THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY TURZAI, SAYLOR, CHRISTIANA, BEAR, BENNINGHOFF, COX, GILLESPIE, GINGRICH, HARRIS, HUTCHINSON, KILLION, KRIEGER, METCALFE, MILLER, MOUL, PERRY, QUIGLEY, RAPP, REESE, REICHLEY, ROAE, ROSS, SCHRODER AND TALLMAN, SEPTEMBER 10, 2010

REFERRED TO COMMITTEE ON LIQUOR CONTROL, SEPTEMBER 10, 2010  

AN ACT

Amending the act of April 12, 1951 (P.L.90, No.21), entitled, as

reenacted, "An act relating to alcoholic liquors, alcohol and

malt and brewed beverages; amending, revising, consolidating

and changing the laws relating thereto; regulating and

restricting the manufacture, purchase, sale, possession,

consumption, importation, transportation, furnishing, holding

in bond, holding in storage, traffic in and use of alcoholic

liquors, alcohol and malt and brewed beverages and the

persons engaged or employed therein; defining the powers and

duties of the Pennsylvania Liquor Control Board; providing

for the establishment and operation of State liquor stores,

for the payment of certain license fees to the respective

municipalities and townships, for the abatement of certain

nuisances and, in certain cases, for search and seizure

without warrant; prescribing penalties and forfeitures;

providing for local option, and repealing existing laws,"

further providing for enforcement; providing for the

abolishment of the State liquor stores and for a franchise

and license for wine and spirits stores and wholesale

operations; further providing for taxation on wine and

spirits products; and making certain repeals affecting

taxation on wine and spirits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 102 of the act of April 12, 1951 (P.L.90,

No.21), known as the Liquor Code, reenacted and amended June 29,

1987 (P.L.32, No.14), is amended by adding definitions to read:

Section 102.  Definitions.--The following words or phrases,

unless the context clearly indicates otherwise, shall have the

meanings ascribed to them in this section:

* * *

"Municipal police department" shall mean a police department

of a county, city, borough, town or township.

* * *

"Wine and spirits store franchise" shall mean a written

agreement between the board and a successful bidder in which the

board agrees to issue a wine and spirits store license to the

successful bidder for a specified geographic area for the

establishment and operation of a wine and spirits store

consistent with the provisions of this act.

"Wine and spirits store licensee" shall mean any person who

successfully bids for a franchise and who applies for and

receives a license for the operation of a wine and spirits store

for the retail sale of wine and liquor for off-premises

consumption.

"Wine and spirits wholesale franchise" shall mean a written

agreement between the board and a successful bidder in which the

board agrees to issue a wine and spirits wholesale license to

the successful bidder for a specified geographic area for the

establishment and operation of a wine and spirits wholesale and

warehousing business consistent with the provisions of this act.

"Wine and spirits wholesale licensee" shall mean any person

who successfully bids for a franchise and who applies for and

receives a license for the operation of a wine and spirits

wholesale and warehousing business for the sale of wine and

spirits to retail licensees that are authorized to sell wine and

spirits for on-premises and off-premises consumption under the

provisions of this act.

* * *

Section 2.  Section 104(c) and (d) of the act, amended

December 7, 1990 (P.L.662, No.160) and December 20, 1996

(P.L.1513, No.196), are amended to read:

Section 104.  Interpretation of Act.--* * *

(c)  Except as otherwise expressly provided, the purpose of

this act is to prohibit the manufacture of and transactions in

liquor, alcohol and malt or brewed beverages which take place in

this Commonwealth, except by and under the control of the board

as herein specifically provided, and every section and provision

of the act shall be construed accordingly; to provide a

structure in this Commonwealth for a distribution system,

including the [establishment of Pennsylvania liquor stores and]

licensing of wine and spirits wholesalers, wine and spirits

stores, importing distributors and distributors; and to preserve

manufacturers of liquor and alcohol and malt and brewed

beverages selling those products within this Commonwealth. The

provisions of this act dealing with the manufacture,

importation, sale, distribution and disposition of liquor,

alcohol and malt or brewed beverages within the Commonwealth

through [the instrumentality of the board,] licensees and

otherwise, provide the means by which such control shall be made

effective. This act shall not be construed as forbidding,

affecting or regulating any transaction which is not subject to

the legislative authority of this Commonwealth.

(d)  The provisions of this act are intended to create a

system for distribution [that shall include the fixing of prices

for] of liquor and alcohol and controls placed on prices for

malt and brewed beverages, and each of which shall be construed

as integral to the preservation of the system, without which

system the Commonwealth's control of the sale of liquor and

alcohol and malt and brewed beverages and the Commonwealth's

promotion of its policy of temperance and responsible conduct

with respect to alcoholic beverages would not be possible.

* * *

Section 3.  Section 207(a), (b), (c) and (j) of the act,

amended November 30, 2004 (P.L.1727, No.221) and December 8,

2004 (P.L.1810, No.239), are amended to read:

Section 207.  General Powers of Board.--Under this act, the

board shall have the power and its duty shall be:

[(a)  To buy, import or have in its possession for sale and

sell liquor, alcohol, corkscrews, wine and liquor accessories,

trade publications, gift cards, gift certificates, wine- or

liquor-scented candles and wine glasses in the manner set forth

in this act: Provided, however, That all purchases shall be made

subject to the approval of the State Treasurer, or his

designated deputy. The board shall buy liquor and alcohol at the

lowest price and in the greatest variety reasonably obtainable.]

