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PRINTER'S NO. 3831
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2547
Session of
2020
INTRODUCED BY O'NEAL, TURZAI, TOEPEL, BARRAR, DUNBAR, JONES,
RYAN, SIMMONS, ROWE, BERNSTINE, JOZWIAK, ZIMMERMAN, JAMES,
KEEFER, STRUZZI, MIHALEK, KAUFFMAN, GREINER, BOROWICZ, MASSER
AND FEE, MAY 26, 2020
REFERRED TO COMMITTEE ON LIQUOR CONTROL, MAY 26, 2020
AN ACT
Amending the act of April 12, 1951 (P.L.90, No.21), entitled "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," as
follows:
In preliminary provisions, further providing for
definitions and for interpretation.
In the Pennsylvania Liquor Control Board, further
providing for general powers, providing for fee adjustment by
regulation and further providing for subject of regulations
and for enforcement and repealing provisions relating to wine
and spirits marketing.
In Pennsylvania Liquor Stores, further providing for
establishment and for sales.
Providing for wine and spirits distribution.
In licensing, further providing for hotels, restaurants
and clubs liquor licenses, providing for grocery store
licenses, further providing for liquor license sales and
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restrictions, providing for grocery store license sales and
restrictions, further providing for malt and brewed beverages
licensees, for wine and spirits auction permits, for liquor
importers' license fees, privileges and restrictions, for
interlocking business prohibited and for malt and brewed
beverages licenses, providing for distributor package reform
permit, further providing for distributors and dispensers
licenses, for prohibitions against the grant of licenses, for
numbers and kinds of licenses, for distributors and importing
distributors restrictions, for retail dispensers
restrictions, for interlocking business prohibited, for
breweries, for county limitations, for assignability, for
fines, for responsible alcohol management, for local option,
for unlawful acts, for hours of operation, providing for
unlawful acts and for licensees and taxation and further
providing for penalties and for vacation of premises.
In distilleries, wineries, bonded warehouses, bailees and
transporters, further providing for limited wineries, for
distilleries and for license fees.
In disposition of money, further providing for moneys
paid into Liquor License Fund.
Providing for supplemental provisions.
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, 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:
"Affiliate" or "person affiliated with" shall mean a person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with a
specified person.
* * *
"Blended brand valuation" shall mean, for any particular
brand of liquor, the sum of the wholesale profit margin on each
product of a brand.
* * *
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"Brand of liquor" shall mean a liquor product or series of
liquor products produced by a single manufacturer.
* * *
"Change in control" shall mean, for purposes of wholesale or
retail licensees as defined in this section, the acquisition by
a person or group of persons acting in concert of more than
twenty per centum 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 twenty per centum of the securities or other ownership
interests of a corporation or other legal entity which owns,
directly or indirectly, at least twenty per centum of the
securities or other ownership interests of the licensee.
* * *
"Commission" shall mean the State Civil Service Commission.
* * *
"Controlling interest" shall mean 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 five per centum 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.
* * *
"Department" shall mean the Department of General Services of
the Commonwealth.
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* * *
"Displaced employe" shall mean a salaried employe of the
board whose employment is terminated as a sole and direct result
of the implementation of Article III-A. The term shall not
include a person who is terminated for cause or who retires or
resigns, is furloughed or is otherwise separated from employment
for any other reason. The term excludes intermittent liquor
store clerks and seasonal liquor store clerks.
* * *
"Grocery store" shall mean a reputable place operated by
persons of good repute that primarily sells food, supplies for
the table and food products for human consumption off the
premises and that has an area under one roof of ten thousand
square feet or more.
* * *
"Heritage State Stores" shall mean the number of State
stores, as determined by the board, located in any given county
as of the effective date of this definition.
* * *
"Retail licensee" shall mean a person that holds a wine and
spirits retail license issued pursuant to section 311-A.
* * *
"Variable pricing" shall mean, 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" shall mean a factor of two and
one-half applied to the wholesale profit margin of a brand of
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liquor in determining a wholesale license fee.
"Wholesale licensee" shall mean a person that holds a wine
and spirits wholesale license issued pursuant to section
321.1- A.
"Wholesale profit margin" shall mean, for any particular
liquor product, twenty per centum of the total of costs of goods
sold of the product in the Commonwealth over the most recent
twelve-month period for which information is available.
* * *
"Wine and spirits retail license" shall mean a license issued
by the department or the board authorizing a person to sell and
distribute wine and spirits to the public for off-the-premises
consumption.
"Wine and spirits wholesale license" shall mean a license
issued by the department or the board authorizing a person to
sell and distribute liquor on a wholesale basis to the board
until all retail licenses have been issued in accordance with
Article III-A and to retail licensees and other licensees under
this act.
