Saturday, April 18, 2020

Why This Isn't Already Done

This is something I just posted on the "Abolish the PLCB - Rewrite The Code!" Facebook group page (a group you're certainly encouraged and welcome to join). A new member was full of righteous rage and wanted to know how to get privatization and said we needed to force Harrisburg to change this. Frankly, I wish we could. But 12 years of writing and editing this blog, and all the activity that went with it, has taught me patience, the patience needed to wear away a stone. Here's what I've learned, here's how it's got to be done.  

For the new readers: I've been trying to push this rock for twelve years. I've been to Harrisburg to attend hearings and lobbying meetings, I've testified before a joint committee of the legislature once, I've made friends with a number of reporters and fed them info and ideas. Some small progress has been made, but...a reality check is needed. This is an uphill fight, although the PLCB's huge failures in the past month are a great opportunity.

Here's why.

I was so spunky back then.
I had a lot of schemes and ideas when I started working on this back in 2008. The tough truth is that there isn't anything that can be done until a MUCH larger number of voters are actively engaged on the issue. And that's not easy, because of a few factors.

1. People are liable to be embarrassed to stand up for their booze rights. "It's only a drink, it's not important." Polls usually show that people are willing to be taxed more for drinks, even though they already are.

2. Many Pennsylvanians just don't know any better. They've never gone out of state to buy booze, so the State Stores' adequacy is all they know.

Dezinformatsiya...UFCW style
3. The other side, largely through the union that represents the State Store clerks, UFCW Chapter 1776, does a great job of shaming anyone who supports privatization: "You're a drunk! You just want more alcohol! This will cost thousands of family-supporting jobs! The PLCB gives MILLIONS to the state, to police, to communities! There are much more important things that need to be done!" And people back off, because that SOUNDS reasonable.

4. There's a LOT of deeply-believed misinformation and ignorance about the situation. That the PLCB is a cash cow (it's not), that it serves us well (with only 600 stores in a state where 5,000 would be average, how can they?), that it's not illegal to buy booze out of state (it absolutely is). People are constantly amazed about the existence of the Johnstown Flood Tax, they believe it's illegal because "it's a tax on a tax" (completely not illegal to do that), without ever realizing the huge layer cake of taxes and fees that boost the shelf price of booze in PA.

5. The PLCB is absolutely brilliant at assessing the threat of privatization, and doing just enough to make people think they're improving, and the threat decreases.

Despite all this, we will have to get millions of them on board, because the Legislature cannot be moved otherwise.

Democratic legislators block-vote against this; in over 10 years, not one has ever broken ranks that I can recall. Republicans from southeast PA are likely to flip-flop on it: they face more pressure from unions here, and from a highly-organized group of beer sellers who'd just as soon see their competition run incompetently. It's a powerful combo. Speaker Turzai has tirelessly campaigned for privatization (he's retiring after this term), but the Senate has balked on it, and Wolf will not sign a full privatization bill. Without Democratic votes, there's no way to override him.
Privatization? No. HELL no.
The courts won't do anything because of the 21st amendment; states have very broad power to regulate alcohol.

The Board itself is, naturally, only interested in preserving the agency. The three members are traditionally appointed 1 each by the legislative GOP, Dems, and the governor, so no real help there.

THE ONLY THING THAT WILL WORK is getting fellow citizens involved. Writing letters to newspapers, reminding people how badly the PLCB handled literally everything in this crisis, reposting on Facebook.

Like it says at the top of the blog,

"...there was [in 1997] no overarching passion within the General Assembly, or in the public at large, for privatization. Unless and until there is a general hue and cry, it is very unlikely there will be a privatization initiative that succeeds." -- John E. Jones III, former PLCB chairman

Friday, April 3, 2020

Time for a Change.org

With the State Stores closed, and the PLCB's website essentially non-functional -- 

With restaurants and bars across the state reduced to take-out business --

With the PLCB refusing to service any but the largest accounts (while the Wolf Administration tells Pennsylvania that we should look to the private market to meet the demand caused by the closed State Stores...while denying that market the right to sell spirits)

With thousands of businesses on the brink of failure, tens of thousands of people unemployed -- 

Someone has to do something. 