(b)  To control the manufacture, possession, sale,

consumption, importation, use, storage, transportation and

delivery of liquor, alcohol and malt or brewed beverages in

accordance with the provisions of this act[, and to fix the

wholesale and retail prices at which liquors and alcohol shall

be sold at Pennsylvania Liquor Stores. Prices shall be

proportional with prices paid by the board to its suppliers and

shall reflect any advantage obtained through volume purchases by

the board. The board may establish a preferential price

structure for wines produced within this Commonwealth for the

promotion of such wines, as long as the price structure is

uniform within each class of wine purchased by the board. The

board shall require each Pennsylvania manufacturer and each

nonresident manufacturer of liquors, other than wine, selling

such liquors to the board, which are not manufactured in this

Commonwealth, to make application for and be granted a permit by

the board before such liquors not manufactured in this

Commonwealth shall be purchased from such manufacturer. Each

such manufacturer shall pay for such permit a fee which, in the

case of a manufacturer of this Commonwealth, shall be equal to

that required to be paid, if any, by a manufacturer or

wholesaler of the state, territory or country of origin of the

liquors, for selling liquors manufactured in Pennsylvania, and

in the case of a nonresident manufacturer, shall be equal to

that required to be paid, if any, in such state, territory or

country by Pennsylvania manufacturers doing business in such

state, territory or country. In the event that any such

manufacturer shall, in the opinion of the board, sell or attempt

to sell liquors to the board through another person for the

purpose of evading this provision relating to permits, the board

shall require such person, before purchasing liquors from him or

it, to take out a permit and pay the same fee as hereinbefore

required to be paid by such manufacturer. All permit fees so

collected shall be paid into the State Stores Fund. The board

shall not purchase any alcohol or liquor fermented, distilled,

rectified, compounded or bottled in any state, territory or

country, the laws of which result in prohibiting the importation

therein of alcohol or liquor, fermented, distilled, rectified,

compounded or bottled in Pennsylvania.

(c)  To determine the municipalities within which

Pennsylvania Liquor Stores shall be established and the

locations of the stores within such municipalities].

* * *

[(j)  By regulation, to provide for the use of a computerized

referral system to assist consumers in locating special items at

Pennsylvania Liquor Stores and for the use of electronic

transfer of funds and credit cards for the purchase of liquor

and alcohol at Pennsylvania Liquor Stores.]

* * *

Section 4.  Section 208 of the act is amended to read:

Section 208.  Specific Subjects on Which Board May Adopt

Regulations.--Subject to the provisions of this act and without

limiting the general power conferred by the preceding section,

the board may make regulations regarding:

[(a)  The equipment and management of Pennsylvania Liquor

Stores and warehouses in which liquor and alcohol are kept or

sold, and the books and records to be kept therein.]

(b)  The duties and conduct of the officers and employes of

the board.

[(c)  The purchase, as provided in this act, of liquor and

alcohol, and its supply to Pennsylvania Liquor Stores.

(d)  The classes, varieties and brands of liquor and alcohol

to be kept and sold in Pennsylvania Liquor Stores. In making

this determination the board shall meet not less than twice a

year.

(e)  The issuing and distribution of price lists for the

various classes, varieties or brands of liquor and alcohol kept

for sale by the board under this act.]

(f)  The labeling of liquor and alcohol sold under this act

and of liquor and alcohol lawfully acquired by any person prior

to January first, one thousand nine hundred thirty-four.

(g)  Forms to be used for the purposes of this act.

(h)  The issuance of licenses and permits and the conduct,

management, sanitation and equipment of places licensed or

included in permits.

[(i)  The place and manner of depositing the receipts of

Pennsylvania Liquor Stores and the transmission of balances to

the Treasury Department through the Department of Revenue.

(j)  The solicitation by resident or nonresident vendors of

liquor from Pennsylvania licensees and other persons of orders

for liquor to be sold through the Pennsylvania Liquor Stores

and, in the case of nonresident vendors, the collection

therefrom of license fees for such privilege at the same rate as

provided herein for importers' licenses.]

Section 4.1.  Section 211(a) of the act, amended October 5,

1994 (P.L.537, No.80), is amended to read:

Section 211.  Enforcement.--(a)  There is created within the

Pennsylvania State Police a Bureau of Liquor Control Enforcement

[which]. The enforcement bureau and municipal police departments 

shall be responsible for enforcing this act and any regulations

promulgated pursuant thereto. Officers and investigators

assigned to the bureau or a municipal police department shall

have the power and their duty shall be:

(1)  To investigate whenever there are reasonable grounds to

believe liquor, alcohol or malt or brewed beverages are being

sold on premises not licensed under the provisions of this act.

If the investigation produces evidence of the unlawful sale of

liquor or malt or brewed beverages or any other violation of the

provisions of this act, the officer involved in the

investigation shall institute criminal proceedings against the

person or persons believed to have been criminally liable, as

otherwise provided by law or rule of court.

(2)  To arrest on view, except in private homes, without

warrant, any person actually engaged in the unlawful sale,

importation, manufacture or transportation or having unlawful

possession of liquor, alcohol or malt or brewed beverages

contrary to the provisions of this act or any other law of this

Commonwealth or any person whom the officer/investigator, while

in the performance of his assigned duties under and pursuant to

this act and any regulations promulgated under this act,

observes to be in violation of any of the following provisions:

18 Pa.C.S. § 3302 (relating to causing or risking

catastrophe).

18 Pa.C.S. § 3304 (relating to criminal mischief).

18 Pa.C.S. § 4101 (relating to forgery).

18 Pa.C.S. § 5503 (relating to disorderly conduct).

18 Pa.C.S. § 5505 (relating to public drunkenness).

18 Pa.C.S. § 5512 (relating to lotteries, etc.).

18 Pa.C.S. § 5513 (relating to gambling devices,

gambling, etc.).

18 Pa.C.S. § 5514 (relating to pool selling and

bookmaking).

18 Pa.C.S. § 6307 (relating to misrepresentation of age

to secure liquor or malt or brewed beverages).

18 Pa.C.S. § 6308 (relating to purchase, consumption,

possession or transportation of liquor or malt or brewed

beverages).

18 Pa.C.S. § 6309 (relating to representing that minor is

of age).

18 Pa.C.S. § 6310.1 (relating to selling or furnishing

liquor or malt or brewed beverages to minors).

18 Pa.C.S. § 6310.3 (relating to carrying a false

identification card).

(3)  Upon reasonable and probable cause, to search for and to

seize, without warrant or process, except in private homes, any

liquor, alcohol or malt or brewed beverages unlawfully

possessed, manufactured, sold, imported or transported and any

stills, equipment, materials, utensils, vehicles, boats,

vessels, animals, aircraft, or any of them, which are or have

been used in the unlawful manufacture, sale, importation or

transportation of the same. Such liquor, alcohol, malt or brewed

beverages, stills, equipment, materials, utensils, vehicles,

boats, vessels, animals or aircraft so seized shall be disposed

of as hereinafter provided.

