|July 22, 2020 10:47 AM
|Senator Thomas H. Killion
|All Senate members
|Self-Distribution Process for Special Order Wine and Spirits Distributors
|During the past several months, many small businesses have been decimated by the COVID-19 pandemic. Restaurants are among the worst impacted as well as small businesses that rely on them, including special order wine and spirits distributors.
I plan to introduce legislation narrowly focused on helping small businesses, like The Artisan’s Cellar, located in West Chester, Chester County and part of my 9th Senatorial District, and over twenty similar Pennsylvania distributors, to help improve their operations through a new self-distribution process for special order wine and spirits products.
Artisan’s Cellar presented testimony during the Senate Law & Justice Committee public hearing on May 6, 2020, sharing their specific experiences as small business owners on what it has been like selling to customers through the Pennsylvania Liquor Control Board (PLCB) during the COVID-19 restrictions; how the re-opening process was handled; and suggestions for improvement. Artisan’s Cellar holds a Pennsylvania Importer License for importing and distributing 800+ boutique wines from over 200 small family wineries in 20 countries; and a Pennsylvania Winery License, used to fill and sell kegs for wine-on-tap. They have no Listed products with the PLCB, only a couple Luxury placements, so over 90% of their sales are to licensees and consumers through the PLCB’s special order program. Special orders as a whole, are only 4.5% of the PLCB’s total sales.
The PLCB currently requires special order distributors to follow an 11-step process to fulfill customer orders before delivering them to PLCB stores for pickup by licensees and consumers. In other states, it is a 4-step process: receive order, create invoice, pack order, and deliver to customer. The PLCB system makes it difficult for both licensees and small vendors to do business through increased cost, decreased convenience, unfair and often impractical and burdensome requirements.
Act 39 of 2016, supported by the Commonwealth Court’s decision in April 2020, requires the PLCB to allow special order distributors to direct deliver products to licensees and consumers. During their April testimony, the PLCB estimated the time to implement direct delivery to be 8 to 12 months at a cost of $1.1 to $1.9 Million. The PLCB has appealed the ruling; however, they stated they will still work to implement direct delivery regardless of the outcome.
Specifically, this legislation allows smaller special order distributors to follow a self-distribution process for special order wine and spirits that are direct delivered only. All other special orders will be processed through the PLCB’s current system and be delivered to state stores for customer pickup. The economic impact on the PLCB is minor as only a portion of special orders will be self-distributed and direct delivered, but this is critical to small businesses seeking greater efficiencies and lower costs, while providing licensees and consumers greater convenience and lower prices. Only a new Limited Distributor License is required, the PLCB will save up to a year’s work and nearly $2 Million to implement direct delivery, and this can commence immediately. A list of the many benefits to the PLCB, special order distributors, licensees, and consumers is attached.
I believe this legislation would greatly benefit small businesses like The Artisan’s Cellar; and ultimately, improve business operations and livelihoods for all the special order distributors, licensees, and consumers throughout the Commonwealth.
Please join me in co-sponsoring this legislation.
Introduced as SB1346