license issue remained unchanged, I would probably be in support of the bill rather than totally against it. But I remain against it.

  • James McCann


    The licenses will be distributed fairly across the counties, based upon past sales in the area.

    While all wine lovers want direct shipping, I still cannot understand the stance of not backing the bill to at least get us into a private system. The political reality is that this bill will NEVER include a direct shipping provision, so if the wine lover says "without it I'm against the bill," then they are condemned to the PLCB forever.

    Baby steps, dude, baby steps.

    • 1WineDude


      James – I guess my fear is that we will substitute the PLCB for a PLCB-look-alike, which would more or less function as the PLCB does but have a different name. I.e., I am not sure that removing the PLCB is actually a baby step along a continuum, it could become the end-game and then we are stuck complacently with its slightly-better but still well-behind-the-times substitute. But maybe I am just being too militant? :)

      • Lew Bryson


        That this is indeed going to be the end-game is the reason I'm not backing HB11 as is. Making significant changes will take years of uphill work: "You got privatization, why do you need THIS?" 1250 licenses is just ridiculously underdone for this state. As for the square foot limitation "giving" us 500 small stores, well, whoopee. You want a limitation that will really work on limiting the number of big box stores sucking up licenses? How about something like they have in Massachusetts, where any one company can only own three licenses? And you're happy because the limitations don't apply to Philadelphia? News to you: as things currently stand, Philadelphia County will have about as many stores as it does now. Happy with that?
        This is not a good bill. It's way too friendly to big stores. And we didn't even get into the crappy wholesaler arrangements that will likely make selection even worse, or the onerous taxes.

        • 1WineDude


          Lew – thanks for chiming in and thanks for inspiring this post of mine. I think we share the end-game concern as probably the biggest reason why this bill is bull honkey. Does it make progress? Yes. BUT… it makes the minimum amount of progress to call the bill a privatization initiative. And maybe what we need in PA is not so much a privatization initiative as an out-of-the-stone-age-and-back-to-the-free-market initiative – no PLCB, alcohol available in grocery stores, no serious restrictions on the size or number of potential businesses, and direct shipping to consumers.

          • Scott Rudich


            I know that New York State allows direct shipment now, but up until 2005, they did not. I grew up there and continue to vist family regularly. They have alwasy had an awesome selection and great prices. This was even prior to direct shipment. Granted certain wineries, Outpost up in the russian river valley comes to mind, have fantastic wines, but don't sell or distribute to other states. They will only direct ship, or you can pick up at the winery. Under the new law, you will still not be able to get those wines. However, you may be able to get some more variety from the bigger wineries around. Just to be able to get a Charles Krug, or a Regusci would be great. Let me get a little love from the privatization…then we tackle direct shipment…as long as you will support me in allowing brewies to to sell six packs

            • 1WineDude


              Scott – That is a logical argument, but I do NOT think the PA legislature will act logically and continue to progress along that continuum and allow direct shipping. With this bill, they are not even willing to update some of the related legislation and would, according to Lew’s blog post, rather agree in principle not to enforce laws that would remain on the books, which of course means that they could then just turn around and decide to enforce them. That is not logical – so we probably should not count on them having a change of heart and mind and acting logical after passage of a bill like this one.

  • Thomas Pellechia


    James,

    What's so private about a system that guarantees by government licensing arrangements the number of stores and sizes of stores?

    In just about every state of the union, it's so evidently clear that governmental alcohol control is a corrupt way to maintain a revenue stream–and it ain't ever private!

    Having said that, I grant you that it is likely the best PA will get for now and so, Joe should biter the bullet–or swallow the Bull Honky ;)

    • 1WineDude


      Thomas- It certainly does look like bull honkey sandwich is on the menu for me…

    • James McCann


      Because once you have a license, you are free to do with it what you choose. And, there will not be a single wine buyer in Harrisburg deciding what wines get "listed" in the state. Again, while the division of licenses by square footage may seem odd, it guarantees that there will be 500 smaller, private stores. So, what we will end up with is the ability to buy wine at: Grocery stores – Wine Superstores (Total Wine) – Small, Private Retailers. And that is a monumental step forward.