Why not you? Sign this Change.org petition, asking Governor Wolf and the Legislature (or the PLCB, why not?) to immediately allow the sale of wine and spirits to-go (or local delivery) by all licensees, including beer distributors, through the end of 2020. Give them a chance to make the money that will allow them to stay open, employing some people, and giving others hope for re-employment when the crisis ends.

Buddy, can you spare a signature? 
Before you say, 'Oh, those Change.org petitions don't change anything,' last week a petition just like this one succeeded in getting the government of Ontario to allow restaurants to sell wine and beer to go. We can do that here, just as quickly, just as easily.

Until then, Pennsylvanians will continue to cross the borders, spreading the disease. Those taxes will be lost to the state, where they could help pay unemployment benefits, while the PLCB flounders, trying to serve the whole state from three warehouses with a patched-up website (while the wholesalers who service the PLCB's operations have their offers to help rejected), literally filling only hundreds of orders out of hundreds of thousands of attempts to place an order. 

Is this a total solution? No.
Will this save every restaurant, every bar? No.
Will it adequately compensate every beer distributor for the damage to their business? No.

Is it better than what the State's doing now?  Hell yeah. 

Over 11,000 people have signed as of April 14. This is not a fringe position. 

Please. Sign the petition and share it. Thank you.

Friday, March 20, 2020

Why Is The PLCB Lowering Spirits Instead of Selling Them?

Philadelphia
The PLCB shut down the State Store System of Stores because of the COVID-19 pandemic. They are the ONLY control state to do so (other than Utah, temporarily, because of an earthquake that happened concurrently). Liquor stores remain open in other states (because a lot of them sell booze in grocery stores, you know, like normal people do); beer distributors were literally classified as "life essential" by Governor Wolf in yesterday's shut-down-the-state order; and of course, as we pointed out recently, we were told by the state that we didn't need the State Store System of Stores because "Individuals can still buy wine and beer at grocery stores with PLCB licenses."
Wilkes-Barre
We have encouraged the State to leave the stores closed. The Distilled Spirits Council of the US and American Distilled Spirits Association has pointed out that the current instruction leaves the citizens unable to buy spirits (a completely legal product in Pennsylvania and the United States), and suggested the state at least temporarily allow the sale of spirits at the grocery stores and beer distributors that remain open...somewhat heroically, and I'm not kidding about that.
Allentown (the sawdust is a nice touch)
I've been talking to wine and spirits wholesalers who work with the PLCB to supply their warehouses. They're ready, willing, and able to supply spirits to the grocery stores, convenience stores, and beer distributors that are already open and selling. What's more, they're also ready to supply the restaurants and bars who are eager to do take-out beer and wine and spirits sales, just to keep their people employed, to literally keep their businesses from failing. Not closing temporarily: failing. The wholesalers know that they can find drivers to do the work. The PLCB has said they could do this (click the link, and scroll down to the 7th paragraph), but have never shown a bit of initiative toward action on it.
Williamsport
Has there been any indication that the PLCB is even considering any of this? At least the legislature has decided to come back to work remotely and get something done, but you have to believe this isn't going to be high on their list -- and I'm not suggesting it should be. But as we saw when the Board decided that it could simply "interpret" the hated Case Law right out of existence by declaring a six-pack to equal a case, the courts give the PLCB very broad latitude indeed on "interpretation" of The Almighty Liquor Code (had we mentioned that the PLCB has its own courts?). They could easily rule on all of this stuff, and let the Legislature catch up.
Also Philly
No. The Board, the Governor, the Department of Community and Economic Development have done nothing about this, none of the really easy steps that would take some of the stress off businesses, and extend some fairness to the folks in the spirits production chain (who also need gainful employment), and let those of us who might want a whiskey sour or Bloody Mary (or quarantini, which is apparently a thing) buy a bottle or two.