(4)  To investigate and issue citations for any violations of

this act or any laws of this Commonwealth relating to liquor,

alcohol or malt or brewed beverages, or any regulations of the

board adopted pursuant to such laws or any violation of any laws

of this Commonwealth or of the Federal Government, relating to

the payment of taxes on liquor, alcohol or malt or brewed

beverages by any licensee, his officers, servants, agents or

employes.

(5)  To arrest any person who engages in the following

offenses when the said offenses are committed against the

officer/investigator or any person accompanying and assisting

the officer/investigator while the said officer/investigator is

performing assigned duties under and pursuant to this act and

any regulations promulgated under this act:

18 Pa.C.S. § 2701 (relating to simple assault).

18 Pa.C.S. § 2702 (relating to aggravated assault).

18 Pa.C.S. § 2705 (relating to recklessly endangering

another person).

18 Pa.C.S. § 2706 (relating to terroristic threats).

18 Pa.C.S. § 2709 (relating to harassment and stalking).

18 Pa.C.S. § 5104 (relating to resisting arrest or other

law enforcement).

18 Pa.C.S. § 5501 (relating to riot).

(6)  To serve and execute warrants issued by the proper

authorities for offenses referred to in this subsection and to

serve subpoenas.

(7)  To arrange for the administration of chemical tests of

breath, blood or urine, including preliminary breath tests, to

persons for the purpose of determining the alcoholic content of

blood or the presence of a controlled substance by qualified

personnel of a State or local police department or qualified

personnel of a clinical laboratory licensed and approved by the

Department of Health.

* * *

Section 5.  Section 213 of the act, amended April 29, 1994

(P.L.212, No.30), is repealed:

[Section 213.  Bureau of Consumer Relations.--The board shall

establish a Bureau of Consumer Relations which shall be

responsible for handling all consumer complaints and

suggestions. The bureau shall develop a system-wide program for

investigating all complaints and suggestions and implementing

improvements into the State store system. The management of the

bureau shall be vested in a director, who shall be assisted by

such other personnel as the board deems necessary.]

Section 6.  Section 215 of the act, amended June 25, 2010

(P.L.217, No.35), is repealed:

[Section 215.  Wine and Spirits Marketing.--(e)  The board is

authorized to participate in or sponsor wine and spirits events

for the purpose of educating consumers as to the wines and

spirits available in this Commonwealth. The wine and spirits to

be used for the event may be acquired through the State store

system or may be donated from outside this Commonwealth.

Participation in the tastings may be conditioned on the purchase

of a ticket to the event. The event may include events occurring

on premises licensed by the board, and the board may sell wine

and spirits for off-premises consumption in an area designated

by the board for such sale.] 

Section 7.  Article III of the act, amended July 13, 1987

(P.L.331, No.61), May 8, 2003 (P.L.1, No.1), July 17, 2003

(P.L.63, No.15), November 30, 2004 (P.L.1727, No.221), December

8, 2004 (P.L.1810, No.239) and July 6, 2005 (P.L.135, No.39), is

repealed:

[ARTICLE III.

PENNSYLVANIA LIQUOR STORES.

Section 301.  Board to Establish State Liquor Stores.--(a)  

The board shall establish, operate and maintain at such places

throughout the Commonwealth as it shall deem essential and

advisable, stores to be known as "Pennsylvania Liquor Stores,"

for the sale of liquor and alcohol in accordance with the

provisions of and the regulations made under this act; except

that no store not so already located shall be located within

three hundred feet of any elementary or secondary school, nor

within a dry municipality without there first having been a

referendum approving such location. When the board shall have

determined upon the location of a liquor store in any

municipality, it shall give notice of such location by public

advertisement in two newspapers of general circulation. In

cities of the first class, the location shall also be posted for

a period of at least fifteen days following its determination by

the board as required in section 403(g) of this act. The notice

shall be posted in a conspicuous place on the outside of the

premises in which the proposed store is to operate or, in the

event that a new structure is to be built in a similarly visible

location. If, within five days after the appearance of such

advertisement, or of the last day upon which the notice was

posted, fifteen or more taxpayers residing within a quarter of a

mile of such location, or the City Solicitor of the city of the

first class, shall file a protest with the court of common pleas

of the county averring that the location is objectionable

because of its proximity to a church, a school, or to private

residences, the court shall forthwith hold a hearing affording

an opportunity to the protestants and to the board to present

evidence. The court shall render its decision immediately upon

the conclusion of the testimony and from the decision there

shall be no appeal. If the court shall determine that the

proposed location is undesirable for the reasons set forth in

the protest, the board shall abandon it and find another

location. The board may establish, operate and maintain such

establishments for storing and testing liquors as it shall deem

expedient to carry out its powers and duties under this act.

(b)  The board may lease the necessary premises for such

stores or establishments, but all such leases shall be made

through the Department of General Services as agent of the

board. The board, through the Department of General Services,

shall have authority to purchase such equipment and appointments

as may be required in the operation of such stores or

establishments.

Section 302.  Selection of Personnel.--Officers and employes

of the board, except as herein otherwise provided, shall be

appointed and employed subject to the provisions of the Civil

Service Act.

Section 303.  Management of Pennsylvania Liquor Stores.--

Every Pennsylvania Liquor Store shall be conducted by a person

appointed in the manner provided in the Civil Service Act who

shall be known as the "manager" and who shall, under the

directions of the board, be responsible for carrying out the

provisions of this act and the regulations adopted by the board

under this act as far as they relate to the conduct of such

stores.

Section 304.  When Sales May Be Made at Pennsylvania Liquor

Stores.--(a)  Except as provided for in subsection (b), every

Pennsylvania Liquor Store shall be open for business week days,

except holidays as that term is defined in section 102. The

board may, with the approval of the Governor, temporarily close

any store in any municipality.

