The new law will enhance customer convenience and provide additional revenue to help the state balance its budget.
On June 8, Pennsylvania Governor Tom Wolf signed into law the first major overhaul of the Commonwealth’s Liquor Code since the end of Prohibition. Wolf heralded the measure as enhancing customer convenience while providing additional revenue to help the state balance its budget. The law goes into effect in August, 60 days after signing.
The most prominent change is the newly created Wine Expanded Permit. Details of the permit include the following:
- All holders of restaurant (R) and hotel (H) liquor licenses will be allowed to purchase a wine permit for an initial fee of $2,000.
- In addition, current holders of eating places licenses (bottle shops, convenience stores, gas stations and grocery stores) will be allowed to convert their licenses to an R license for a fee of $30,000 and also become eligible for a wine permit.
- The wine permit allows its holder to sell up to 3,000 milliliters of wine (four bottles) for off-premises consumption in a single transaction.
- The wine permit is subject to an annual renewal fee equal to 2 percent of the cost of wine sold for off-premises consumption.
- This new permit means that grocery stores, gas stations and convenience stores will now be able to sell both beer and wine and that restaurants and bars will be able to sell wine to go (once they comply with all requirements and obtain the proper licenses and permits).
- The law does not remove the restrictions currently in place that require alcohol sales at gas stations, grocery stores and other non-alcohol-based businesses to be in a separate area with separate payment — so customers will be required to buy their wine and groceries in separate transactions at separate registers.
The new law also allows for direct shipment of wine, including the following provisions:
- The law is limited to producers of wine (wineries, limited wineries), which will be eligible to obtain a direct wine shipper license from the Pennsylvania Liquor Control Board (PLCB).
- Shipments are limited to 36 cases per year.
- Resale of wine obtained through direct shipment is prohibited.
The new law keeps in place the Commonwealth’s exclusive retail system (or State Stores) and does not fundamentally change sales of beer and liquor. However, it does make other significant changes, including:
- Although the law does not remove the limits on the number of licenses allowed, it will increase the supply of liquor licenses by establishing a yearly auction for licenses that are currently dormant (up to 50/county each year).
- Before now, if a liquor license lapsed, it was not sold, reissued or auctioned off, leading to shrinkage in the already limited number of licenses.
- There are currently 625 such licenses available, with an additional 200 estimated to be available in FY 2016–2017.
- The minimum bid is set at $25,000; the Senate Appropriations Committee estimates that the average selling price will be $75,000.
- The Special Liquor Order (SLO) process has been dramatically revised, including the following:
- Currently, a license holder may make SLOs of products not available through the State Store system. The order must be made, however, through the PLCB and delivered to a State Store. Currently, such orders are subject to the standard 30 percent markup, with a 10 percent licensee discount.
- The new law reduces the markup to 10 percent (but also eliminates the licensee discount) and forbids any handling fees.
- The new law also allows a licensed importer or vendor to place SLOs and deliver them directly to the customer.
- These changes are predicted to reduce costs to licensees by more than $2.5 million during FY 2015–2016 and by more than $7.5 million in FY 2016–2017.
- The law creates a new license for casinos. Details of this license include:
- These licenses will cost $1 million/year for the next four years, and then $250,000 thereafter.
- Casinos will be allowed sell alcohol 24 hours/day, seven days/week (expanded from 19 hours/day).
- Alcohol sales will no longer be restricted to the gaming floor.
- State Stores are being given more flexibility:
- The law expands the hours when stores may be open and allows stores to be open on holidays and more stores to be open on Sunday.
- Some stores will begin selling lottery tickets.
- The law allows stores to establish a loyalty program and offer coupons.
- The law also provides exceptions to the proportional-pricing requirement for "best selling" and "limited purchase" items.
- The law sets up a grant program for encouraging increased production of beer and wine in Pennsylvania ($1 million each/year).