PLCB buying power is a joke.

Well, it it that time of year again when the Buffalo Trace Antique Collection (BTAC) goes up for lottery. So how does PA fare as one of the largest buyers in the country? Worse than most control states and certainly worst than Total Wine.  Need proof?

Last year PA got an allotment of 165 bottles of George T Stagg, the most popular of bourbons in the BTAC, out of a release of 9.120 This year the total bottling of GTS is almost 29,000 more bottles and PA is getting.....you guessed it, 165 again. Maybe that is just an outlier you say. OK, let's looks at Thomas Handy Rye. PA got 408 bottles for the entire state out of a run of 11,944. This year they are getting 407 from a run of  14,021.

2017 BTAC, although the PLCB says it it 2016, but they are idiots.

Want to try another? Sazerac Rye stayed the same too even though production went up and W.L Weller also stayed the same even though production was up 42% over last year. Yeah I've got the numbers for them too if you really need them. 

So even if the allotments were just divided up by states and foreign sales PA got the short end of the stick by A LOT, It is even worse if you looked at it by a population allocation and we owe it all to the glorious leaders at the PLCB. They should hire some North Koreans, at least they have experience in allocating resources while screwing the public.


Now if you are like me you're thinking that this is what they get for trying to play hardball over purchase prices. We, the citizens and consumers, not only have to pay above list price to the ass-backward PLCB but their newly increased "buying power" gets us LESS of the products we want. Name another business that works like that? You can't - and if one did exist they wouldn't be in business because their competition would make sure they didn't survive.

So just let me say that you guys are doing a bang up job. The more stupid and incompetent things you keep dreaming up to do means the sooner we can be rid of you for good.

PRIVATIZE.

The numbers don't lie...but somebody is

In the House Appropriations Budget Meeting for the PLCB held earlier this month, the PLCB leadership said that they would have to dip into reserves to meet the Governor's anticipated request for $185 million. Why is that, if "modernization" is going to be the windfall that the Governor (and clerks' union president Wendell W. Young IV) says it is? Are their arguments that facile?

The Governor said in his "Budget In Brief" of 02/07/17 (pg.15) that through modernization ..."an additional $137 million in LCB revenues will be generated." The PLCB didn't correct or disagree with that number. So let's see what doesn't add up. If their income for FY 2015-16 — after paying for the BLCE, but before the General Fund Transfer — was $103,856,933 (which it was, according to their financial report), then a $137 million increase would take it to just over $240 million. But if the PLCB has to dip into reserves to pay $185 million, that has to mean that their so-called "profit" is less than $185 million.

OH NO!  42 million of my friends are missing!

However, during that same budget meeting — in sworn testimony — the PLCB said that even with record sales again, they would only make about $90 million for FY 17-18. That $90 million and $137 million "modernization bonus" take it to $227 million in total. That's $42 million more than the $185 million they said they could pay IF they dipped into reserves. So where is this $42+ million going? If they make the $90 million they project, and the $137 million additional that they didn't object to, then turning in $185 million to the General Fund should be no problem. Remember that these numbers are what the PLCB calls "profit," so everything (except the $238 million in pension debt...but that's another story) is already covered.

We have to ask: why after all the "modernization" is in place does the PLCB think they are actually going to make LESS than they did in FY 15-16?

Could it be that "modernization" is a sham, and that it isn't going to bring $137 million, or $100 million, or even $80 million? Is being off by well over 60% how the Governor and the PLCB do estimates? How big a failure is this going to be? The MINIMUM $42 million off would push this well beyond wine kiosk failure, or the 66% computer cost overrun, or selling house brands or anything I can think of. This would be a failure the size of the 82 year lie that the State Stores would be convenient to the public. They got what they wanted, "flexible pricing" and all, so show us the modernization money, PLCB!

Do the math and decide: are they just stupid? Or is the PLCB deliberately misrepresenting how much money they will bring in for the Commonwealth?

Why the PLCB should follow the law, not "interpret" it

If the PLCB were a private citizen, it would most likely be in jail. It does things that the people — through their representatives in the legislature — never approved. It willingly and repeatedly violates the law, and consistently goes against one of the very foundations of English and American law: "Everything which is not forbidden is allowed." Also stated as "no crime without law," this is an essential freedom of the ordinary citizen. The PLCB, on the other hand, seems to work on the opposite idea, that "all that is not expressly permitted is forbidden." Sorta like North Korea.