What are they doing?
Harrisburg

In a state where the last large scale riots were over fifty years ago, the PLCB decided to raise public morale with this amazing display of optimistic trust. Because nothing says "it may be rough, but we're going to get through this together" like boarding up your store...in Williamsport. 

This lack of leadership, lack of understanding, lack of common good sense is just another example of what an awful mistake having this all-too-independent state agency in charge of retail stores has been. The Legislature should, in the spare ten minutes it would take, use this opportunity to say, 'Okay, that's enough. You had your chance, more than enough chances, and that's it. Game over, PLCB. You're done.'

Even better? It really would only take ten minutes. The Legislature actually drew up plans back in 1987 to end the State Store System of Stores and those plans, never enacted, are still available online in the Pennsylvania Code...ready to roll.

Here's the plan; your predecessors already did the work for you. Literally all you should have to do is change the dates and vote.

Because all the PLCB is going to do in this crisis is protect themselves. Apparently they think Pennsylvania is France. We deserve a lot better than this.
Paris






Thursday, March 19, 2020

Support for Emergency Spirits Sales

Posted with these brief comments: Clearly the PLCB is in the minority. We could be doing more. If take-out is allowed, the opportunity to allow citizens to do one-stop shopping HELPS the situation. The Legislature and the Governor and the PLCB should take up this suggestion (at the very least) immediately. Jobs are being lost.



March 18, 2020

The Honorable Tom Wolf
Office of the Governor
508 Main Capitol Building
Harrisburg, PA 17120

Dear Governor Wolf:

We are writing to you on behalf of the Distilled Spirits Council of the United States and the American Distilled Spirits Association, national trade associations representing producers and marketers of distilled spirits sold in the United States, regarding the difficult decision to close all Fine Wine & Good Spirits stores in response to COVID-19.

We understand state leaders like yourself are struggling with the careful balance of protecting the health of citizens while also protecting the financial health of state and local economies. We'd like to offer some alternatives to completely shutting down all state stores that take into account these dual needs and share how other control states are handling the issue.

Control states, including Alabama, North Carolina and Virginia, have adopted emergency rules to reduce the risks to patrons and workers while also trying to keep afloat hospitality businesses and continue to serve the public.

For example:

. In Alabama, the state has reduced the number of open ABC stores and shifted personnel to open locations. The state ABC has also outlined guidelines to protect customers and employees including limiting the number of customers allowed in a store at any given time; having store personnel retrieve customers products; encouraging credit card purchases; and requiring employees to wear gloves.

. In North Carolina, local counties continue to operate their off-premise spirits stores but might consider scaled back hours of operation. Distilleries may still sell bottles for off-premise consumption.

. In Virginia, stores remain open with reduced operating hours at certain stores. The VABC guidance states, "As the sole retailer of distilled spirits in Virginia, we are dedicated to filling our role in providing product to our licensees and the public."

. Utah and New Hampshire continue to keep their state stores open.

To date, Pennsylvania is the only state to completely close down all stores that provide consumers with access to distilled spirits products. Pennsylvania's hospitality industry, including craft distillers, is already under enormous strain due to the U.S. tariffs on EU spirits and wine products. We respectfully request that you reconsider your decision to close all state stores. It is the only channel of distribution that Pennsylvania consumers have to distilled spirits.

If you are unable to re-open all or select PLCB stores, an innovative alternative would be to temporarily allow "R'" licenses that currently sell beer and wine to also sell spirits until PLCB stores are re-opened. Many restaurants are now selling take away food only and the loss of patrons is financially harming their businesses. These restaurants are already licensed to sell spirits and already are trained in proper ID verification. As restaurants across the state are suffering huge financial losses due to lack of business, the ability to also sell distilled spirits would help offset their losses and could potentially prevent permanent restaurant closures.