      • 1WineDude


        James – that's a double-edged sword; we also won't have the same discounts on some wines that the PLCB was able to get due to its buying power. Fair trade of course for getting rid of the PLCB and engendering some competition, I suppose.

  • winethropology


    Hate to be a wet blanket on the already stinky bull puckey, but Pennsylvanians had better get a grip on their expectations of privatization. It's privatization, not market liberation – and certainly not deregulation, which is what I think you're really looking for. Privatization, in political terms, means, "Someone else pays the rent and salaries now". It doesn't mean that the tax revenue structure will change, it doesn't mean that incoming wine/beer/liquor selections will change, and it doesn't mean that pricing will necessarily change, either.

    If it pans out in PA the way it has in OH, the only real changes are that the state/Commonwealth no longer pays rent on state stores and the people selling you booze aren't state employees (this one is at least a real positive). Dwelling on the positive for a sec, there will definitely be competition at the service level, which is a terrific thing for consumers and something sorely lacking in PA.

    • Lew Bryson


      This wet blanket stuff is exactly why we're not in favor of HB11. They're your legislators: talk to them. This bill is not the product of compromise. ONE law firm wrote it for ONE legislator, and they're now ramming it down ALL of our throats. Where's the compromise? We don't have to approve this, but if they see us saying, "Oh joy, we'll take what we can get!" they'll give it to us.

      • James McCann


        Lew, you are completely wrong that this bill was not the result of compromise. While most people sat on the sidelines, hoping for something good to happen, many of us spent countless hours (and dollars) to get the proper people elected to make privatization even possible, and subsequently lobbied them to get things moving.

        The bill itself, as it is currently written, has been revised many times from when it was first written, based on input from many industry sources, and based on the models that exist in other states. While many provisions of the bill are distasteful to me, I understand the political realities that spawned them. Putting together a coalition to pass this bill is incredibly complicated, and the resulting bill reflects that reality. One of the reasons Jim Mann wants hands off right now is that if you start messing around with it, votes can start slipping away.

        And why can't I buy wine in a supermarket? Outside of wine geeks, most consumers would jump at the chance.

        • Lew Bryson


          James, WHEN was the bill revised many times? Before it was presented? So what, it's so precious and fragile that it can't handle any adjustment? And "based on input from many industry sources"? What about US? What about the consumers, the voters?

          Why doesn't anyone GET THIS? WE are not being consulted, we are not being heard, it's as if our desires mean nothing. "Here," they say, "we're 'privatizing,' and the form of that privatization should not matter to you. We are granting you this, please don't look this gift horse in the mouth." Sorry, I don't buy that. I don't think Corbett believes this is a great solution either, which is why he said it was a good place to start.

          I agree: it's a good place to start…but as a bill, not a law. There is NOTHING in this bill about beer. I realize that may not be as obviously a flaw to you as to me, but in most other states, stores sell wine, spirits, and beer. It's a package, one-stop shopping. Does that mean Mann and company would have to deal with another group of stakeholders? Sure, and it means an opportunity to get more people invested in the idea. As it stands now, they're against this. Could have brought them in.

          Nathan Lutchansky makes an excellent point about the wholesaler provisions of HB11 being likely to shrink selection, not increase it. Is that what any of us want? Do you really want the markedly high taxes on wine to continue, now that they're finally out in the open? Is 1,250 a good number for licenses, even if it is twice what we have now? (Because it surely won't put wine in supermarkets.) Do the square foot provisions make any sense except in the context of a number of licenses that is clearly too small?

          HB11 needs more work. If Jim Mann needs hands off, maybe he should have done a better job writing a bill that was more palatable to some people who really matter: the voters. I don't want a perfect bill. I've laid out what I'd like to see changed in HB11, but unlike some, I'm willing to compromise on those points. At this point, though, I've got NONE of them. That's not compromise.

          • James McCann


            Lew,

            Yes, the bill was revised numerous times before introduction, and ultimately will be revised again. The point I'm trying to make is that each bullet point that you are unhappy with is in there because of some type of political reality. To your credit, you did point out before the election that electing Governor Corbett was key to privatization. Most did not, yet they want a seat at the table now? Where was their support a year ago?

