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Senate of Pennsylvania
Session of 2015 - 2016 Regular Session


Posted: February 6, 2015 09:40 AM
From: Senator James R. Brewster
To: All Senate members
Subject: Modernizing PA LCB operations
I will soon be introducing legislation that will modernize the Pennsylvania Liquor Control Board, the Wine & Spirits Stores, and process through which beer is sold. These reforms will produce additional revenues for the Commonwealth of approximately $100 Million annually. Many of these changes were contained in SB 800 of 2013-2014, but there have been changes made to that bill.

Wine & Spirits Store Reform: This bill will not privatize the Wine & Spirits Stores or the wholesale purchasing system of wine and spirits. This bill will contain many modernizations that have been debated in recent years. These changes will allow the PLCB to operate more efficiently, and more profitably. These changes include:

  1. Changes to Store Operations:

    1. Open more stores;
    2. Encourage those additional stores to be within or near grocery stores
    3. Remove the cap on the number of stores that can operate on Sundays
    4. Extend the permitted hours of operation on Sundays to 9 AM to 9 PM
    5. Offer customer loyalty programs to improve customer experiences in stores
    6. Sell lottery tickets within Wine & Spirits Stores.

  1. Pricing:

    1. Currently, the LCB feels it cannot provide flexibility in its pricing due to restrictive language in the Liquor Code requiring “proportional” markups on all of its products. “Proportional” has been interpreted to mean that a uniform markup must be used on all products regardless of the quality or quantity of a particular brand that is sold.
    2. The LCB wishes to remove the required proportional pricing so that the Board can design pricing structures more reflective of successful retail operations. If given this flexibility, the agency could increase profitability by $50 to $70 million per year.
    3. In order to assist licensees with any potential increases in prices associated with this change, the bill also will increase the licensee discount from 10% to 16%, and will reduce the special liquor order mark up by 50%
  2. Direct Shipment of Wine:
    1. This bill will permit wine manufacturers to directly ship wine to residential customers. These customers will be required to provide identification at the time of delivery.
    2. The State’s liquor tax and sales tax will continue to be calculated and collected in the same fashion that it is at the Wine & Spirits Stores, and the PLCB will be required to license any direct wine shipper.
  3. Procurement of Stores:
    1. Currently, the PLCB must go through the rigorous and time-consuming procurement process which may cause the agency to miss important market opportunities.
    2. This bill will permit the PLCB to have a limited number of opportunities, such as entering leases, to bypass the procurement process and act on the Board’s discretion. The Department of General Services will review the procurement process and purchases at the PLCB.
Beer Reform: This bill will address package reform for the sale of beer. It will allow Distributors to sell packages less than a full case, they will now be able to sell as little as 42 oz, provided that the package is produced by the manufacturer. Additionally, this bill will allow restaurants and taverns to sell more beer per transaction than they are currently able to sell.

This bill will also address some definitions that relate to beer sales and are in need of updating. These updates will include items such as: kegs, units, package, and case.

Other: This bill will also contain miscellaneous provisions that will address minor issues that have been brought to the attention of the PLCB or members of the Senate and do not fall within one of the areas outlined above.

Introduced as SB15