Of particular interest to Pennsylvania residents and those doing business in the Commonwealth is the focus on expanding the location and availability of alcohol beyond traditional licensees.
A month after Act 39 of 2016 was signed into law by Governor Wolf, and a few short weeks before the Act and its companion (Act 85 of 2016) go into effect on August 8, the Pennsylvania Liquor Control Board (PLCB) has issued guidance on the changes for existing and future alcohol-related licensees under the Act. In particular, the PLCB guidance aims to consolidate the key provisions across Act 39 as they apply to certain types of licensees or categories of activity. The following provides a summary of some of the key changes as interpreted by the PLCB; however, the full summary of Act 39 of 2016 can be found at http://www.lcb.state.pa.us/cons/groups/externalaffairs/documents/form/003462.pdf.
A major focus of the Act 39 amendments to the Pennsylvania Liquor Code is increasing the availability and promotion of Pennsylvania alcohol products. These changes take two key forms.
First, as noted by the PLCB, Pennsylvania limited wineries, limited distilleries and breweries with an accompanying brewery pub license are authorized under the new law to sell each other products as part of the privileges of their own manufacturer’s license without the need to obtain a separate and, in some counties, very expensive restaurant license. Note, however, that while the Act seeks to create equality among the three categories of manufacturers, Pennsylvania breweries, unlike wineries and distilleries, may only avail themselves of this privilege if they have a separate brewery pub license — a provision that is not required for the other two categories of manufacturers.
Second, the PLCB notes that Act 39 expands the availability of special “exposition” permits for Pennsylvania cideries, breweries and distilleries, which were previously only available to Pennsylvania limited wineries. Specifically, Pennsylvania cideries and limited distilleries may participate in “alcoholic cider, liquor and food expositions,” which are affairs aimed at educating attendees on the availability, nature and quality of Pennsylvania-produced alcoholic ciders and liquors, together with food displays, demonstrations, musical activities and other cultural events. Pennsylvania breweries, in contrast, have the same ability to obtain exposition permits, but rather than focusing on promoting Pennsylvania-based products, these permits need only promote the availability, nature and quality of malt or brewed beverages more generally.
In an effort to bring Pennsylvania cideries closer in line to the treatment of hard cider at the federal level, Act 39 amends the definition of “alcoholic cider” by increasing the maximum alcohol by volume from 5.5 percent to 8.5 percent (the latter being the definition of hard cider for federal excise tax purposes beginning in January 2017). However, the Act and the PLCB guidance note that, because cider is defined as beer under Pennsylvania law, after Act 39 goes into effect on August 8, the PLCB may no longer purchase cider to sell in its stores. Accordingly, cider will be sold exclusively alongside beer at retail.
Direct Wine Shipper
In its guidance, the PLCB notes the elimination of the current direct shipper license in favor of a new direct wine shipper (DWS) license. Under the new DWS license, any licensed wine producer (whether in Pennsylvania, another state or another country) may lawfully ship up to 36 cases of wine to Pennsylvania residents within a calendar year for personal use. Unlike the previous law, direct shipments can be made for any wine, not just wine that is not currently available in the PLCB stores. However, all wine purchased directly must be transported to Pennsylvania residents via a Pennsylvania-licensed transporter-for-hire. Indeed, Pennsylvania limited wineries either have to obtain a transporter-for-hire license or ship through an current license holder within the Commonwealth.
Expanding the Availability of Alcohol Outlets
Of particular interest to Pennsylvania residents and those doing business in the Commonwealth is the Act’s focus on expanding the location and availability of alcohol beyond traditional licensees. For example, the Act codifies the PLCB’s recent (challenged) interpretation that, while the PLCB cannot license a location where gas is sold, it is permissible to authorize interior connections between a lawfully authorized premises and an area where gas is sold. In short, gas stations may now sell alcohol with certain restrictions.
Indeed, no provision of Act 39 has gotten more attention than the development of wine expanded permits. For those entities holding a restaurant or hotel license, the new permits allow for the sale of wine to go of up to three liters in a single transaction. This is significant because a growing number of grocery stores have obtained restaurant licenses and developed separate licensed premises to sell alcohol to their patrons. The PLCB noted that the new license includes the ability to purchase non-alcohol items at the separately designated licensed premises, meaning grocery patrons cannot buy alcohol at the normal checkout but can purchase their grocery items at the alcohol-designated registers. Further, to support the expansion of these permits, the PLCB notes that the Act does not allow residents located within 500 feet to protest the issuance of a wine expanded permit.