The spirits industry stands ready to assist you in exploring innovative approaches to protect Pennsylvanians while easing the burden on consumers and the hospitality industry. We are all in this together and we are committed to doing our part to support our communities during this difficult time. For example, distillers in Pennsylvania and across the country are converting their distilling operations into production lines for hand sanitizer to help communities combat COVID-19. We look forward to working with you and the PLCB now and in the future.

Thank you for your leadership.

Very Best Regards,

Chris R. Swonger
President/CEO
Distilled Spirits Council of the United States

Matt Dogali
President/CEO
American Distilled Spirits Association

CC: Chairman Tim Holden, Pennsylvania Liquor Control Board”



Wednesday, March 18, 2020

Why Not Leave Them Closed?

We have a tremendous opportunity before us. We must not waver. We must not hesitate.

The State Stores could easily be closed by June.

Let me explain. 

I have a tremendous idea!!
By now, you all must know that Governor Wolf has declared that the State Store System of Stores is CLOSED, nominally because of the COVID-19 pandemic. Shut down as of 9 PM on St. Patrick's Day, of all inane coincidences. What's more, the PLCB's FWGS website is no longer delivering booze to your door (you know, because they never really wanted to anyway), AND the licensee "service centers" are also closed (all the bars are closed anyway, except for takeout food and beer, two things with which the PLCB is entirely uninterested).

Wow. And as I was writing this earlier, Wolf issued a proclamation (link will download a PDF of the letter) shutting down ALL licensee operations that involve selling food or drink (of any kind) for consumption on premises. Take-out/to-go is still allowed, but one wonders for how long (see below). The only exception is for hotel room service.

Note: licensee operations only. Restaurants, lunch counters, etc. that are NOT licensed are still asked to voluntarily limit operation to take-out only. Wolf is doing this under the authority of The Almighty Liquor Code: "The PLCB, upon authorization from the Governor, has the authority under the Liquor Code (47 P.S. §4-462) to mandate the closure of licensed establishments in times of emergency."

Here's what you see when you go to Ye Olde Fine Wine Et Goode Spyrites site of Web:


Reaction has been mixed. There was an insane rush to the stores, people standing in line for half an hour, as if they were Fine Bottled Water and Good Toilet Paper Shops. People say, oh, you don't need booze (idiots). Or they say, booze is as necessary as groceries and medicine, which, if you really think that, then why didn't you tell your state rep that years ago and get it out of the state's incompetent control? Eh, another missed opportunity.

Back to today. Why did the governor close the State Stores, and not close beer distributors, not close the sales rooms of wineries, distilleries, or breweries (yes, and meaderies and cideries and kvasserei)? Simply because he could, most likely, and possibly because of union pressure. Naturally enough, why is not a question that's been asked of Wolf directly. It's much more important that we do 'flatten the curve' and get this damned virus under control. Believe me, that's absolutely true. Retail operations, particularly small ones, are going to take a whupping here, and that's going to be disastrous for the economy.

But that's not what we're here to talk about. It's about the opportunity to finally put an end to the ridiculous State Store System of Stores. 


Rahm Emanuel's famous quote was about the 2008 recession. He followed the famous part with this:
"This is an opportunity, what used to be long-term problems, be they in the health care area, energy area, education area, fiscal area, tax area, regulatory reform area, things that we have postponed for too long, that were long-term, are now immediate and must be dealt with."
Are the State Stores an immediate problem? Are they one that "must be dealt with"? Of course not. I'm not a fool. No one's livelihood or survival is threatened by the continued existence of this Relic of Repeal, this Fossil of Prohibition.

But it is definitely falls under "thing that we have postponed for too long," making this is a unique opportunity to deal with it. The State Stores will be closed for at least two weeks, probably more. And the Governor, a Democratic governor, has openly admitted that the State Stores are not necessary to serve the needs of the citizens of the state. 

