THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY TURZAI, KILLION, MUSTIO, SAYLOR, CHRISTIANA, AUMENT, BEAR, BLOOM, DAY, DUNBAR, ELLIS, EVANKOVICH, GABLER, GILLEN, GILLESPIE, GINGRICH, GROVE, HARRIS, HELM, KNOWLES, KRIEGER, LAWRENCE, MALONEY, METCALFE, MILLER, MOUL, OBERLANDER, PERRY, QUIGLEY, RAPP, REESE, ROAE, ROCK, SACCONE, SCHRODER, SIMMONS, SONNEY, STEVENSON, SWANGER, TALLMAN AND VULAKOVICH, SEPTEMBER 13, 2011

AS REPORTED FROM COMMITTEE ON LIQUOR CONTROL, HOUSE OF REPRESENTATIVES, AS AMENDED, DECEMBER 13, 2011   

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

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privatization of sales of wine and spirits in this

Commonwealth through abolition of the State Liquor Stores,

through establishment of a franchise and license system for

sale of wine and spirits and through imposition of a tax on

wine, spirits and beer; and making a related repeal and

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providing for an enhanced distributor license further

providing for definitions, for general powers of board, for

when sales may be made at Pennsylvania liquor stores, for

sales by Pennsylvania liquor stores; adding provisions

relating to wholesale wine distribution; further providing

for authority to issue liquor licenses to hotels, restaurants

and clubs, for sale of malt or brewed beverages by liquor

licensees, and for malt and brewed beverages manufacturers',

distributors' and importing distributors' licenses; adding

provisions relating to enhanced distributor's licenses; and

further providing for malt and brewed beverages retail

licenses, for distributors' and importing distributors'

restrictions on sales and storage, for retail dispensers'

restrictions on purchases and sales, for interlocking

business prohibited, for licenses not assignable and

transfers, for revocation and suspension of licenses and

fees, for unlawful acts relative to liquor, alcohol and

liquor licensees, for unlawful acts relative to malt or

brewed beverages and licensees, for unlawful acts relative to

liquor, malt and brewed beverages and licensees, for moneys

paid into Liquor License Fund and returned to municipalities,

and for moneys paid into State Stores Fund for use of

Commonwealth.

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 a definition 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.

* * *

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

retailers, 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 and

similar misconduct).

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.  Section 301 of the act, amended July 9, 1976

(P.L.527, No.125), is repealed:

[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 7.1.  Sections 302 and 303 of the act are repealed:

[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 7.2.  Section 304 of the act, amended December 8,

2004 (P.L.1810, No.239), is repealed:

[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 7.3.  Section 305 of the act, amended 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:

[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 7.4.  Section 306 of the act is repealed:

[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

GENERAL PROVISIONS

Section 301-A.  Scope of article.

This article relates to liquor distribution privatization.

Section 302-A.  Legislative intent.

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

that:

(1)  The sale of liquor at wholesale or retail should no

longer be by the Commonwealth, but rather by private persons

licensed and regulated by the Commonwealth.

(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.

(3)  The sale of liquor through wholesale and retail

licensees will improve customer service, selection and price.

(4)  The operation and efficiency of State government

will be improved.

(b)  Purpose.--The General Assembly recognizes the following

public policy purposes and declares that the following

objectives of the Commonwealth are to be served by this article:

(1)  The authorization of wine and spirits wholesale and

retail licenses is intended to continue and enhance the

generation of revenue to the Commonwealth related to the

wholesale and retail sale of liquor.

(2)  The transition to a privately owned and operated

wholesale and retail liquor distribution system shall be

accomplished in a manner that protects the public through

regulation and policing of all activities involved in the

wholesale and retail sale of liquor.

(3)  The establishment of wine and spirits wholesale and

retail licenses is intended to provide broad economic

opportunities to the citizens of this Commonwealth and shall

be implemented in such a manner as to prevent monopolization

by establishing reasonable restrictions on the control of

wholesale and retail licensees.

(4)  The transition to a privately owned and operated

wholesale and retail liquor distribution system shall be

accomplished in a manner that creates incentives and

facilitates the transition of Pennsylvania Liquor Store and

other effected employees to other employment.

(5)  The transition to a privately owned and operated

wholesale and retail liquor distribution system shall be

accomplished in a manner that minimizes disruption of

services to the public.

(6)  With the transition to a privately owned and

operated wholesale and retail liquor distribution system, it

is necessary to enhance alcohol education efforts to ensure

against the illegal sale of alcohol, prevent and combat the

illegal consumption of alcohol by minors and visibly

intoxicated persons, and discourage the intemperate use of

alcohol.