* * *
Section 2. Sections 104(c) and (d) of the act 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] regulatory
authority 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
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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]
the sale and distribution of 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), (e) and (j) of the act
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:
(a) To buy, import or have in its possession for sale and
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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.
The board's authority to exercise the powers granted pursuant to
this subsection is subject to the limitations set forth in
Article III-A.
(b) The following shall apply:
(1) 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.
(2) Except as provided in paragraphs (3) and (4), prices
shall be proportional with prices paid by the board to its
suppliers and may include a handling fee. This proportional
pricing provision shall not apply to special liquor orders
authorized under section 305(a).
(3) The board may price its best-selling items and limited
purchase items in a manner that maximizes the return on the sale
of those items.
(4) The board may discount the price of discontinued items.
(5) All prices of a particular product identification number
shall be uniform throughout the Commonwealth. The board may
establish a preferential price structure for wines produced
within this Commonwealth for the promotion of such wines, as
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long as the price structure is uniform within each class of wine
purchased by the board.
(6) On a quarterly basis the board shall publish a listing
of the wholesale and Pennsylvania Liquor Store retail prices on
its publicly accessible Internet website.
(7) No later than April 1st of each year the board shall
submit an annual written report to the Law and Justice Committee
of the Senate and the Liquor Control Committee of the House of
Representatives. The report shall contain information related to
the method and rationale for pricing products.
(8) No later than June 1st of each year, the board shall
appear before the Law and Justice Committee of the Senate and
the Liquor Control Committee of the House of Representatives to
provide testimony in relation to its annual written report under
paragraph (7).
(9) 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
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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. The board may not sell
private label products. A Pennsylvania Liquor Store may continue
to sell private label products within its inventory after the
effective date of this section until the private label products
within its current inventory are depleted.
(10) The proportional pricing under paragraph (2) shall not
apply to special liquor orders authorized under section 305(a).
(10.1) The board's authority to exercise the powers granted
pursuant to this subsection is subject to the limitations set
forth in Article III-A.
(11) As used in this subsection, the following words and
phrases shall have the meanings given to them in this paragraph:
"Best-selling items" shall mean the one hundred fifty (150)
most sold product identification numbers of wine and the one
hundred fifty (150) most sold product identification numbers of
liquor as measured by the total number of units sold on a six-
month basis calculated every January 1 and July 1.
"Discontinued items" shall mean those product identification
numbers that the board has voted to delist at a public meeting.
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"Limited purchase items" shall mean those product
identification numbers that the board purchases on either a one-
time or nonrecurring basis due to the product's limited
availability or finite allocation.
"Product identification number" shall mean the stock keeping
unit (SKU) or a successor method of identifying specific
products.
[(c) To determine the municipalities within which
Pennsylvania Liquor Stores shall be established and the
locations of the stores within such municipalities.]
* * *
(e) (1) Through the [Department of General Services]
department as agent, to lease and furnish and equip such
buildings, rooms and other accommodations as shall be required
for the operation of this act.
(2) The department shall not relocate a Pennsylvania Liquor
Store after the effective date of this paragraph.
* * *
(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. The board's authority
to exercise the powers granted pursuant to this subsection is
subject to the limitations set forth in Article III-A.
* * *
(o) To close Pennsylvania Liquor Stores as directed under
Article III-A.
(p) The board may implement a delivery system as a means of
providing product to all licensees under this act.
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Section 4. The act is amended by adding a section to read:
Section 207.1. Adjustment of Fees by Regulation.--(a)
Notwithstanding any provision of this act or the act of April 9,
1929 (P.L.177, No.175), known as "The Administrative Code of
1929," to the contrary, all fees required under this act shall
be fixed by the board by regulation and shall be subject to the
act of June 25, 1982 (P.L.633, No.181), known as the "Regulatory
Review Act."
(b) The board shall be authorized to increase license fees
by regulation under the following conditions:
(1) If the revenues raised by the fees imposed under this
act are not sufficient to meet all expenditures of the board
over a two-year period, the board shall increase the fees by
regulation, subject to the "Regulatory Review Act," so that the
projected revenues will meet projected expenditures.
(2) If the board determines that the fees established by the
board under subsection (a) are inadequate to meet the minimum
enforcement efforts required under this act, the board, after
consultation with the enforcement bureau, and subject to the
"Regulatory Review Act," shall increase the fees by regulation
in an amount so that adequate revenues are raised to meet the
required expenditures.
(c) All acts or parts of acts are repealed insofar as they
are inconsistent with this section.
Section 5. Sections 208(a), (c), (d), (e), (i) and (j) and
211(c) and (f) of the act are 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:
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[(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.]
