Let's Play "Spot the Lies!"

In the world of privatization, it seems that some opinions can't be bothered to rely on pesky things like truth, opting instead to build their "cases" on what Steven Colbert would call "truthiness" - things that sound true, until they are confronted with those annoying facts.

Such appears to be the case with Donald Cohen's opinion piece on PA Privatization appearing this week on The Patriot News, titled "Lawmakers should just say no to booze privatization: As I See It."

How Cohen apparently sees "it" is through rose-colored - but not fact-tinged - glasses. Cohen is, according to PennLive.com, "the executive director of In the Public Interest, a nonprofit comprehensive resource center on privatization and responsible contracting, based in Washington D.C." Red flags should be raising in your brain as you read that (it's not possible to determine, through scanning In the Public Interest's Website, where and from whom they get their funding).

You should head over to PennLive.com and give Cohen's ill-conceived OpEd a read, if only to get your blood boiling. I think we could start a serious game of "spot the lies!" in that piece, though it would be like shooting fish in a barrel. If it were a drinking game, you'd be hammered before you were halfway through reading it.

Many commenters on the original piece have beat me to the punch on this game, and following are two highlights from that discussion. One comes from a commentor called BertB:

"An analysis of state data by the Keystone Research Center found that states with tighter control over the sale and distribution of alcohol have lower rates of alcohol-related traffic deaths than states that take a more hands’ off approach." 
Except for PA which is in the lower half of the states in DUI, underage DUI, binge drinking and underage binge drinking.

Really, the only way that rational alcohol enjoying people can tolerate this stuff is to turn it into a game, right?

So... let's play!

"I am a producer of fine wine..."

I just got this comment on another story I posted today, and I thought it deserved fuller treatment, so I'm putting it up as a post. Unfortunately -- but understandably -- it was an anonymous post, but I've heard similar stories from other importers and producers. They've all warned me that they must remain anonymous, because the bureaucrats at the PLCB are vindictive. I know this from personal experience; I've seen them retaliate against producers who have talked to me. So...no name, even though that diminishes somewhat the poster's credibility.

Their credibility is, however, enhanced by their clear passion about this issue. This is a point we've tried to make a number of times: this is NOT about killing union jobs, this is NOT about making it easier to get cheap buzzbooze, this is NOT about beer in supermarkets. What this is about...is choice, and how the PLCB denies it to Pennsylvanians. At least, to those of us who don't live close to the border. Many of us simply cross that border and take privatization, since the Legislature won't see fit to give it to us.

The winemaker has the floor.


I am a producer of fine wine. I sell wine in 35 states. We sometimes are able to sell wine in PA, but there is no other state I work in that operates like PA. We have to get through the PLCB, regardless of whether or not our wine is wanted by citizens. Unlike every other state I work with, PA has an organization that can limit access to our wine because they don't want to buy it, don't like the price I have assigned to it, or for whatever reason, they simply don't want to work with me.

I don't think that most Pennsylvanians realize how their access to fine wine is severely limited by the PLCB. Even when I know for a fact that I could be selling wine in PA, because people have contacted me and specifically said so, I am sometimes unable to do so because the PLCB refuses to purchase. The PLCB arrangement in PA consolidates power in the hands of one org, and many times in the hands of ONE individual. If I have a good relationship with this individual, I'm able to sell wine just fine in PA. If for some reason this individual doesn't like something I've done, like raise prices, then he/she can simply not buy. And he/she (the PLCB representative) is my ONLY option for selling wine into PA at the retail level. (There are exceptions for restaurants, but it is nominal, and honestly, a huge hassle.)

In most states, if a distributor is willing to take you on, that distributor then purchases your product and goes out into the market and sells it. Maybe it sells. Maybe it doesn't. That responsibility falls on the distributor and me. And if that distributor decides to decline to purchase your product or starts to perform poorly, then you have other distributors to choose from.

In PA, you can't even sell your wine to people who want it, unless you schmooze with the PLCB and give them their cut. So, in effect, PA citizens get taxed twice by their state government. I can think of no other example other than a mafia that works like this.

And the only producers of wine that are okay with an arrangement like this are massive producers of wine like Gallo and Constellation, who make millions and millions of cases of wine and grease the skids with the PLCB and lobby the state government and have so much low end wine that people want that the PLCB can't really say no to them. In the eyes of these massive producers, leaving the choice up to one individual who simply can't say no to them is a huge victory. They love an arrangement like this. It keeps producers like me out of the market and all it is is competition between their own brands. False competition, given that all the wines are ultimately made by the same company.