(7)  Participation in the wholesale and retail sale of

liquor by any wholesale or retail licensee shall be deemed a

privilege, conditioned upon the proper and continued

qualification of the licensee and upon the discharge of the

affirmative responsibility of each licensee to provide the

department and the board with assistance and information

necessary to assure that the policies declared by this

article are achieved.

Section 303-A.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Adjusted store net profit factor."  The net profit factor

for each Pennsylvania Liquor Store divided by the number of

retail zones which the department assigns to each Pennsylvania

Liquor Store for purposes of determining the minimum bid.

"Affiliate" or "person affiliated with."  A person that

directly or indirectly, through one or more intermediaries,

controls, is controlled by or is under common control with a

specified person.

"Agency."  The Pennsylvania Higher Education Assistance

Agency.

"Bid-rigging."  The concerted activity of two or more persons

to determine in advance, or attempt to influence, the selected

bidder for a wine and spirits retail license. The term includes

any of the following:

(1)  Conspiring or cooperating in the preparation of

bids, including the determination of bid amounts.

(2)  Submitting prearranged bids, agreed-upon higher or

lower bids or other complementary bids.

(3)  Agreeing to submit identical bids.

(4)  Agreeing to coordinate the retail zones in which a

person will or will not submit a bid.

(5)  Agreeing to share profits with or give an equity

interest to a person who does not submit the high bid.

(6)  Agreeing to set up territories to restrict

competition.

(7)  Agreeing not to submit a bid.

"Blended brand valuation."  For any particular brand of

liquor, the sum of the wholesale profit margin on each product

of a brand.

"Brand of liquor."  A liquor product or series of liquor

products produced by a single manufacturer.

"Change in control."  For purposes of wholesale or retail

licensees, the acquisition by a person or group of persons

acting in concert of more than 20% of a licensee's securities or

other ownership interests, with the exception of any ownership

interest of the person that existed at the time of initial

licensing, or more than 20% of the securities or other ownership

interests of a corporation or other legal entity which owns,

directly or indirectly, at least 20% of the securities or other

ownership interests of the licensee.

"Commission."  The State Civil Service Commission.

"Controlling interest."  As follows:

(1)  For a publicly traded legal entity, an interest in a

legal entity, applicant or licensee whereby a person's sole

voting rights under State law or corporate articles or bylaws

entitles the person to elect or appoint one or more of the

members of the board of directors or other governing board or

the ownership, directly or indirectly, of 5% or more of the

securities of the publicly traded corporation.

(2)  For a privately held corporation, partnership,

limited liability company or other form of privately held

legal entity, the holding of any securities in the legal

entity.

"Countywide adjusted net profit factor."  Fifty percent of

the sales to unlicensed customers minus the taxes and cost of

goods sold for all existing Pennsylvania Liquor Stores located

in a given county divided by the existing number of Pennsylvania

Liquor Stores located in that county.

"Department."  The Department of General Services of the

Commonwealth.

"Displaced employee."  A full-time employee of the board

whose employment is terminated as a sole and direct result of

the board's decision to cease wholesale and retail operations

under this article. The term shall not include a person who is

terminated for cause or who resigns, is furloughed or is

otherwise separated from employment for any other reason.

"Institution of higher education."  A public or private

institution within this Commonwealth authorized by the

Department of Education to grant a certificate, associate degree

or higher degree. The term includes a branch or satellite campus

of the institution.

"Licensed premises" or "controlled area."  The areas approved

by the department or the board to be utilized by a wholesale or

retail licensee for the distribution of liquor.

"Net profit factor."  Fifty percent of the sales to

unlicensed customers minus taxes and cost of goods sold for each

existing Pennsylvania Liquor Store for the most recent available

12-month period.

"Retail acquisition factor."  As follows:

(1)  For Class A wine and spirits retail licenses, the

term shall mean a factor of five applied to the adjusted

store net profit factor for each retail zone.

(2)  For Class B wine and spirits retail licenses, the

term shall mean a factor of 2.25 applied to the Statewide

adjusted net profit factor of each retail zone.

"Retail licensee."  A person that holds a wine and spirits

retail license under this article.

"Retail zone."  An area, as established by the department,

for which a wine and spirits retail license authorizes the

distribution of wine and spirits. The location of each

Pennsylvania Liquor Store shall be in a separate zone.

"Variable pricing."  For purposes of the wholesale sale of

liquor, any disparity in the price of an item sold to one

licensee as compared to the price of the same item to another

licensee or a licensee of a different classification. The term

shall not include discounts for volume purchases.