* * *
[(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.]
* * *
[(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 211. Enforcement.--* * *
(c) The Pennsylvania State Police Commissioner shall assign
State Police Officers to such [supervisory and other] capacities
in the enforcement bureau as he deems necessary. All other
personnel of the enforcement bureau shall be civilians.
Notwithstanding any other provision of law, a State Police
Officer assigned to the enforcement bureau may not be counted
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against the complement of officers as prescribed in section 205
of the act of April 9, 1929 (P.L.177, No.175), known as "The
Administrative Code of 1929."
* * *
(f) In addition to the information provided to the General
Assembly and the Legislative Data Processing Center under
sections 613 and 614 of [the act of April 9, 1929 (P.L.177,
No.175), known as] "The Administrative Code of 1929,"
respectively, the Pennsylvania State Police shall provide to the
chairman and minority chairman of the Appropriations Committee
of the Senate and the chairman and minority chairman of the
Appropriations Committee of the House of Representatives any
other information as requested. The Pennsylvania State Police
shall also provide:
(1) a copy of the most recently completed audit of
expenditures of the enforcement bureau; and
(2) a report detailing the demographic characteristics of
the bureau's complement of civilian officers. Such report shall
include information relating to workplace diversity as contained
in section two of the Governor's Annual Workforce Report
relating to equal employment.
* * *
Section 6. Section 215 of the act 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
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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. Sections 301 and 305(a), (b) and (g) of the act
are amended to read:
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
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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.],
and subject to the limitations set forth in Article III-A.
(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] department as agent
of the board. The board, through the [Department of General
Services] department, shall have authority to purchase such
equipment and appointments as may be required in the operation
of such stores or establishments.
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. A supplier of a special order may not refuse an
order from a customer placing an order for one bottle of the
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item and may assess a surcharge on the order if the supplier
otherwise requires a minimum quantity purchase. 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 a mark-up that is equal to
ten per centum of the cost of the product and taxes but shall
add the freight or shipping charges to the price after the mark-
up and taxes have been applied. In addition to the ten per
centum mark-up, the board shall impose handling fees on special
orders which come to rest at a store, in the same manner that it
imposes them on the other alcohol that it sells.
A licensed importer or a licensed vendor may place special
orders on behalf of customers and may deliver the orders to
customers. The orders do not need to come to rest at a store,
but delivery may not occur until payment for the order has been
forwarded to the board and the board has authorized the delivery
of the order. A handling fee may not be assessed by the board on
an order delivered directly to a customer. Liability for special
orders that do not come to rest at a store, shall, until the
order is delivered to the customer, remain with the licensed
importer or licensed vendor that placed the order on behalf of
the customer. The board shall, by January 1, 2017, implement a
procedure for processing special orders which do not come to
rest at a store. The board may continue to accept special orders
at its stores even after the procedure is implemented.
Unless the customer pays for and accepts delivery of any such
special order within ten days after notice of arrival, the store
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may place it in stock for general sale and the customer's
deposit shall be forfeited.
During the retail divestiture process as provided in Article
III-A, the board shall continue to take and process special
liquor orders for residents and licensees of the board, and may
establish a protocol by which prepaid orders may be picked up at
either a Pennsylvania Liquor Store or from the licensed premises
of a wine and spirits retail licensee. A wine and spirits retail
licensee is authorized to assess a handling fee for this
purpose. Any product not claimed at a wine and spirits retail
store by the purchaser shall be returned to the board after ten
days' notice of arrival was sent to the purchaser.
* * *
(b) [Every] Until the wholesale divestiture process as
provided in Article III-A is complete, every Pennsylvania Liquor
Store shall sell liquors at wholesale to wine and spirits retail
licensees, grocery stores, 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] fourteen per
centum from the retail price; except that special order sales to
licensees authorized in subsection (a) shall not be subject to
the ten per centum discount. 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
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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, except that incentives,
such as coupons or discounts on certain products, may be offered
to unlicensed customers of the board as provided under sections
207(m) and 493(24)(ii)(B). 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.
* * *
[(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.]
* * *
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.
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This article relates to the privatization of liquor
distribution in this Commonwealth.
Section 302-A. Legislative intent.
The General Assembly finds and declares as follows:
(1) The wholesale and retail sale of liquor 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 provide residents with improved customer
convenience, and will provide an opportunity for competitive
pricing and enhanced product selection.
(4) Modernization of the retail sale of wine and spirits
through new outlets for consumption off the premises will
further enhance customer convenience.
(5) This article will improve operation and efficiency
of State government.
(6) The authorization of wine and spirits wholesale and
retail licenses is intended to continue the generation of
revenue to the Commonwealth related to the wholesale and
retail sale of liquor.