Lastly, the idea that a bunch of jobs would be lost or a bunch of deaths would all of a sudden occur is simply preposterous. If that was the case, the rest of America would be mayhem, as PA is one of the few states that inserts the state government into the selling of wine to this degree. And other states are not mayhem. They operate just fine, and there are plenty of jobs. The real difference between PA and most other states is that in most other states you have a much better and broader selection of wines to choose from when you go to a wine shop.

Just Imagine...

If you had a clean slate, could lay things down the way you think would be best for selling alcohol beverages in Pennsylvania...how would you do it? I heard that question asked recently at a small discussion of the prospects of PLCB privatization, and it gave me pause.

Some things were easy. Would I keep the state-owned stores? Certainly not. Would I ever have the State as the sole wholesaler, with a committee in Harrisburg deciding what would and wouldn't be sold in the state? Don't be ridiculous. Would I keep the police-enforced monopoly, making it illegal for Pennsylvanians to buy a bottle of wine across the river in New Jersey? Not on your life. Would any of us keep the nonsensical case law, or its equally ridiculous corollary, the two sixpack limit at bars? Hell no, done away with, along with "registration"!

But... Would I want anyone who wanted to be able to sell beer, wine, or spirits, by the bottle or by the drink, with no limit other than a small fee and maybe a criminal background check? Should municipalities (of whatever size) be able to control that through zoning? What about BYOB and corkage fees? Would I impose excise taxes? Wholesaler franchise laws, brewery/winery self-distribution, hell, the whole idea of the state-imposed three-tier system: keep it, modify it, or toss it out the window? Honestly, there are things that cause me some head-scratching. I like the idea of no license limitations and a small fee: I've already said that I think licensing limitations lead directly to nuisance bars. But if a majority of people in a town really want to put a limit on the number of licensed bars/restaurants/booze stores, shouldn't they be allowed to? It's their town! Truly, the Devil is in the details.

However...hard as it was for me to answer the question, the pro-PLCB side found it even harder. There are just too many contradictions in the current system to put it forward as the ideal situation with a straight face. Government control of retail? If it's good, why not government control of beer sales? Why not government control of by-the-drink sales? And believe me, no one wants the government controlling that. Can you imagine PLCB clerks as bartenders? The mind boggles. They certainly couldn't call it "the hospitality industry" anymore...

If you grant control, and manage to come up with a cogent argument for it, how on earth do you then task the very same agency with regulation, taxation, and regulation of booze sales with an eye towards -- literally -- controlling how much people drink? Does anyone really think an agency that's supposed to be keeping us from drinking too much, that was created "for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon," (as the Almighty Liquor Code puts it), is the agency that should also be advertising the idea of buying mom a bottle of vodka for Mother's Day?

I've said I wouldn't want to debate President For Life Wendell W. Young IV about privatization --  the man is just too glib a liar -- but it would almost be worth it to sandbag him with that question: if you could wipe away the Pennsylvania Liquor Code and build a new way of doing alcohol beverage retail from zero...would you create the PLCB and the State Store System, the beer distributors and tavern licensing, and the case law? Love to see a pro-PLCB answer to that one that wouldn't have the audience laughing their asses off.

Retail Booze Privatization: why HB11 doesn't cut it

HB 11, a bill proposed by House Majority Leader Mike Turzai back in July, is still the standard bearer for privatization. Privatization currently has the support of Republican Governor Tom Corbett, who has majorities in both houses of the legislature (although the Senate Republicans are stalling, possibly trying to squeeze out a deal on a Marcellus Shale "tax"). To make things more likely, the PLCB has obligingly stumbled badly in the past two years with: 

• two contracts of questionable ethics and effectiveness – one for the wine kiosks, the other for 'courtesy' training
• the embarrassing public failure of the wine kiosks (and a clumsy attempt to cover up a strongly negative internal review of the idea)
• a disastrous install of a $66 million inventory system that led to a gross overbuy of inventory (which then had to be stored in trailers in summer heat) and a shutdown of licensee deliveries pickups (the PLCB doesn't deliver...what was I thinking?!) for a week
• a still-simmering corruption debacle at the Philadelphia warehouse in which over 20 employees were suspended (and another cover-up)
• a complete fiasco over beer registration raids on three Philadelphia bars that led to very uncomplimentary hearings on the subject
• a frustrating inability to promptly close nuisance bars
• and a baffling failure to turn significant 'profits' with a police-enforced monopoly on sales of wine and spirits

This is the time to strike on privatization, and as you know, I've been all for it. I've called for it, argued for it, howled for it. 