Are they making broad interpretations of the laws for the benefit of the citizens? Good intentions are not an excuse for breaking the law. Never have been. The laws are for everybody, they don't say "except for when the PLCB wants to save us from ourselves" anywhere.  Let's take a look at some of the legal and common sense violations they are a party to.

Just this past week Giovanni's Pizza & Pasta, in Dormont, PA was trying to comply with all the written legal requirements so that they could deliver wine. But the PLCB isn't interested in just the legal requirements; their requirements have to be met as well. What are those requirements? They won't say. "That's a matter that is under review for consideration by our attorneys and our board. There's nothing in Act 39 that says it's illegal, but Act 39 did impose certain conditions that need to be met. We don't have a determination on that matter yet." - Elizabeth Brassell, director of communications for the Pennsylvania Liquor Control Board (emphasis added).

I'm sure we all remember the magic 12 pack case where they "interpreted" that a "case or original container" could mean a 12-pack, even though a case had been a case (and an "original container" had been ONE original container, not a pack of  12 of them) for as long as anyone could remember. How many times in the past 80 years had they refused to consider that?  More than we will ever know.

Why was the new interpretation suddenly different? No one knows. Of course there are the infamous Wine Kiosks that were never checked to see if they complied with federal law, The PLCB just didn't bother and really didn't seem to care in that case. Even after they were called out on it they still didn't check.

While moot now, state law did say that only 25% of State Stores could be open on Sunday. Since they don't care what the law says, the PLCB was about 18 stores over the limit when Act 39 took place, allowing more stores to open. They obviously didn't care about a legal limit that was written to apply specifically to them!

How about the ever-changing beer at gas stations gymnastics? "You can't sell beer at the same location where you sell gas, period, that's the law! Well, unless the property is actually next door. Oh, and they can't have an interior connection...unless we say it's OK, in which case, that's fine, for that one licensee, not for anyone else."

That's contrary to what the Liquor Code explicitly says: "No license shall be transferred to any place or property upon which is located as a business the sale of liquid fuels and oil." But according to the PLCB, if you have a business that sells gas and you build another store next to it, and then attach them together (and they are owned by the same company), it isn't a continuation of the original gas selling business. If not, then why do they have an interior connection? Common sense was never a PLCB strong point.

One of my favorites in the "Do as I say not as I do" category is that a licensee of one class can't provide anything of value to another class of licensee. So as a distributor you couldn't help a restaurant with how to display their beer selection for example. However, the PLCB has outside representatives that come in all the time to set up advertising displays in their stores, and hires outside companies to do the sets* in the stores too. But then there are no requirements for State Stores either. We shouldn't expect them to know how to stock shelves and sell things - should we?

Maybe if the PLCB just regulated and didn't run a half-assed retail booze monopoly, they would be able to do at least one thing well. I doubt it, but I'd like to find out.

Privatize.


* A 'set' is where every bottle goes and in what order they should be on the shelves. These are the people that decided to not have the 1.5L sizes next to the standard 750ML sizes of the same wine but to group all the 1.5L bottles together.  The same ones that destroyed the standard "top shelf" setup that liquor had been using for almost 100 years.  Of course, no place except PA state stores do this.

The Past is Prologue: don't forget the wine kiosks

"Those who do not learn history are doomed to repeat it." 

 We laugh at the idea of the wine kiosks now. That was in the past, and it was crazy, but, we tell ourselves, it's over now, and even the PLCB gets it. That was just that crazy Joe "Da CEO" Conti and his effort to make the PLCB "modern" (and maybe pay off some political cronies).

Except many of the people responsible for the wine kiosks, the bureaucrats, are still in place. Conti's gone, and PJ "PJ" Stapleton is gone, and James "Fall Guy" Short is gone (though still not sentenced...), but the faceless minions at 910 Capital Street are largely still there, still making some great decisions.

Remember those? Going $33+ million over budget for the new computer system, basically because they couldn't read a contract. Storing wine in un-air conditioned trailers in the summer. The keen plan to undercut PA wine producers with out of state house brands. And paying an out of state company about $4 million to come up with the incredibly generic "Fine Wine And Good Spirits." (Considering they were called "Wine and Spirits Shoppes" before, that comes out to about $2 million a word for adding "Fine" and "Good." Great spend, guys.)