(7) The transition to a privately-owned and privately-
operated wholesale and retail liquor distribution system
should 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.
(8) The establishment of wine and spirits wholesale and
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retail licenses is intended to provide broad economic
opportunities to the citizens of this Commonwealth and to be
implemented in such a manner as to prevent monopolization by
establishing reasonable restrictions on the control of
wholesale and retail licensees.
(9) The transition to a privately-owned and privately-
operated wholesale and retail liquor distribution system
should be accomplished in a manner that minimizes disruption
of services to the public.
(10) In conjunction with the transition to privately-
owned and privately-operated liquor wholesalers and retail
liquor stores, this article is intended to modernize the
retail sale of wine and spirits through new outlets for
consumption off the premises, further enhancing customer
convenience.
(11) With the transition to a privately-owned and
privately-operated wholesale and retail liquor distribution
system, and with the addition of new licensing
classifications, it is necessary to enhance alcohol education
and enforcement efforts to:
(i) ensure against the illegal sale of alcohol;
(ii) prevent and combat the illegal consumption of
alcohol by minors and visibly intoxicated individuals;
and
(iii) discourage the intemperate use of alcohol.
(12) Participation in the wholesale and retail sale of
liquor by a wholesale or retail licensee is a privilege,
conditioned upon the proper and continued qualification of
the licensee and upon the discharge of the affirmative
responsibility of the licensee to provide the department and
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the board with assistance and information necessary to assure
that the policies declared by this article are achieved.
Section 303-A. Transition to private distribution system,
powers and duties of the department and the board.
(a) Orderly transition.--The department and the board have
the power and duty to implement this article and effect an
orderly transition to a privately-owned and privately-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 that seeks to maintain
uninterrupted service to the public.
(b) Retail transition.--
(1) The board, in consultation with the department,
shall have the authority to issue wine and spirits retail
licenses and wine and spirits wholesale licenses, provided
that the wine and spirits wholesale licenses are not issued
until one year after the effective date of this section. The
department shall contract with financial, legal and other
advisors as are necessary to assist the department and the
board in effectuating the addition of this article. Such
contracts shall not be subject to the provisions of 62
Pa.C.S. Ch. 5 (relating to source selection and contract
formation).
(2) The divestiture of the board's retail operations
shall be accomplished through the issuance of 1,200 wine and
spirits retail licenses that shall be allocated by county . As
the State liquor stores wind down operations, 600 wine and
spirits retail licenses may be issued by the board which
shall be allocated by county. The additional licenses shall
be issued if the department determines, in cooperation with
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the board, that the retail licenses are necessary for
consumer convenience. After the determination, the retail
licenses shall be issued first to distributor licensees and
then on a first-come, first-served basis. Each successful
applicant shall be thoroughly investigated to determine
whether the person is a reputable and responsible person
suitable to be licensed to sell liquor in this Commonwealth.
(3) As licenses are awarded in a given county, the board
shall determine the necessity of winding down operations in
State liquor stores in the county and, as it becomes
necessary , terminate applicable lease agreements,
redistribute or furlough store personnel and dispose of
remaining inventory and store property.
(c) Wholesale transition.--
(1) Twelve months after the effective date of this
section , in consultation with the department's advisors and
the board, the department shall transition the board's
wholesale distribution of liquor to privately-owned and
privately-operated wholesale licensees.
(2) The divestiture of the board's wholesale operations
shall be accomplished through the issuance of wine and
spirits wholesale licenses by brand of liquor, which shall be
subject to an application process as set forth in this
article. The transition must fully divest the board of all
operations relating to the wholesale distribution of liquor
within six months of the commencement of wholesale
divestiture.
(d) Cooperation required.--
(1) The board shall fully cooperate with the department
or its advisors in all aspects of implementation of this
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article and shall provide the department or its consultant
with all records and information in the possession of the
board upon request.
(2) The board shall devote sufficient resources to
planning and preparation for the divestiture of its wholesale
and retail functions.
(3) The board shall use its best efforts in coordinating
with the department or its advisors , wine and spirits retail
licensees and wine and spirits wholesale licensees so as to
maintain uninterrupted service to the residents of this
Commonwealth during divestiture.
(e) Prohibition.--The board shall not engage in wholesale
distribution of liquor following completion of the wholesale
transition to a private distribution system.
Section 304-A. Reports to the General Assembly.
One year after the effective date of this section, and each
year thereafter until the board has been fully divested of its
wholesale and retail operations, the board, in cooperation with
the department, shall submit to the Secretary of the Senate and
the Chief Clerk of the House of Representatives a report on
wholesale and retail alcohol sales in this Commonwealth and the
implementation of this article, including:
(1) the total revenue earned by the issuance of licenses
under this article;
(2) the distribution and sale of brands through private
wholesalers;
(3) the net profit or loss of each wine and spirits
retail licensed premise and State liquor store in this
Commonwealth; and
(4) the status of the ongoing transition, including
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store closures and employee displacement.