He did? When did he say that? In the letter to Pennsylvania businesses (dated March 14) from Wolf's Secretaries of Health, and Community and Economic Development, there is a list of descriptions of "non-essential businesses" that are asked to close. At the end of that list, there are these bullet points:
NOTE: Liquor stores will begin an orderly closure. Individuals can still buy wine and beer at grocery stores with PLCB licenses
NOTE: Restaurants should stay open for carry-out and delivery only
You see? The State Stores can close because people can still buy wine at grocery stores and restaurants. Of course they can, and they do, in huge, growing amounts.

If the State would allow grocery stores (and beer distributors, and restaurants, and deli licenses, and private clubs) to sell spirits by the bottle -- and really, why not? It's all the same alcohol! -- we could just leave the State Stores closed. Never open them again.

It's not that hard. Have an auction, sell off the inventory, and have time for new businesses to get licenses and open with former State Store employees at the register (or at the helm, why not?).

At the very least, the Legislature should immediately adjust The Almighty Liquor Code to allow licensees -- grocery stores, bars, and beer distributors to add off-premise, take-out spirits sales. End this ridiculous prejudice against spirits. Let mom pick up a bottle of Bailey's at the Giant Eagle.

And do away with the stupid cafe requirements (because...we're only doing take-out now, and the world hasn't ended), and the childish "buy four bottles and step outside the door" limit. What ridiculous bullshit is that, anyway?

We could do this. It's just waiting to happen.

"...it's an opportunity to do things you think you could not do before." Clearly Governor Wolf is ready.

PRIVATIZE. And if we can't do that, take the spirits monopoly away from the State Stores. The grocery stores have earned it, beer distributors have earned it by staying open during the crisis...something the State Stores weren't prepared to do. 

Monday, November 18, 2019

A great place to work?

Among the lies, & fallacies, disingenuous statements and statistics that appear out of thin air over at the old PLCB fudge factory, we hear how the PLCB is a great place to work! Jinkies! Cool!

But what do the numbers say? According to the 2019 annual report (on page 61) the average age of a store clerk is 44 years old. Not exactly attracting younger workers. And when they do get workers, 56% of them are part time. I don't think those are the "Family Sustaining Jobs" that are so often mentioned. Out of that 56%, over half of them quit every year for a turnover rate of 53.1%. Even if you somehow manage to get one of the 2,453 full time filled positions, there is a 49.3 % turn over rate there too. Now factor in this: 29% of store workers change location every year.

Can you say "turn and churn"? Is it burnout, or do they just get tired of the bullshit? If the PLCB isn't that good at retaining employees, just how good they are to work for?

Turn it on its head: is this mismanaged workforce of any benefit to the agency (and thus, to the commonwealth). The average sales per employee for 2017 across this kind of industry was $689,000 per each full time equivalent. The PLCB can force a "part time" employee to work 34 hours a week if they want to, so that makes figuring out the total hours the part time workforce puts in a bit difficult. I'll just go with 25 hours a week for part time workers and 15 hours for seasonal workers.

With 3,190 full time sales and admin employees putting in 37.5 hours per week times 52 weeks, that's a total of 6,320,125 hours. Add to that 25 hours times 1,773 workers times 52 weeks equals 2,304,900 hours plus 383 seasonal workers at 15 hours each, but only 13 weeks of work equals 74,490 for a grand total of  8,719,515 hours. Take that and divide it by 37.5*52 (1,950) and you get roughly 4,471 full time equivalent employees.
Now that we have the number of full-time equivalents, we can then multiply that by $689,000 for each employee and come up with $3,080,519,000 as what average sales should be. But the PLCB only did $2,126,927,971 in sales or UNDERPERFORMED the average by just about 45%. In simple terms, having the PLCB do things is costing the state about $950 Million in lost taxable sales based on average sales. Now that is the average, there could be significant differences for liquor stores. But looking at Total Wine, they are only about 10% below that average, so it pretty much confirms the PLCB is a bloated, poorly managed organization,

It gets worse. All the PLCB numbers were taken from the number of working employees as of June 2019. However, the amount that are authorized is greater.  If the PLCB were fully staffed, they would be 65% BELOW average in sales per employee. Filling over 1000 current vacancies might cause the PLCB to not be able to meet the amount of payout revenues requested by the administration.