Wine Kiosks Redux

Still, the wine kiosks were such a disaster, one that made Pennsylvania a national laughingstock, that it's worth having a full look at just how stupid it all was, and exactly how it happened. First, a summation from House Speaker Mike Turzai, from when the kiosks fell apart, back in September 2011.

Wine Kiosks A Big Mistake From The Beginning 
9/20/2011 – Majority Leader Mike Turzai (R-Allegheny) released the following statement regarding the Pennsylvania Liquor Control Board’s (PLCB) decision to end the wine kiosk program:
“I don’t think it comes as a shock to anyone outside the PLCB’s top echelon that the wine kiosk program was a complete failure. The kiosk program was a joke from the very beginning and the PLCB knew it. The agency’s own internal evaluation committee recommended against the kiosk idea. Yet the board went through with the cockamamie program anyway.
“This is just another example of why a government agency should not be attempting to mimic private industry. The wine kiosk program resulted in machines that sometimes worked, and sometimes didn’t; and it forced consumers to actually blow into a cumbersome machine – no one wants to buy wine that way. Real customer convenience will only come once the sale of wine and spirits is moved to the private sector.”

How did it actually happen? How did we wind up with the Incredible Robot Wine Army? We've got it all, right here.

PLCB Wine Kiosk Timeline: (be sure to check the links!)

• March 28, 2008 – Public Notice of Wine Kiosk RFP on PLCB and DGS websites; proposals due May 8, 2008. Simple Brands (Simple) is the only applicant.
• July 9, 2008 – PLCB RFP Evaluation Committee submits report to PLCB Chief Counsel’s Office for inclusion in that day’s board meeting. Report advises against contracting with Simple, not a well-founded business plan; failure to get advisory opinion from TTB (federal government) on permissibility of Kiosk program; awards Simple a score of 305 out of 1,000 points for its proposal.
• July 9, 2008 – RFP Evaluation Committee advised that the board would not be reviewing the committee’s report; committee members told to destroy all copies/documentation relating to the report; and that CEO Joe Conti would meet with them on July 10.
• July 9, 2008 – LCB members met and voted to approve Simple Brands proposal.
• July 10, 2008 – Conti met with Evaluation Committee members, told them not to speak of the evaluation; to destroy all copies; and their concerns would “be taken care of.” (Copies of cover-up RFP and emails)
• January 29, 2009 – Effective date for Contract 20080318 between LCB and Simple for 100 wine kiosk vending machines.
• June 30, 2009 – Relationship between Simple investors and former Governor Ed Rendell discovered: Investor Herbert Vederman gave Mr. Rendell $346,276, including a $100,000 lump sum in 2002, campaign finance records show. Mr. Vederman also served as the governor's campaign finance chairman. His business partner, Ira Lubert, meanwhile, gave Mr. Rendell $140,980 in that time period.
• June 23, 2010 – LCB places two kiosks in Harrisburg area grocery stores: Giant Foods in Dauphin County and Wegman’s in Cumberland County.
• June 30, 2010 – End of FY 09-10, Profit and Loss statement. Kiosk program showed a net loss of $255,077.
• July 9, 2010 – LCB conditionally accepts delivery of two kiosk machines subject to Simple remedying operational problems with the machines (doors failing to open or close, credit card machine failures and general failures with particular transactions).
• September 1, 2010 – Second letter sent to Simple giving conditional acceptance of two kiosks provided they remedy operational problems within 60 days of notice.
• September 8, 2010 – Contract with Simple amended to include a $1 per transaction fee (collected from the consumer and paid to Simple) and a 50-cent per bottle “advertising fee.” The amount to be paid to Simple for advertising was capped at $1.5 million per year. PLCB also warned Simple that it would not accept delivery of additional kiosks (only two were in operation at the time) unless the various problems previously identified by the board were remedied.
• October 15, 2010 – LCB announces roll-out of more kiosks throughout the state. According to LCB press release: “We’ve been testing the Pronto Wine Kiosks at two supermarkets in the Harrisburg area for the past three months,” said Board Chairman Patrick J. “PJ” Stapleton. “The kiosks have proven to be safe and reliable and we are looking forward to giving consumers across Pennsylvania the opportunity to do one-stop shopping.”
• December 21, 2010 – PLCB takes all 29 wine kiosks out of service due to systemic problems. (Note the date: right in the midst of the busiest booze sales of the year.)  LCB Press release: “While customer satisfaction with the six-month old kiosk program remains high, recent problems -- such as product not dispensing -- require us to take immediate action while we wait for the manufacturer to correct all of the identified issues,” said Pennsylvania Liquor Control Board Chairman Patrick J. “PJ” Stapleton. “We apologize for any inconvenience this may cause our customers and supermarket partners, but felt this temporary closure was critical to the future success of the program.”
• December 22, 2010 – Board notifies Simple that the Kiosks were taken out of service because Simple failed to remedy the various problems with the Kiosks. According to the Board: “While most of the several hundred specific instances were eventually resolved, the recurring nature of the problems confirms that the problems are systemic, rather than isolated.” Simple was advised to deliver fully functioning wine kiosks, and a certification that the systemic problems had been rectified by March 14, 2011
• December 30, 2010 – PA Auditor General notifies the board of its Wine Kiosk performance audit and advises LCB to preserve and maintain any and all documents and materials (including e-mails) relating to the kiosk project. 
• February 22, 2011 – Simple hopes to expand to smaller kiosks at convenience stores like Wawa and Sheetz – per letter to the Board.
• June 2010 – Wegman’s notifies LCB it will terminate its “kiosk” relationship.
• June 25, 2011 – Right-To-Know-Law request submitted to LCB by House Majority Leader Turzai requesting a copy of the TTB advisory required by the RFP; all costs associated with Kiosk program and all invoices to, and payments from, Simple pursuant to the contract
• June 30, 2011 – End of FY 10-11, Profit and Loss statement. Kiosk program showed a net loss of $843,369 for FY-10-11; Additional losses (not accounted for on prior FY P&L statement) of $24,877. Total net loss for project: $1,123,323.
• August 4, 2011 – Response from LCB indicates Simple failed to obtain TTB advice and that no billing had been done up to that point, but LCB was in the process of sending the Profit and Loss statement to Simple for payment.
• August 5, 2011 – Board demands payment from Simple.
• August 15, 2011 – Walmart advises PLCB it will not participate in the Kiosk program (23 machines were planned for Walmart stores).
• August 17, 2011 – PLCB chief Joe Conti indicates the agency will continue the wine kiosks once its litigation is resolved. "This was not a faulty fiscal decision," Conti said.
• September 1, 2011 – PA Auditor General issues audit detailing the failed program.
• September 16, 2011 – PA Independent reporter Eric Boehm reports, contrary to public comments and direct testimony, PLCB failed to conduct any market research in relation to the kiosk program.
• September 20, 2011 – PLCB announces the end of the failed kiosk program; it pulls the plug on remaining machines in several supermarkets. 
• January 25, 2015 – PLCB legal costs for the "free" kiosks have exceeded $300,000 pushing total losses to $1.5 million, not counting PLCB resources and personnel costs, which have never been accounted for.