Section 305-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 five 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; or
(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, 2021.
SUBARTICLE B
WINE AND SPIRITS RETAIL LICENSES
Section 311-A. Issuance of wine and spirits retail licenses,
fees and taxes.
(a) Sale of retail licenses.--The board may award not more
than 1,200 wine and spirits retail licenses to qualified
applicants, provided that when the S tate stores close in a given
county because the wine and spirits retail licenses have
commenced operation, the department, in cooperation with the
board, shall determine if it is necessary to issue additional
wine and spirits retail licenses for customer convenience and
access. If the department determines more wine and spirits
retail licenses are needed, the department may authorize the
board to issue not more than 600 additional wine and spirits
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retail licenses.
(b) License classification.--Wine and spirits retail
licenses shall be awarded as follows:
(1) For the first 12 months after the enactment of this
section, the board shall receive applications from
distributor licensees licensed under section 431. A
distributor licensee applying for a wine and spirits retail
license must operate out of a facility with a minimum of
1,500 square feet of retail space and dedicate a minimum of
50% of shelf space for the sale of malt and brewed beverages.
(2) At the conclusion of the 12-month period under
paragraph (1), the board may issue the remaining wine and
spirits retail licenses on a first-come, first-served basis.
A private wine and spirits retail licensee must operate in a
facility with not less than 1,500 square feet of retail
space.
(c) License allocation.--
(1) The board, in consultation with the department and
its advisors, shall allocate the aggregate number of wine and
spirits retail licenses to be available in each county.
(2) A county may not be allocated fewer wine and spirits
retail licenses than the number of licensed distributors in
the county provided that the wine and spirits retail licenses
shall be evenly distributed throughout the county on a per
capita basis.
(3) A wine and spirits retail licensee may determine
whether the wine and spirits retail licensee will sell wine
or spirits or both. If a wine and spirits retail licensee
elects to sell either wine or spirits, the board shall
consider that one wine and spirits retail license and only
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the licensee will have the ability to pay an additional fee
in the future to sell both wine and spirits.
(d) License application.--An applicant for a wine and
spirits retail license shall file a written application with the
board in the form and containing the information as the board
shall prescribe from time to time, which must be accompanied by
a filing fee and license fee as prescribed under subsection (f).
An application must contain:
(1) a description of the part of the premises for which
the applicant desires a license;
(2) whether the applicant desires to sell wine or
spirits or both on the licensed premises. Notwithstanding any
other provision of this act, an applicant that chooses to
sell wine or spirits may make application at a later date to
the board to sell both products and be granted that authority
after paying the proper fees; and
(3) other information that the board may prescribe.
The board may not require physical alterations, improvements or
changes to the licensed premises until the wine and spirits
license application has been approved.
(e) Other licenses.--Nothing in this act shall prohibit a
wine and spirits retail licensee from receiving:
(1) a distributor license under section 431 that
authorizes the licensee to sell malt and brewed beverages for
consumption off the premises;
(2) a restaurant liquor license or a retail dispenser
license as long as the restaurant or retail dispenser does
not have an interior connection to or with the wine and
spirits retail licensed premises ; or
(3) an importing distributor license under section 431
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that authorizes the licensee to sell malt or brewed beverages
at wholesale so long as the importing distributor does not
obtain a wine and spirits wholesale license.
(f) License fees.--The fees for a wine and spirits retail
license are as follows:
(1) For a distributor licensed under section 431 making
application for a wine and spirits retail license:
(i) For the privilege of selling wine, the board
shall require the following fees:
(A) For a county of the first class or second
class, $30,000.
(B) For a county of the second class A or third
class, $37,500.
(C) For a county of the fourth class or fifth
class, $22,500.
(D) For a county of the sixth class or seventh
class, $15,000.
(E) For a county of the eighth class, $7,500.
(ii) For the privilege of selling spirits, the board
shall require the following fees:
(A) For a county of the first class or second
class, $52,500.
(B) For a county of the second class A or third
class, $60,000.
(C) For a county of the fourth class or fifth
class, $45,000.
(D) For a county of the sixth class or seventh
class, $37,500.
(E) For a county of the eighth class, $30,000.
(iii) For the privilege of selling both wine and
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spirits, the board shall require a fee equal to the sum
of the fees listed above by county. Nothing in this act
shall prevent a licensee who initially makes application
to sell either wine or spirits from adding the other
product at a later date so long as application is made to
the board and the proper fees are paid.