            And the idea that there needs to be compromise with you personally does not make much sense. Put together a coalition of thousands, and maybe you'll get a voice.

            • 1WineDude


              James – I think the point is not that Lew wasn't consulted personally, it's that it doesn't seem that PA wine consumers were consulted (at least, not in a way that was made public), and ultimately they are the ones impacted by the changes if the bill passes.

      • James McCann


        So, while I agree with most of the criticisms leveled at this bill, I'm still strongly inclined to support a bill that yields a flawed private system than support the continuation of the PLCB as it stands. Those who think that they will change it to something perfect are beyond naive.

  • Carl Helrich


    Nice post, Joe. I have to say that the direct-shipping issue is deeper than you might realize. The Supreme Court ruling of Granholm v Heald in 2005 forced states to either even-up or even-down with regards their in-state wineries. At that time, the PLCB issued an edict trying to remove the right of PA wineries to ship wine to PA resident. Since that right was given to us by legislature, the PA Winery Association was able to get an injunction filed which kept the local wineries shipping wine to PA residents to this day.

    What this means is that, since PA wineries are allowed to ship to PA residents, out-of-state wineries are as well. It's just that the PA legislature has legislatively complied yet with the Supreme Court ruling (even after six years.) It's also why they won't enforce the law, because technically there isn't a law to enforce anymore. (Of course, most non-PA wineries aren't willing to test this out…)

    I am for privatization in the current bill, because the direct-shipping will be have to be handled later. They really are two separate political (and legal) issues, and Turzai's bll is trying not to muddy the waters.

    We need to continue the debate in Harrisburg. I was told a while ago by someone connected in Harrisburg that most people in PA want privatization, but it won't happen unless there are demonstrations in the streets by the capitol….

    My $.02.. Keep up the good work!

    –Carl

    • 1WineDude


      Thanks, Carl – I was aware of PA's lack of compliance with the 2005 SC decision, and covered it some time ago here on 1WD. Essentially, the message it is sending seems to be that if you bring in enough money to PA, you need not comply with Federal law, which is a scary message.

    • James McCann


      Carl is completely right about the current state of the PA shipping laws – there is nothing currently "constitutionally" on the books that can be enforced.

  • Kovas


    Hard to believe you can't bring home a bottle of wine purchased out of state!

    • 1WineDude


      Kovas – welcome to my hell! :)

  • Thomas Pellechia


    Kovas,

    When I was a wine salesman working for a New Jersey-based distributor I went to sales meetings by car from my home in NY State.I had a solicitor's license in NY and in NJ, because you can't be a wine salesman without one.

    I had no need for a solicitor's license in PA, because I didn't sell wine in that state, however, to get to the office in New Jersey from my home I drove through PA.

    Once, while stopped for a taillight that was out, a PA state cop glanced at my back seat which was full of wine sample bottles that I was taking home from the office. He asked what it was there for, I told him. He informed me that since I had no license to carry wine in PA I was in violation of PA law by driving through the state.

    Because he was a nice guy, and because I had those two solicitor's licenses, he said he would warn me not to bring wine through PA again–and also to get my light fixed.

    Welcome to the world of alcohol regulation.

    • 1WineDude


      Thomas – you forgot to mention the part where you bribed the cop with some of those samples, right? ;-)

  • Tom


    As a PA resident, I don't really think I will get better selection if/when privatization passes. I live near one of the PLCB's larger "premium collection" stores, and the selection is pretty good. I also can't imagine that people living in rural areas will have better selection. Why would private industry want to build and stock a store with a wide variety of items in a sparsely populated area?

    Direct shipping, in my opinion, is a much more worthwhile effort than privatization.

    • 1WineDude


      Tom – I am beginning to think you are right. And maybe I was too quick to lament the current privatization bill – if it leads to more traction for a separate measure for direct shipping then it might be a good move. Having said that, I have little faith that this bill would pave the way for direct shipping, and might even risk consumers and legislators getting too complacent and direct shipping actually losing traction…

      • Lew Bryson


        "Direct shipping" is the main "modernization" that the PLCB/UFCW is dangling as a shiny toy to distract you from privatization. I've got a Facebook page where a UFCW rep is constantly harping about direct shipping, and wondering why we don't just go for that, because they're "okay" with it. Then you realize that when THEY say "direct shipping," they're talking about "direct shipping" to a PLCB store where you would go pick it up after paying PA taxes and PLCB markup. So be careful what you wish for.