"Wholesale acquisition factor."  A factor of 2.5 applied to

the wholesale profit margin of a brand of liquor in determining

the wholesale license fee.

"Wholesale licensee."  A person that holds a wine and spirits

wholesale license under this article.

"Wholesale profit margin."  For any particular liquor

product, 20% of the total of costs of goods sold of the product

over the most recent 12-month period for which information is

available.

"Wine and spirits retail license."  A license issued by the

department or the board authorizing a person to sell and

distribute wine and spirits to the public for off-premises

consumption.

"Wine and spirits wholesale license."  A license issued by

the department or the board authorizing a person to sell and

distribute liquor on a wholesale basis to retail licensees and

other licensees under this act.

Section 304-A.  Reports to General Assembly.

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

this section, and each year thereafter, the board, in

cooperation with the department, 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 the total revenue earned by the issuance of licenses

under 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, in cooperation with the department, shall

conduct a thorough review of the operations of wholesale

licensees and retail licensees. The board, in cooperation with

the department, shall submit a copy of this review and any

recommendations relating to the expansion of existing retail

zones to the General Assembly. The same review shall be

conducted ten years following the effective date of this

section.

Section 305-A.  Powers and duties of the department and the

board.

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

the department and the board to implement this article and

effect an orderly transition to a privately owned and operated

wholesale and retail liquor distribution system in this

Commonwealth in a manner that is consistent with this article

and the laws of this Commonwealth and which maintains a

continuous level of service to the public. The department shall

be primarily responsible to administer the transition to a

privately owned wholesale and retail liquor distribution system.

The board shall be primarily responsible for enforcement of this

article and this act on the liquor distribution operations of

private wholesale and retail licensees and the administration of

this article once the privatization transition is completed.

(b)  Specific duties.--Within 180 days of the effective date

of this section, the department shall utilize the authority

provided for under section 306-A and any other powers of the

department and with the full cooperation and assistance of the

board, shall, at a minimum, have completed all of the following

duties:

(1)  Establishment of an application process and schedule

for the investigation and award of wine and spirits wholesale

licenses under this article.

(2)  Establishment of a blended brand valuation for each

brand of liquor sold by Pennsylvania Liquor Stores in this

Commonwealth.

(3)  Establishment of retail zones to be utilized by the

department in conducting the auction of Class A wine and

spirits retail licenses under this article.

(4)  Assignment of the 500 Class B wine and spirits

retail licenses to counties across this Commonwealth,

excluding counties of the first class, to be utilized by the

department in conducting Class B auctions.

(5)  Establishment of a process for the auction of wine

and spirits retail licenses under this article.

(6)  Establishment of minimum bid amounts for each wine

and spirits retail license to be auctioned under this

article.

(7)  Establishment of procedures and standards governing

the relationship between wholesale licensees and

manufacturers and the ability and terms upon which that

relationship may be terminated.

Section 306-A.  Temporary regulations.

(a)  Promulgation.--In order to facilitate the prompt

implementation of this article, regulations promulgated by the

department shall be deemed temporary regulations which shall

expire no later than three years following the effective date of

this section. The department may promulgate temporary

regulations not subject to:

(1)  Sections 201, 202 and 203 of the act of July 31,

1968 (P.L.769, No.240), referred to as the Commonwealth

Documents Law.

(2)  The act of June 25, 1982 (P.L.633, No.181), known as

the Regulatory Review Act.

(b)  Expiration.--The authority provided to the department to

adopt temporary regulations under subsection (a) shall expire on

January 1, 2014. Regulations adopted after this period shall be

promulgated as provided by law.

Section 307-A.  Order of transition to private distribution

system.

(a)  Wholesale transition.--The department shall transition

the board's wholesale distribution function to privately owned

and operated wholesale licensees before divesting the board's

retail operations. The transition must substantially divest the

board of all operations relating to the wholesale distribution

of alcohol in this Commonwealth within one year of the effective

date of this section.

(b)  Retail transition.--Twenty-four months following the

effective date of this section, the department shall

substantially divest the board of all operations relating to the

retail sale of alcohol in this Commonwealth. The department may

extend this transition period by up to six months by certifying

to the President pro tempore of the Senate, the Minority Leader

of the Senate, the Speaker of the House of Representatives and

the Minority Leader of the House of Representatives that, due to

circumstances beyond its control, the department cannot complete

the retail transition in the 24-month period. The department

shall provide a detailed explanation of the circumstances which

cause the delay with its certification to the General Assembly.