(2) For an unlicensed entity making application for a
wine and spirits retail license:
(i) For the privilege of selling wine, the board
shall require the following fees:
(A) For a county of the first class or second
class, $165,000.
(B) For a county of the second class A or third
class, $187,500.
(C) For a county of the fourth class or fifth
class, $142,500.
(D) For a county of the sixth class or seventh
class, $120,000.
(E) For a county of the eighth class, $97,500.
(ii) For the privilege of selling spirits, the board
shall require the following fees:
(A) For a county of the first class or second
class, $232,500.
(B) For a county of the second class A or third
class, $262,500.
(C) For a county of the fourth class or fifth
class, $202,500.
(D) For a county of the sixth class or seventh
class, $172,500.
(E) For a county of the eighth class, $142,500.
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(iii) For the privilege of selling both wine and
spirits, the board shall require a fee equal to the sum
of the fees listed above by county. Nothing in this act
shall prevent a licensee who initially makes application
to sell either wine or spirits from adding the other
product at a later date so long as application is made to
the board and the proper fees are paid.
(3) A restaurant or hotel licensee in good standing that
applies for a retail wine and spirits license shall pay the
same amount for the license as a distributor.
(4) The board may not require a distributor making
application for a wine and spirits retail license to pay the
fees in full prior to issuance of the license. A distributor
making application for a wine and spirits license has 48
months from the issuance of the license to pay to the board
the licensing fees plus a fee of 5%. If the licensee fails to
make a payment to the board on a monthly basis, the board
shall revoke the wine and spirits retail license and offer it
on a first-come, first-served basis.
Section 312-A. Postqualification of selected applicants.
(a) Investigation.--Upon selection of an applicant under
section 303-A, the Bureau of Licensing of the board shall
conduct an investigation of an applicant based upon the
information submitted to evaluate whether:
(1) the applicant qualifies as a reputable, responsible
and suitable person to hold a wine and spirits retail license
and operate a wine and spirits store;
(2) the applicant proposes an acceptable facility and
location for a wine and spirits store; and
(3) the planned operation of the applicant complies with
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this article.
(b) Authority of the board.--The board may:
(1) require additional information from an applicant;
and
(2) conduct onsite inspections, as necessary, to
complete the postqualification process.
(c) Agreement.--The board may enter into an agreement with
the Pennsylvania State Police or the Office of Inspector General
to:
(1) assist the board in the conduct of an investigation
under this section; and
(2) provide for the reimbursement of a cost incurred for
providing assistance.
(d) Protocol for objections.--The board shall establish
protocol for receiving written objections from residents,
churches, hospitals, charitable institutions, schools and public
playgrounds that are located near a proposed wine and spirits
store location. The board may consider a written objection in
the postqualification investigation of applicants. An objector
under this paragraph may not appeal the decision of the board.
(e) Investigative fee.--The board may charge a fee to an
applicant to recover the costs directly related to the board's
investigation within the postqualification process.
(f) Acceptance of qualifications.--The qualifications of an
applicant shall be accepted by the board if the investigation by
the board reveals the following:
(1) the applicant and its officers, directors and
principals, if any, are of good repute, responsible and
suitable for operating a wine and spirits store;
(2) the applicant possesses sufficient financial
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resources to:
(i) operate a wine and spirits store;
(ii) pay taxes due; and
(iii) meet financial obligations;
(3) the applicant possesses sufficient business
experience to operate a wine and spirits store;
(4) the proposed facilities comply with the operational
requirements of the statement of conditions under this
article; and
(5) the proposed location within the community is
suitable.
(g) Issuance of license.--If a selected applicant's
qualifications are accepted by the board, the board shall
qualify the applicant and issue a wine and spirits retail
license to the applicant upon the occurrence of the following:
(1) execution and delivery to the board of the statement
of conditions required under section 313-A ;
(2) payment of the license fee by certified check or
wire transfer to a designated restricted account established
in The State Stores Fund. A distributor licensed under
section 431 that obtains a wine and spirits retail license
has 48 months to pay the license fee;
(3) payment of an outstanding investigation fee; and
(4) fulfillment of other conditions required by the
board.
(h) Approval of qualifications.--If the qualifications of
the applicant are approved by the board under subsection (f),
the board shall issue a wine and spirits retail license to the
successful applicant consistent with the requirements of
subsection (g).
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(i) License not entitlement.--
(1) This article is not intended to establish an
entitlement to a wine and spirits retail license. A wine and
spirits retail license is a privilege between the board and
the licensee.
(2) Between the licensee and a third party, a wine and
spirits retail license is property.