(b)  Certain Pennsylvania Liquor Stores operated by the board

shall be open for Sunday retail sales between the hours of noon

and five o'clock postmeridian, except that no Sunday sales shall

occur on Easter Sunday or Christmas day. The board shall open up

to twenty-five per centum of the total number of Pennsylvania

Liquor Stores at its discretion for Sunday sales as provided for

in this subsection. The board shall submit yearly reports to the

Appropriations and the Law and Justice Committees of the Senate

and the Appropriations and the Liquor Control Committees of the

House of Representatives summarizing the total dollar value of

sales under this section.

Section 305.1.  Confectionery Containing Alcohol or Liquor.--

(a)  Notwithstanding the prohibition against the manufacture of

confectionery containing alcohol as set forth in the fifth

clause of subsection (a) of section 3 of the act of May 13, 1909

(P.L.520, No.292), referred to as the Pure Food Law, the

manufacture, storage, transportation and delivery to points out-

of-State by manufacturers of confectionery containing alcohol or

liquor is permitted.

(b)  The sale of confectionery containing alcohol or liquor

is prohibited within this Commonwealth.

(c)  This section is not intended to cover, govern, nor

control the sale of confectionery containing tinctures or

extracts used for flavoring purposes or solvents for glazes.

Section 305.  Sales by Pennsylvania Liquor Stores.--(a)  The

board shall in its discretion determine where and what classes,

varieties and brands of liquor and alcohol it shall make

available to the public and where such liquor and alcohol will

be sold. Every Pennsylvania Liquor Store shall be authorized to

sell combination packages. If a person desires to purchase a

class, variety or brand of liquor or alcohol not currently

available from the board, he or she may place a special order

for such item so long as the order is for two or more bottles.

The board may require a reasonable deposit from the purchaser as

a condition for accepting the order. The customer shall be

notified immediately upon the arrival of the goods.

In computing the retail price of such special orders for

liquor or alcohol, the board shall not include the cost of

freight or shipping before applying the mark-up and taxes but

shall add the freight or shipping charges to the price after the

mark-up and taxes have been applied.

Unless the customer pays for and accepts delivery of any such

special order within ten days after notice of arrival, the store

may place it in stock for general sale and the customer's

deposit shall be forfeited.

(b)  Every Pennsylvania Liquor Store shall sell liquors at

wholesale to hotels, restaurants, clubs, and railroad, pullman

and steamship companies licensed under this act; and, under the

regulations of the board, to pharmacists duly licensed and

registered under the laws of the Commonwealth, and to

manufacturing pharmacists, and to reputable hospitals approved

by the board, or chemists. Sales to licensees shall be made at a

price that includes a discount of ten per centum from the retail

price. The board may sell to registered pharmacists only such

liquors as conform to the Pharmacopoeia of the United States,

the National Formulary, or the American Homeopathic

Pharmacopoeia. The board may sell at special prices under the

regulations of the board, to United States Armed Forces

facilities which are located on United States Armed Forces

installations and are conducted pursuant to the authority and

regulations of the United States Armed Forces. All other sales

by such stores shall be at retail. A person entitled to purchase

liquor at wholesale prices may purchase the liquor at any

Pennsylvania Liquor Store upon tendering cash, check or credit

card for the full amount of the purchase. For this purpose, the

board shall issue a discount card to each licensee identifying

such licensee as a person authorized to purchase liquor at

wholesale prices. Such discount card shall be retained by the

licensee. The board may contract through the Commonwealth

bidding process for delivery to wholesale licensees at the

expense of the licensee receiving the delivery.

(c)  Whenever any checks issued in payment of liquor or

alcohol purchased from State Liquor Stores by persons holding

wholesale purchase permit cards issued by the board shall be

returned to the board as dishonored, the board shall charge a

fee of five dollars per hundred dollars or fractional part

thereof, plus all protest fees, to the maker of such check

submitted to the board. Failure to pay the face amount of the

check in full and all charges thereon as herein required within

ten days after demand has been made by the board upon the maker

of the check shall be cause for revocation or suspension of any

license issued by the board to the person who issued such check

and the cancellation of the wholesale purchase permit card held

by such person.

(d)  No liquor or alcohol package shall be opened on the

premises of a Pennsylvania Liquor Store. No manager or other

employe of the board employed in a Pennsylvania Liquor Store

shall allow any liquor or alcohol to be consumed on the store

premises, nor shall any person consume any liquor or alcohol on

such premises, except liquor and alcohol which is part of a

tasting conducted pursuant to the board's regulations. Such

tastings may also be conducted in the board's headquarters or

regional offices.

(e)  The board may sell tax exempt alcohol to the

Commonwealth of Pennsylvania and to persons to whom the board

shall, by regulation to be promulgated by it, issue special

permits for the purchase of such tax exempt alcohol.

Such permits may be issued to the United States or any

governmental agency thereof, to any university or college of

learning, any laboratory for use exclusively in scientific

research, any hospital, sanitorium, eleemosynary institution or

dispensary; to physicians, dentists, veterinarians and

pharmacists duly licensed and registered under the laws of the

Commonwealth of Pennsylvania; to manufacturing chemists and

pharmacists or other persons for use in the manufacture or

compounding of preparations unfit for beverage purposes.

(f)  Every purchaser of liquor, alcohol, corkscrews, wine or

liquor accessories, trade publications, gift cards, gift

certificates, wine- or liquor-scented candles or wine glasses

from a Pennsylvania Liquor Store shall receive a numbered

receipt which shall show the price paid therefor and such other

information as the board may prescribe. Copies of all receipts

issued by a Pennsylvania Liquor Store shall be retained by and

shall form part of the records of such store.

(g)  The board is hereby authorized and empowered to adopt

and enforce appropriate rules and regulations to insure the

equitable wholesale and retail sale and distribution, through

the Pennsylvania Liquor Stores, of available liquor and alcohol

at any time when the demand therefor is greater than the supply.

(h)  Every Pennsylvania Liquor Store shall sell gift

certificates and gift cards which may be redeemed for any

product sold by the board. In addition, the board may sell

corkscrews, wine and liquor accessories, wine- or liquor-scented

candles, trade publications and wine sleeves at Pennsylvania

Liquor Stores.

(i)  Notwithstanding any other provision of law to the

contrary, the board may sell wine in containers having a

capacity of six liters or less.