(c)  Prohibition.--Except as necessary to ensure a continuous

level of service to the public and subject to section 328-A, the

board shall not engage in any wholesale or retail distribution

of alcohol within this Commonwealth following completion of the

wholesale and retail transitions.

(d)  Cooperation required.--The board shall fully cooperate

with the department in all aspects of implementation of this

article and shall provide the department with all records in the

possession of the board upon request.

Section 1.  The definition of "case" in section 102 of the

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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) and amended

July 7, 2006 (P.L.584, No.84), is amended and the section 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:

* * *

"Case" shall mean a package prepared by the manufacturer for

sale or distribution of [twelve] six or more original containers

totaling [two hundred sixty-four] ninety-six or more fluid

ounces of malt or brewed beverages [excepting those packages

containing twenty-four or more original containers each holding

seven fluid ounces or more].

* * *

"Variable pricing" shall mean, for the purposes of wholesale

sale of wine, any disparity in the price of an item sold to one

licensee as compared to the price of the same item to another

licensee of a different classification. The term shall not

include discounts for volume purchases.

* * *

"Wholesale licensee" shall mean a person who holds a wine

wholesale license.

* * *

Section 2.  Section 207(b), (h) and (k) of the act, added

February 21, 2002 (P.L.103, No.10), are amended and the section

is amended by adding subsections to read:

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

board shall have the power and its duty shall be:

* * *

(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] as set

forth by the board so long as the price of a particular item is

uniform throughout the Commonwealth. 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.

* * *

(h)  Without in any way limiting or being limited by the

foregoing, to do all such things and perform all such acts as

are deemed necessary or advisable for the purpose of carrying

into effect the provisions of this act and the regulations made

thereunder. Notwithstanding any other provision of law to the

contrary, the board is authorized to purchase all goods and

services in its sole discretion which are deemed necessary to

perform all such acts. The board is authorized to promulgate

regulations providing for the procurement of such goods and

services.

* * *

(k)  To [issue grants to various entities] transfer funds

from "The state stores Fund" to the Department of Health, Bureau

of Drug and Alcohol Programs for alcohol education and

prevention efforts pursuant to section 802 of this act.

(l)  To establish and implement a customer relations

marketing program for the purpose of offering incentives,

including coupons or discounts on certain products, to customers

of the board.

(m)  Notwithstanding any other provision of law to the

contrary, to enter into agreements with governmental units of

the Commonwealth and other states for the purchase or sale of

goods or services with, from or to the governmental units.

Section 2.1.  Section 208(c) 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:

* * *

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

alcohol, and its supply to Pennsylvania Liquor Stores and the

procurement of all other goods and services which are deemed

necessary by the board, in its sole discretion, to perform all

such acts.

* * *

Section 2.2.  Section 304(b) of the act, amended December 8,

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

Section 304.  When Sales May Be Made at Pennsylvania Liquor

Stores.--* * *

(b)  Certain Pennsylvania Liquor Stores operated by the board

shall be open for Sunday retail sales between the hours of

[noon] nine o'clock antemeridian and [five] nine 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], at its discretion, as many Pennsylvania Liquor

Stores as it deems necessary 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 3.  Section 305(b) of the act, amended July 6, 2005

(P.L.135, No.39), is amended to read:

Section 305.  Sales by Pennsylvania Liquor Stores.--* * *

(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 every

Pennsylvania Liquor Store shall sell wine at wholesale to

enhanced distributors; 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] fifteen 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.

* * *

Section 4.  The act is amended by adding an article to read:

ARTICLE III-A

WHOLESALE DISTRIBUTION

SUBARTICLE A

(RESERVED)

SUBARTICLE B

PRIVATIZATION OF WHOLESALE LIQUOR WINE DISTRIBUTION

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Section 308-A.  Wholesale divestiture wine licenses.

<--

(a)  Authorized wine and spirits wholesale licenses.--

(1)  One wine and spirits wholesale license may be issued

<--

by the department board to each successful applicant. The

<--

license shall authorize the distribution of the brands of

liquor wine to retail licensees and other licensees

<--

authorized to sell or distribute liquor wine under this act,

<--

as proposed by an applicant and approved by the department 

<--

board.

<--

(2)  Subject to the restrictions enumerated under section

313-A, wholesale licensees may distribute more than one brand

of liquor wine under the same wine and spirits wholesale

<--

license.

(3)  Upon application by a wholesale licensee, the board

may amend the authorization under a wine and spirits 

<--

wholesale license to include or exclude additional brands of

liquor wine.