(j) Terms of licensure.--
(1) A wine and spirits retail license is in effect
unless the board:
(i) revokes, suspends or fails to renew the license;
or
(ii) revokes the operating authority of the licensee
under the license requirements of this article.
(2) A wine and spirits retail license is subject to
renewal every two years consistent with this article.
(3) This subsection does not relieve a wine and spirits
retail licensee of the affirmative duty to notify the board
of a change relating to the status of the wine and spirits
retail licensee's license or to other information contained
in the application materials on file with the board.
Section 313-A. Wine and spirits retail licensee statement of
conditions.
(a) Statement of conditions.--The board shall develop a
statement of conditions to be executed by a wine and spirits
retail licensee governing the operations of the wine and spirits
licensee.
(b) Conditions.--In addition to other conditions the board
deems necessary or appropriate for a specific wine and spirits
retail licensee, a statement of conditions under this section
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shall include, at a minimum, the following conditions and impose
the following obligations and requirements:
(1) Under section 493.2, a wine and spirits retail
licensee may not sell or distribute liquor to an individual
under 21 years of age or to an individual who is visibly
intoxicated.
(2) A wine and spirits retail licensee may not operate a
retail wine and spirits store located within:
(i) three hundred feet of an elementary or secondary
school without the approval of the department or board;
or
(ii) a municipality that voted to preclude the
establishment of a State liquor store, unless the
municipality subsequently votes to permit the board to
issue a wine and spirits retail license.
(3) A wine and spirits retail licensee's wine and
spirits store and the facilities involved in its retail
operations, including a change to the facilities during the
term of the license, are subject to:
(i) inspection and investigation by the board and
enforcement bureau; and
(ii) approval of the board and enforcement bureau.
(4) A wine and spirits retail licensee shall maintain
adequate security to protect the licensee's inventory from
unauthorized sale or diversion and prevent the inventory's
unauthorized distribution.
(5) Unless specifically authorized in this act or with
the prior approval of the board, a wine and spirits retail
licensee may not engage in a separate business activity upon
a licensed premises where retail liquor operations are
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conducted.
(6) A wine and spirits retail licensee shall notify the
board within 15 days of a change in persons holding an
interest in the wine and spirits license.
(7) A wine and spirits retail licensee shall notify the
board within 15 days of becoming aware of an arrest, criminal
indictment or conviction by the following:
(i) if the licensee is an individual, the licensee;
(ii) if the licensee is a partnership, a partner;
(iii) if the licensee is an association, a member;
(iv) if the licensee is a corporation, an officer, a
director or a shareholder in the corporation; and
(v) an affiliate of the licensee.
(8) A wine and spirits retail licensee shall notify the
board within 15 days of becoming aware of a violation of this
article by an individual listed in paragraph (7).
(9) The premises of a wine and spirits store must be a
self-contained unit with limited customer access dedicated to
the sale of liquor and related merchandise. Except for a
licensee that also holds a distributor license, a wine and
spirits store may not have an interior connection with
another business or with a residential building except as
approved by the board. A purchase of wine and spirits must be
paid for at a location within the confines of the licensed
premises.
(10) A wine and spirits retail licensee shall configure
its premises in a manner and with adequate safeguards to
ensure that:
(i) liquor products are secure; and
(ii) the licensed area may not be accessed during
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prohibited hours of operation.
(11) A wine and spirits retail licensee may not hold,
directly or indirectly, more than five wine and spirits
retail locations within this Commonwealth or more than one
wine and spirits retail license within a county.
(12) A wine and spirits store may sell liquor for
consumption off the premises and related merchandise within
the licensed area of the store. A sale of related merchandise
within the licensed area may not exceed 30% of the gross
annual sales of a wine and spirits store. Unless the wine and
spirits retail licensee operates another license that
authorizes the sale of malt and brewed beverages for
consumption off the premises in the same licensed area, a
wine and spirits store may not sell malt or brewed beverages
within its licensed premises.
(13) A wine and spirits retail licensee shall make the
premises and the facilities involved in the retail operation
and the business and financial books and records of the
retail operation available at any time for inspection and
audit by the board and the enforcement bureau. The board
shall promulgate regulations regarding the records that a
wine and spirits retail licensee must maintain in its
licensed premises.
(14) A wine and spirits retail licensee may sell wine or
spirits between 9 a.m. and 11 p.m. of any day except Sunday
to a person that is not licensed under this act.
(15) In addition to the hours authorized under paragraph
(14), a wine and spirits retail licensee may, upon purchasing
a permit from the board at an annual fee of $1,000, sell wine
or spirits on Sunday between the hours of 9 a.m. and 9 p.m.
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to persons not licensed under this act.