        • 1WineDude


          Lew – direct shipping to a Monopoly store is not, in fact, direct shipping; in my meaning, direct shipping is basically any wine from any source shipped directly to any residence by any approved carrier and purchased by any resident of legal drinking age. The shipping "solution" proposed by the PLCB is, I agree, completely crap – it's adding the PLCB as a useless middle-man so they can store the wine at one of their (arguably inferior and detrimental) facilities and charge us all for the "convenience" of that "service."

          • Lew Bryson


            You know…even if we DO get real direct shipping, to my own home, paying the taxes (and they'll still want the PLCB's markup, count on that), that is no substitute for privatization. I want to go to a store, where people know what they're talking about, where the selection is a result of the local store manager/owner/buyer making decisions based on the local patrons' desires, not those of a committee hundreds of miles away making decisions for the entire state.

            • 1WineDude


              Lew – ideally, we would get total dissolution into the private sector, meaning alcohol sales are free-market and not at all touched by the government (beyond reasonable regulations, etc.).

              But we probably need baby steps to get there – and you and I are aligned that this existing bill, for many reasons, isn't the right first step.

  • Thomas Pellechia


    Somebody–please, somebody–get the Supremes to shoot down all sate control over wine commerce and make it just like any other commodity. Please, I ask you–please.

    Unfortunately, only a revolution will ever get wine consumers what they should have.

    I know it sounds trite, but when it comes to wine, where is the representative Republic in which we live? Forget Tea Party or Wall Street; we need a Win Party party!

  • Thoams Pellechia


    Make that Wine Party…

    • 1WineDude


      Thomas – maybe we can piggyback the Occupy [insert town name here] craze…

  • Jeff


    Thanks, Joe, for staying with these developments. I've commented here on past stories you've written on the subject and still maintain the same argument, that as it stands now we STILL won't have the small, independent and hand-selected wine stores that we should have in PA. New York, DC, hell even Memphis has cool wine shops, but Philadelphia can't and this bill doesn't look like it will help.

    Yes, I have a bias (which is probably obvious). I've been honing my retail business management skills, my wine knowledge and my industry experience with the hopes of opening one of those small, hand-select wine stores in my hometown. But I can't do it if the license will be many hundreds of thousands of dollars! The only ones who will do that are the mega chain stores.

    I'll keep dreaming my dream and building my base with the hopes that one day I'll get the chance. *sigh* Please keep up the fight for real options for the consumer!

    • 1WineDude


      Thanks, Jeff – here's hoping that one day I will be shopping freely in one of your stores!

  • James McCann


    Jeff,

    As the bill is currently written, there will be 500 small stores available. You can look at the data for the current state stores in your area, and the numbers in the bill, and get some idea of what a license might go for… keep in mind, you always had the potential to be competing with someone else who wanted to do the same thing you did.

    How many dollars did you have in your business plan for the license?

  • @mariepayton


    In all your spare time, can you analyze what the hell is wrong with Massachusetts shipping laws? I consider myself fairly well educated but these laws (think they were written when the Pilgrims landed) just amaze me!

    • 1WineDude


      @mariepayton – sure, I will get right on that… ;-)

  • 1WineDude


    @winethropology – Thanks. I suppose I am shooting for the moon here and probably acting as the sharp stone that has just fallen into the stream and has not yet been smoothed out by the waters of PA politics. But in the case of free enterprise, I remain an idealist even if a slightly-unrealistic one at that. :)

  • Trackbacks

  • Trackback from Terroirist » Daily Wine News: Bull Honkey!
    Tuesday, 15 November, 2011

    […] As much as Joe Roberts would “love to see privatization take hold and the free market rein when it comes to alcohol sales” in Pennsylvania, he thinks the current effort to reform the system is Bull Honkey. […]

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