Section 306.  Audits by Auditor General.--(a)  It shall be

the duty of the Department of the Auditor General to make all

audits which may be necessary in connection with the

administration of the financial affairs of the board and the

Pennsylvania Liquor Stores operated and maintained by the board.

Such audits shall be conducted in accordance with generally

accepted accounting principles. Nothing herein shall be

construed to require the Auditor General to conduct biannual

inventories.

(b)  At least one audit shall be made each year of the

affairs of the board, and all collections made by the

Pennsylvania Liquor Stores shall be audited quarterly. A copy of

the annual audit of the affairs of the board shall be submitted

to each member of the General Assembly.

(c)  Special audits of the affairs of the board and the

Pennsylvania Liquor Stores maintained and operated by the board

may be made whenever they may, in the judgment of the Auditor

General, appear necessary, and shall be made whenever the

Governor shall call upon the Auditor General to make them.

(d)  Copies of all audits made by the Department of the

Auditor General shall be promptly submitted to the board and to

the Governor.

(e)  Unless the Department of the Auditor General shall

neglect or refuse to make annual, quarterly or special Audits,

as hereinabove required, it shall be unlawful for the board to

expend any money appropriated to it by the General Assembly for

any audit of its affairs, except for the payment of the

compensation and expenses of such auditors as are regularly

employed as part of the administrative staff of the board.]

Section 8.  The act is amended by adding an article to read:

ARTICLE III-A

WINE AND SPIRITS DISTRIBUTION

SUBARTICLE A

WINE AND SPIRITS

FRANCHISES AND LICENSES

Section 301-A.  Legislative intent.

(a)  Declaration.--The General Assembly hereby finds and

declares that:

(1)  The sale of liquor and wine at wholesale or retail

should no longer be by the Commonwealth, but rather by

licensees.

(2)  The health and welfare of the citizens of this

Commonwealth will be adequately protected by the regulation

of private licensees through strict enforcement of laws and

rules relating to the purchase and sale of liquor and wine.

(3)  The sale of liquor and wine through wholesale and

retail licenses will improve customer service, selection and

price.

(4)  The operation and efficiency of State Government

will be improved.

(b)  Purpose.--It is the purpose of the General Assembly to:

(1)  Continue and increase revenue to the Commonwealth.

(2)  Provide a system of controls, including limitations

on the number of wholesale and retail franchises and

licenses, and establish procedures to discourage the

intemperate use of liquor.

(3)  Create incentives and facilitate the transition of

employees to other employment.

(4)  Minimize disruption of services to the public.

(5)  Enhance alcohol education efforts to ensure against

the illegal sale of alcohol and consumption of alcohol by

minors and visibly intoxicated persons.

Section 302-A.  Transition to franchise and licensure of stores

and warehouses.

(a)  General.--The board shall develop and implement a plan

to provide for the orderly transition from the current system of

wholesale and retail distribution of alcohol through the board

to a franchise and license system of alcohol distribution in

this Commonwealth. The board shall transition its retail

operations first, followed by its wholesale operations.

(b)  Transition.--The board shall transition to wine and

spirits store franchises and licenses pursuant to the provisions

of this article. The board shall substantially divest itself of

all operations relating to the retail sale of alcohol in this

Commonwealth within one year of the effective date of this

section.

(c)  Divestiture.--Eighteen months after the effective date

of this section, the board shall substantially divest itself of

all operations relating to the wholesale distribution of alcohol

in this Commonwealth in accordance with the provisions of this

article.

(d)  Prohibition.--Under no circumstances will the board

engage in any wholesale or retail distribution of liquor within

this Commonwealth after two years of the effective date of this

section.

Section 303-A.  Reports to General Assembly; review.

(a)  Annual report.--One year after the effective date of

this section, and each year thereafter, the board shall submit

to the General Assembly an annual report on wholesale and retail

alcohol sales in this Commonwealth and the implementation of

this article, including, but not limited to, the total revenue

earned by the issuance of licenses pursuant to this article for

the wholesale and retail sale of liquor in this Commonwealth.

(b)  Review.--Five years following the effective date of this

section, the board shall conduct a thorough review of the

operations of the wine and spirits wholesale licensees and store

licensees. The board shall submit a copy of this review and any

recommendations relating to the expansion of existing franchise

zones to the General Assembly. The same review shall be

conducted ten years following the sale of the first wine and

spirits wholesale or store franchise.

Section 304-A.  Closure of State stores and initial franchises.

(a)  Continuous level of service.--It shall be the power and

duty of the board to carry out an orderly transition to a wine

and spirits store system in a manner which is consistent with

this article and other laws of this Commonwealth and which

maintains a continuous level of service to the public.

(b)  Franchise zones.--

(1)  Subject to the provisions of this article, the board

shall establish 621 franchise zones within this Commonwealth

for the issuance of wine and spirit store licenses, granting

to a licensee the exclusive authority to sell liquor and wine

at retail for off-premises consumption within each franchise

zone. The board, in establishing each franchise zone, shall

ensure the delivery of services currently provided by State

stores. At a minimum there shall be a wine and spirits store

located in each county.

(2)  In addition to the franchise zones established under

paragraph (1), the board shall permit an additional 129

franchises within this Commonwealth for the issuance of wine

and spirit store licenses, granting to a licensee the

authority to sell liquor and wine at retail for off-premises

consumption within this Commonwealth in a location to be

determined by application to the board. The board, in

establishing the location for such a franchise, shall ensure

that existing franchise zones established under paragraph (1)

are not negatively impacted and the delivery of services

currently provided are maintained or enhanced.

(c)  Sale schedule.--

(1)  The board shall establish a schedule for the sale of

wine and spirits store franchises within the franchise zones

established pursuant to subsection (b)(1) by sale to the

highest responsible bidder in accordance with this article.

The board may establish a staggered schedule for the sale of

wine and spirits store franchises in order to maintain a

continuous level of service to the public. Upon substantial

completion of the sale of wine and spirits store franchises

under subsection (b)(1), the board may engage in a similar

process in auctioning franchises under subsection (b)(2).