So here it is, five years later, and the PLCB insiders and their supporters have made sure that NOBODY has been held responsible, even though there are absolute violations of the PLCB Code of Conduct in that: "No member or employee of the Board shall: use for personal gain or for the gain of others any information obtained as a result of service or employment with the Board, and not available to the public at large."

Having reports destroyed does not make things available to the public at large. Plain and simple.

While the Board may have changed, the entire Directorship are people who were brought up in this system, ingrained with this way of doing things and tacitly approved the entire fiasco by not doing or saying anything. These are the people who are going to "modernize" the PLCB. Do we really need them to do that? Do we need them at all?

Privatize.

Did the PLCB lie in front of the House or the Senate?

Liquor Control Board members recently spoke to the House and the Senate, and appear to have made contradictory statements in the two sessions. Did they lie when they told the House Appropriations Committee that they can't negotiate prices with suppliers, or when they told the Senate Appropriations Committee that they can? It had to be one of them.

Make up your own mind; you can hear exactly what they said.

In front of the House Appropriations Committee at about 2:43 in, PLCB Chairman Tim Holden says they can't negotiate. See that here.

Then in front of the Senate Appropriations Committee, at about 1:23:46 in, Executive Director John Metzger, with the Chairman sitting right there, says they can.  See that here.

So if the Chairman is correct, that they can't, then the Board has been and is just the normal bunch of incompetents we have come to expect. If they can negotiate, then the Board doesn't care about the consumer and is too lazy to try and get a better price.

Are either of those choices what we want to keep, and why have they lasted 82 years?

Solve the problem - Privatize and let real business handle business.