(16) A wine and spirits retail licensee may not employ
an individual under 18 years of age to work on the licensed
premises. An employee of a wine and spirits retail licensee
under 21 years of age may not engage in the sale of liquor.
(17) A wine and spirits retail licensee that is a
corporation, a limited liability company, a limited
partnership, a partnership, an association or other legal
entity must be organized under the laws of this Commonwealth.
(18) A wine and spirits retail licensee who is an
individual must be a citizen of the United States and a
resident of this Commonwealth.
(19) A wine and spirits retail licensee shall:
(i) comply with the responsible alcohol management
program training under section 471.1; and
(ii) ensure that the wine and spirits store managers
and employees who may engage in the sale of liquor attend
the responsible alcohol management training within six
months of commencing employment.
(20) A wine and spirits retail licensee may place its
license in safekeeping for a period not to exceed two years:
(i) pending transfer of the license from person-to-
person or place-to-place or both; or
(ii) during renovation of the premises where retail
operations are conducted.
(21) A wine and spirits retail license that remains in
safekeeping for a period that exceeds two years shall be
forfeited and resold by the board in a manner consistent with
this subarticle.
(22) Except as set forth in paragraph (16), an
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individual under 21 years of age may not enter the licensed
area of a wine and spirits retail licensee unless accompanied
by an adult.
(23) A wine and spirits retail licensee shall utilize a
transaction scan device to verify the age of an individual
who appears to be under 35 years of age before making a sale
of liquor. A wine and spirits retail licensee may not sell or
share data from the use of a transaction scan device provided
that the licensee may use the data to show the board or
enforcement bureau that the licensee is in compliance with
this article. As used in this paragraph, the term
"transaction scan device" means a device capable of
deciphering, in an electronically readable format, the
information encoded on the magnetic strip or bar code of an
identification card under section 495(a).
(24) A wine and spirits retail licensee may not sell a
liquor product at a price less than the liquor product's
underlying cost.
(25) A wine and spirits retail licensee may not provide
tasting samples of liquor on the premises where retail
operations are conducted except in the manner set forth in
the board's regulations related to tasting samples provided
by sponsors.
(26) A wine and spirits retail licensee may not require
a customer to purchase a membership or pay a fee in order to
purchase products, including wine and spirits, from the
premises.
(27) In an inquiry or investigation by the board or the
enforcement bureau, a wine and spirits retail licensee shall
cooperate fully and provide requested information.
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(c) Sanctions.--
(1) A wine and spirits retail licensee that fails to
abide by a condition contained in the licensee's statement of
conditions or commits a violation of this act or other
Federal or State law is subject to citation by the
enforcement bureau.
(2) A citation under paragraph (1) may result in:
(i) a fine or suspension or license revocation;
(ii) nonrenewal of a license;
(iii) revocation of operating authority; or
(iv) another penalty authorized under sections 471
and 494.
SUBARTICLE C
DIVESTITURE OF WHOLESALE LIQUOR DISTRIBUTION
Section 321-A. Wholesale divestiture.
(a) Utilization.--In effectuating the intent of this
article, the department shall utilize the authority provided
under section 305-A and any other powers of the department, with
the full cooperation and assistance of the board.
(b) Establishment.--On the effective date of this section,
the department shall establish all of the following:
(1) An application process and schedule for the
investigation and award of wine and spirits wholesale
licenses under this article.
(2) A blended brand valuation for each brand of liquor
available for sale in this Commonwealth.
(3) Procedures and standards governing the relationship
between wine and spirits wholesale licensees and
manufacturers and the ability and terms upon which that
relationship may be terminated.
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(c) Coordination.--
(1) The department shall:
(i) coordinate scheduling so that wine and spirits
wholesale license applications may be received, processed
and investigated by the board's Bureau of Licensing
during the retail divestiture process; and
(ii) begin a coordinated effort to allow the board
to issue licenses 12 months from the effective date of
this section.
(2) The department must fully divest the board of all
operations relating to the wholesale distribution of liquor
within six months of commencing wholesale divestiture.
Section 321.1-A. Issuance of wine and spirits wholesale
licenses.
(a) Authorization.--The board may issue wine and spirits
wholesale licenses under the following conditions:
(1) The following shall apply:
(i) One wine and spirits wholesale license may be
issued by the board to each qualified applicant.
(ii) A wine and spirits wholesale license shall
authorize the holder to sell and distribute brands of
liquor, as proposed by an applicant and approved by the
department, to wine and spirits retail licensees and
other licensees of the board authorized to sell or
distribute liquor under this act, to United States Armed
Forces facilities located on United States Armed Forces
installations within this Commonwealth and to the holder
of a wholesale alcohol purchase permit issued by the
board.
(iii) The alcoholic products shipped into this
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