(2)  The minimum bid for a franchise shall be determined

based on the fair and reasonable market value of each

franchise as determined by the board.

(3)  The franchise shall be valid for a period of two

years from the date of issuance unless sooner forfeited,

abandoned or revoked pursuant to the provisions of this act.

(4)  No applicant may hold, directly or indirectly:

(i)  More than 5% of the franchises within this

Commonwealth.

(ii)  More than 10% of the franchises in any one

county which has ten or more franchises.

(iii)  More than one franchise in any one county

which has fewer than ten franchises.

(d)  Powers and duties.--In implementing the provisions of

this article, the board shall have the following additional

powers and duties:

(1)  To prescribe application forms for persons desiring

to acquire a wine and spirits store license.

(2)  To adopt an orderly procedure for the investigation,

processing and approval of applications for franchises and

wine and spirits store licenses.

(3)  To develop the form of the wine and spirits store

license.

(4)  To disseminate information to the public relating to

the sale of franchises and the issuance of wine and spirits

store licenses.

(5)  To make available for public inspection the most

recent inventory of the stock, equipment and other assets of

each State store as well as a history of sales by product

code and State store location for the last five years.

(6)  To enforce the provisions of this article, including

the imposition of civil penalties when appropriate.

Section 305-A.  Discontinuance of wholesale operations by board

and initial franchises.

(a)  Orderly transition.--It shall be the power and duty of

the board to carry out an orderly transition to a privately

owned and operated wholesale wine and spirits distribution

system in a manner which is consistent with this article and

other laws of this Commonwealth and which maintains a continuous

level of service to the public.

(b)  Franchise established.--Subject to the provisions of

this article, the board shall establish 100 franchises within

this Commonwealth for the issuance of wine and spirits store

licenses granting to a licensee the authority to deliver liquor

and wine at wholesale to retail licensees and wine and spirits

store licensees within each franchise zone. The board, in

establishing each franchise zone, shall ensure the delivery of

services currently provided by the State-operated wholesale

delivery system. The number of wholesale franchises and licenses

available in each county shall be no more than the following:

(1)  Counties of the first class: five.

(2)  Counties of the second class: five.

(3)  Counties of the second class-A: four.

(4)  Counties of the third class: three.

(5)  Counties of the fourth through eighth class: two.

(c)  Schedule.--

(1)  The board shall establish a schedule for the sale of

wine and spirits wholesale franchises within each county

established pursuant to subsection (b) by sale to the highest

responsible bidder in accordance with this article. Such

schedule shall ensure the full divestiture of the

Commonwealth's wine and spirits wholesale operations to

licensees within six months of offering the first franchise

at auction to qualified applicants.

(2)  The minimum bid for a franchise shall be determined

based on the fair and reasonable market value of each

franchise as determined by the board.

(3)  The franchise shall be valid for a period of two

years from the date of issuance unless sooner forfeited,

abandoned or revoked pursuant to the provisions of this act.

(4)  No applicant may hold, directly or indirectly:

(i)  more than 5% of the franchises within this

Commonwealth; or

(ii)  more than one of the franchises in any county.

(d)  Additional powers and duties.--In implementing the

provisions of this article, the board shall have the following

additional powers and duties:

(1)  To prescribe application forms for persons desiring

to acquire a wine and spirits wholesale license.

(2)  To adopt an orderly procedure for the investigation,

processing and approval of applications for franchises and

wine and spirits wholesale licenses.

(3)  To develop the form of the wine and spirits

wholesale license.

(4)  To disseminate information to the public relating to

the sale of franchises and the issuance of wine and spirits

wholesale licenses.

(5)  To enforce the provisions of this article, including

the imposition of civil penalties when appropriate.

Section 306-A.  Application for franchises and licenses.

(a)  Qualifications.--No person may bid upon, purchase or

otherwise acquire a wine and spirits store or wholesale

franchise unless the applicant has satisfied all the prescribed

requirements of this article and the board has approved the

applicant's qualification to hold a wine and spirits store

franchise and license pursuant to this article.

(b)  Requirements.--Prior to the submission of a bid for a

wine and spirits store or wholesale franchise, each applicant

shall file a written application, with the application fee

required under subsection (g), in such form and containing such

information as the board shall from time to time prescribe. The

application shall contain, at a minimum, the following:

(1)  The name and address of the applicant.

(2)  Whether the applicant is an individual, corporation,

limited liability company, limited partnership, partnership

or association; the state of incorporation or organization,

the names and residence addresses of each executive officer,

director or general or limited partner; and the names and

residence addresses of any person or interested individual

owning, directly or indirectly, any legal or equitable

interest in the operations of the licensed wine and spirits

store or wholesale operation proposed to be operated by the

applicants, including all stockholders of any closed

corporation and all stockholders having an ownership interest

of 5% or more of the voting stock of a public corporation. As

provided in section 404, parties not listed on the

application, or any amendment thereof, can have no ownership

interest in a licensed business.

(3)  If the applicant is an association, the application

shall set forth the names and addresses of the persons

constituting the association.

(4)  If the applicant is a corporation, the application

must show that:

(i)  The corporation was incorporated under the laws

of Pennsylvania or holds a certificate of authority to

transact business in Pennsylvania.

(ii)  All officers, directors and stockholders with

an interest of 5% or more in the stock of the corporation

are citizens of the United States.

(5)  If the applicant is a natural person, the

application must show that the applicant is a citizen of the

United States and has been a resident of this Commonwealth

for at least one year immediately preceding the application

and that the applicant is not acting as an agent for any

other person, partnership, association or group of persons

beneficially interested in the license.

(6)  The proposed location and ownership of the site for

the wine and spirits store or wholesale operation, if

available.

(7)  A sworn statement that the applicant and all parties

with any direct or indirect interests in the operation of a

wine and spirits store or wholesale operation have never been

convicted in this Commonwealth of any crime involving fraud,

moral turpitude or racketeering within a period of ten years

immediately preceding the date of the application or have

been convicted of any felony or of an equivalent crime in

another state or of any crime in this or any other Federal or

state court for a violation of any Federal or state liquor

law. If the applicant is a corporation, limited partnership,

partnership or association, the application shall contain a

sworn statement that none of the executive officers,

directors or general or limited partners, or any person

owning, directly or indirectly, at least 5% of the

outstanding stock of or partnership interests in such

applicant has been so convicted.