That of course, would require the PLCB to variably screw the citizens that much harder just to keep them afloat. In that scenario, it is better for them to have less people on the sales floor. What a way to run a business!

PLCB workers, staff, administrators, board members, and your supporters in the Legislature: tell me why we need this bloated, under performing jobs program?

We are not safer, we are not better served and we are not satisfied. Privatize.

Tuesday, November 12, 2019

How much did they steal from you this year?

It's that (belated) time of year, time for the PLCB to tell us what a wonderful job they are doing and what a swell place to work they have. Their Annual Report is out (you can download the PDF document here), and the truth is in there; we just have to root it out. 

We say it's "that time of year," but it's not, actually, because the annual report took a ludicrous four months to come out...again. Last time it took four months they said, "Ohh, there were special considerations with the new tax code." No new tax code this year, and they didn't bother with a new excuse. What's the point: it's all lies anyway.

Onward! Right on page 2 there's a mission statement (emphasis added):
The mission of the Pennsylvania Liquor Control Board is to responsibly sell wine and spirits as a retailer and wholesaler, regulate Pennsylvania’s alcohol industry, promote alcohol education and social responsibility and maximize financial returns for the benefit of all Pennsylvanians.

Funny how the part about maximizing revenue isn't in the liquor code. Just as well, since based on the available statistics they aren't doing a very good job on the stuff that is, like alcohol education or social responsibility; at least, not compared to states on our border. Their own report on these outcomes shows that students who consumed alcohol in the past year went up from 81.4% to 83%  After 85 years of the PLCB, 85 years of CONTROL FAILURE...maybe it is time to try a different system. Any normal business wouldn't survive 85 years of failure.

What have they done to us lately? After record sales (and record variably-priced screwing us) PLCB liabilities went down $2.03 million on over $1.1 billion dollars of debt. A payback rate of over 500 years, and getting worse. It was "only" 400 years previously. For some reason they don't report that number. Another interesting part of their financial reporting is that they say, on five pages in a row, that "The accompanying notes are an integral part of these statements." And then don't list what any of the accompanying notes are. They aren't going to verify what they are saying; just believe them, because they have such a great track record of telling the truth.

Another thing they don't tell us is that while variable pricing was supposed to be a partnership where the public was supposed to receive some benefit, we don't know what the benefit is in dollar terms. We can look at past financial statements and see that the PLCB is making almost double what it used to. That's almost all because of lower acquisition costs, but where is the share that the public was supposed to get?  We may have seen a 2% reduction in prices, and even that might be high. For every extra $100 they make, we are probably lucky to see a $2 reduction, spread across a number of products. Even then the PLCB still screws us, because of their rounding formula. Rounding is not considered part of "mark-up," so they can hide that from us, just like they hid what the mark-ups actually are now.

It all goes back to the total lack of leadership and experience of those at the top. They are never held responsible for the lack of progress under their leadership, so the status quo, or even a slip in the status quo, is the norm. On the business side it is even worse. I can understand hiring political hacks if you don't want things to improve in a structured order. But when you've got a failed congressman, a political chief of staff, and a furniture company exec it doesn't seem to be the path to a successful liquor business. In 85 years there hasn't been a Yuengling or Jacquin's executive, or someone from a wine wholesaler or spirits importer, who was qualified and wanted to do the job...really?

When you think about this, keep in mind this quote from the Joint session of the House Liquor Control Committee and the Senate Law & Justice Committee of 2017 (adjusted a bit for truth):

SENATOR MCILHINNEY (former Chairman Senate L&J Committee, since retired): "... the state citizens own this system, and they should be able to get some...benefit by having a good  deal when they go to the liquor store."

MR. HOLDEN (Chairman: Liquor Control Board) : "Absolutely Absolutely not."

There, I fixed it for you, Tim.