(8)  A statement that the applicant will continuously

operate a wine and spirits store or wholesale operation for

the duration of the two-year franchise period and will

provide a level of service, including, but not limited to,

hours of operation and product availability reasonably

equivalent to the level of service currently provided in the

same geographic area.

(c)  Financial statement.--In addition to the application

filed under subsection (a), the applicant shall provide a

financial statement in the form and containing such information

as the board shall from time to time prescribe to indicate the

applicant's financial capability to operate the wine and spirits

store or wholesale operation and the estimated volume of

business to be conducted.

(d)  Application requirements.--The application shall be

signed and verified by oath or affirmation by the owner, if a

natural person or, in the case of an association, by a member or

partner thereof or, in the case of a corporation, by an

executive officer thereof or any person specifically authorized

by the corporation to sign the application, to which shall be

attached written evidence of that authority.

(e)  Additional information.--An applicant shall provide the

board any additional information the board may request.

(f)  Amended application.--When a change occurs in any

information provided to the board, an amended application shall

immediately be submitted to the board in the same manner as the

original application.

(g)  Application fees.--

(1)  The following fees shall be due upon application for

and renewal of a wine and spirits store franchise or a wine

and spirits wholesale franchise:

(i)  Application filing fee.......$10,000.

(ii)  Renewal filing fee........... $1,000.

(2)  A fee of $500 shall be due upon application for a

wine and spirits store license or a wine and spirits

wholesale license.

Section 307-A.  Issuance of licenses.

(a)  Qualified applicants.--Only those applicants for wine

and spirits store or wholesale operation licenses issued

pursuant to this section who meet all of the requirements of

this subsection shall be qualified to participate in any sale

conducted under this article. The qualifications are as follows:

(1)  Applicants shall demonstrate, by submitting

financial statements, that the applicants possess sufficient

financial resources to operate a licensed wine and spirits

store or wholesale operation, pay all taxes due and owing to

the Commonwealth and assume liability for the safe operation

of the licensed premises.

(2)  Applicants shall file a certificate obtained from

the Department of Revenue indicating whether the applicant

has any current tax deficiencies due and owing the

Commonwealth. No applicant shall be permitted to participate

in the sale of franchises pursuant to this article if that

applicant has any outstanding tax assessments or deficiencies

except for amounts subject to timely appeal.

(3)  All required bonds and letters of credit shall be

posted and are subject to forfeiture for violations of this

article in the same manner as provided by sections 465 and

466.

(b)  Successful bidders.--Licenses shall be issued pursuant

to this section to successful bidders upon demonstration that

the licensee will comply with all of the following terms and

conditions:

(1)  Notice shall be given to the board within 15 days of

any change in financial interests as provided by subsection

(a)(1).

(2)  Notice shall be given to the board within 15 days of

any criminal indictments or convictions as provided in

section 306-A(b)(7) and the ownership interest of any parties

subject to such convictions shall be totally divested by the

licensee within 30 days of the date of any conviction, guilty

plea or plea of nolo contendere.

(3)  Licensees shall continue to maintain the bonding for

the operation of the wine and spirits store or wholesale

operation required by this article. Wine and spirits store

licensees shall acquire wine and liquor exclusively from the

wholesale system as provided in this act and keep a detailed

log of all wholesale wine and liquor transactions.

(4)  Wine and spirits wholesale licensees shall:

(i)  Collect and remit to the Department of Revenue

the excise tax as provided in section 341-A.

(ii)  Acquire wine and liquor exclusively from a

licensed manufacturer or importer of wine and spirits as

provided in this act and keep a detailed log of all

wholesale wine and spirits transactions.

(5)  Licensees shall establish adequate security to

protect their inventory from unauthorized sale or diversion

and prevent its unauthorized distribution.

(6)  No licensee shall locate or operate any wine and

spirits store in any premises where the retail sale of motor

fuel or malt or brewed beverages is conducted.

Section 308-A.  Disqualification.

(a)  Disqualification.--The board shall disqualify an

applicant for a franchise or license under this article if any

of the following apply:

(1)  The applicant has been convicted of a crime as

provided in paragraph (4).

(2)  Any executive officer, director or general or

limited partner of the applicant, or any person owning,

directly or indirectly, at least 5% of the outstanding stock

of or partnership interest in the applicant, has been

convicted of a crime as provided in paragraph (4).

(3)  The applicant receives funds for the financing of

any part of the wine and spirits store or wholesale operation

from any individual who has been convicted of a crime as

provided in paragraph (4).

(4)  In any instance in which an applicant or persons

with financial interest in the license are under indictment

for a felony or under investigation by a legally constituted

grand jury, the board shall withhold approval or disapproval

of the license until such time as all legal proceedings

related to the felony are resolved.

(5)  The applicant provides false or misleading

information.

(b)  Penalty.--If any false statement is intentionally made

in any part of the application, the affiant commits a

misdemeanor of the second degree and, upon conviction, shall be

subject to the penalties provided by this article. In addition,

the applicant shall be denied a franchise and a license or, if

already granted, the franchise and license shall be revoked.

Section 309-A.  Application procedure.

(a)  Investigation.--Upon receipt of an application for a

franchise and license under this article, and any other

information the board may require, the board shall conduct an

investigation of the applicant as deemed necessary or desirable.

(b)  Notification.--Upon the completion of an investigation

under subsection (a), the board shall inform the applicant in

writing whether the application has been approved or denied and

shall post a copy of the decision in the office of the board.

(c)  Denial.--If an application is denied, the board shall

provide the applicant with the specific reasons for the denial.

The applicant shall be entitled to a hearing if a hearing is

requested within five days of the decision.

(d)  Posting of notice.--Every applicant for a license under

this article or for the transfer of an existing license to

another premises not then licensed shall post, for a period of

at least 60 days beginning with the day the application is filed

with the board, in a conspicuous place on the outside of the

premises or at the proposed new location for which the license

is applied, a notice of the application in the form, of the size

and containing all information as the board may require by

regulation.

(e)  Hearing.--The board shall hold a hearing on any

application for a license under this article upon the request of

any resident residing within a radius of 500 feet of the

premises, if the request is filed within 15 days of posting the

notice of application under subsection (d). The board and any

hearing examiner of the board shall give appropriate evidentiary

weight to any testimony of such residents at the hearing. The

board may provide for the holding of such hearings by hearing

examiners as provided in this act. The board shall refuse any

application for a license under this article which could be

detrimental to the welfare, health, peace and morals of the

inhabitants of the neighborhood within a radius of 500 feet of

the premises proposed to be licensed.

(f)  Notification of decision.--The board shall approve or

disapprove the location and notify the successful bidder or

licensee of its decision.

Section 310-A.  Physical limitations.

(a)  Store specifications.--

(1)  The premises of each wine and spirits store shall be

a self-contained unit with limited customer access dedicated

solely to the sale of liquor and permitted merchandise. All

purchases made within the limitations of the premises shall

be paid for at a location within the confines of the liquor

sales area. No wine and spirits store shall have any interior

connection with any other business or with any residential

building except as approved by the board.

(2)  The premises of each wine and spirits wholesale

operation shall be a self-contained unit with limited

customer access dedicated solely to the sale of wine and

spirits to licensees under this act. No wine and spirits

wholesale operation shall have any interior connection with

any other business or with any residential building.

(b)  Relocation information.--Upon notice of a successful bid

on a franchise or an application to relocate, each applicant for

a license under this article shall submit a description of the

premises and any other material, information and description of

the plan of that premises where it is proposed to keep and sell

liquor as may be required by the regulations of the board.

(c)  Details.--The descriptions, information and plans under

subsection (b) shall show the proposed location of the premises

and any alterations proposed to be made to the described

premises or shall show the new building proposed to be

constructed after the approval by the board of the application

for a franchise or for the transfer of an existing license to

another premises not then licensed.

Section 311-A.  Denial or revocation of application.

Hearings on the denial of an application or on the refusal to

renew a license under this article shall be held in accordance

with the procedures established in section 464.

Section 312-A.  Bidding.

(a)  Process.--The granting of franchises under this article

shall be by sealed competitive bids to the highest responsible

bidder. No bid shall be considered unless the bond required

under this section has been submitted to the board. All bids for

a franchise may be rejected by the board if the board determines

that the highest bid is inadequate. Whenever the board rejects

all the tendered bids, the board shall begin a new bidding

process for that franchise. The board shall notify qualified bid

applicants of the date and the hour of the bid openings.

(b)  Posting of security.--In order to participate in the

bidding under this section, bid applicants shall post bonds,

cash, negotiable securities or letters of credit equal to an

amount set by the board, but not less than $50,000.

(c)  Submission of bids.--Each person desiring to submit a

bid must file the bid with the board prior to the specified date

and hour for the bid openings. Failure to deliver a bid or

nonreceipt of a bid prior to the appointed date and hour shall

constitute sufficient reason for rejection of a bid. Following

the award of the franchise, the board shall indicate the

successful bidder. A copy of each awarded bid and the bidder's

application shall be maintained as public record and open to

public inspection in the offices of the board. Rejection of all

tendered bids by the board shall result in the opening of a new

bidding process for that franchise.

(d)  Conditions of franchise.--The board shall issue a

franchise to a successful bidder to operate a wine and spirits

store or wholesale operation within the specified franchise zone

upon satisfaction of all of the following conditions:

(1)  Execution by the successful bidder of a franchise

agreement.

(2)  Payment in full by the successful bidder of the

amount of the successful bid.

(3)  Approval by the board of the successful bidder's

proposed franchise location.

(4)  Posting by the successful bidder of bonds in an

amount determined by the board to reasonably reflect the cost

of the bidder's initial inventory. Bonds posted pursuant to

this paragraph shall be released by the board upon payment in

full by the successful bidder of the amount due for initial

inventory or shall be forfeited in the event the amount due

for initial inventory is not paid in full within 15 days of

the date such inventory was delivered to the wine and spirits

store or wholesale operation.

(e)  Unsuccessful bidder bonds.--Bonds posted by unsuccessful

bidders pursuant to this section shall be released by the board

upon acceptance of the successful bid.

(f)  Successful bidder bonds.--Bonds posted by the successful

bidder pursuant to this section shall be released by the board

upon payment by the successful bidder of the initial franchise

fee. A successful bidder's bond shall be forfeited if the

initial franchise fee is not paid within 90 days of the date the

board accepts the bid and the board shall then offer the

franchise to the next highest responsible bidder. The board

shall then either issue the license to the next highest bidder

for the license or reject all bids and initiate a new bidding

process for the retail liquor store license or wholesale

operation.

(g)  Deposit of initial franchise fees.--All initial

franchise fees shall be deposited in the State Stores Fund

established under section 802.

Section 313-A.  Closure of existing State stores.

(a)  Sale of State store inventory.--An awarded franchise and

license shall grant the successful bidder the opportunity to bid

upon the remaining inventory, tangible property and fixtures of

all State stores owned by the Commonwealth pursuant to this

article. The board shall establish a procedure for the sale of

the inventory, property and fixtures of all State stores

consistent with Article XXIV-A of the act of April 9, 1929

(P.L.177, No.175), known as The Administrative Code of 1929. All

monetary proceeds from such sales shall be deposited in the Wine

and Spirits Store Fund.

(b)  Schedule of closure.--The board shall develop a schedule

of closure for State stores. Under no circumstances shall any

State store remain open for retail sales beyond 18 months

following the initial opening date set for any wine and spirits

store.

Section 314-A.  Sale, assignment or transfer of license.

(a)  Prohibition.--No person may sell, assign or otherwise

transfer a franchise and license granted under the provisions of

this article without the prior written approval of the board and

payment of the fee under subsection (d).

(b)  Majority interest.--For purposes of this section, the

merger of a licensee or the sale of more than 50% of the

outstanding stock of or partnership interests in the licensee

shall be deemed to be a sale, assignment or transfer of a

franchise and license under this section.

(c)  Compliance.--Any person to whom a franchise and license