But unless substantial changes are made in HB11, I cannot support it. 

It is not a question of the perfect being the enemy of the good; this bill has fundamental flaws that are simply not in favor of the citizens of Pennsylvania. I believe that they will result in the replacement of an unresponsive public monopoly with a poor selection of goods…with an unresponsive private oligopoly with a poor selection of goods, and I cannot support that. We have one chance to get this right, because changing the laws again will be even tougher. Let's have a look.

First, and most important to me, HB 11 does nothing about the intolerable police-enforced monopoly. If it passes as is, Pennsylvanians are still forbidden by law to bring home a bottle of wine from New Jersey (or Maryland, or Delaware, or New York...). I've been assured directly by Representative Turzai that the police will no longer enforce this, but that's not good enough. You're a legislator; don't tell me the police won't enforce a despicably un-American law; change the law. When so much of the state's population lives in the tight pocket of the southeast, just across the bridges from huge liquor stores, to do anything else is simply ridiculous. Kill the monopoly, encourage competition. The only reason this is even faintly legal and constitutional is because of the overboard interpretation of rights granted to the states through the 21^st Amendment by federal courts; there is no such monopoly on any other goods. The police-enforced monopoly is insulting and intolerable. I cannot and will not support HB11 or any other privatization proposal that does not end it, and neither should you.

Second, the proposed wholesaler fees for exclusivity of brands pretty much guarantee a smaller selection of wine and spirits. Nathan Lutchansky (of the PLCB Users Group blog) has explained this in greater detail than I'd care to replicate; read it there. You'll soon realize that this is a non-starter. Why is this here? Well...maybe this is the reason (and Turzai's general counsel Jim Mann is extremely protective of the bill as written, BTW). Clean bill, please: do-over time.

Taxes are another issue: they're too high. Turzai has replaced the insulting “Johnstown Flood Emergency Tax” with a more rational gallonage tax, but it attempts to replicate the revenues from the onerous Johnstown tax – plus state sales tax, plus the PLCB's “profit” that goes to the state (not really "profit," but a somewhat arbitrary number set each year by the legislature; didja know that?) – by boosting it to crazy high levels...more than twice the taxes in neighboring states. Again, Lutchansky hasthe numbers on this; have a look (see his "Issue #2"). The taxes on wine and liquor simply do not have to be that high. They're unfair at those levels; why should I be paying so much more to fund state programs that benefit everyone just because I drink -- moderately!? Now's the time to make these taxes more equitable, instead of some of the highest in the nation (which is weird, because we have one of the lowest beer taxes...). Replace the revenue with a shale gas tax if you have to.

A huge problem: what about beer?  Why hesitate when we can fix some of the most egregious problems with a couple quick penstrokes (see below) Get rid of the insane case law, now! While we're at it, do away with ALL limitations on sales by licensees: “distributors” can sell anything from a single bottle to a keg, and so can taverns (and delis, and supermarkets with deli licenses), and fix the tax laws so that all retail outlets are on the same footing (right now, bars pay more taxes than distributors...say what?). Then, allow beer distributors to add wine and liquor to their licensed sales; allow the new wine/liquor licensees to sell beer. The artificial separation of sales is all about protecting business status quo; rewrite these laws for the benefit of Pennsylvanians, citizens, and voters for a change! Hell, if Joe "CEO" Conti can say “I'm for the people of Pennsylvania,” so can I!

1,250 licenses is simply not enough. If the number were doubled, to 2,500, we would still be under the national average per capita, and this would help address the issue of oligopoly (see below). It will also help address the red herring issue of rural retail access.

I don’t know enough about how the PLCB sells to licensees to complain about it, so I’ll tell you what a friend of mine, a licensee, said:

“My concerns are from a licensee’s point of view. I don't want to be forced to buy from one wholesaler that has a limited selection, makes it difficult to place special orders, and charges retail and sales tax on ‘wholesale purchases.’”

To tell the truth: I don’t even know what HB11 does to address these concerns. I do know that almost every licensee I've talked to who tries to keep a premium wine or spirits inventory finds the PLCB frustrating, and that almost every one is afraid to criticize them. I’d like to hear more about what HB11 has for licensees...I suspect it's not much.

The licensing scheme in HB11 is just that: a scheme. It’s easiest to quote from a licensee who emailed me about this:

“The huge issue I see with the bill is the emphasis on large (over 15,000sf) stores. Was this bill paid for by big retailers like Total Wines? Who the hell is the state to mandate the square footage of a private business? Many of the state stores are much smaller than this. As per the bill, over half of the roughly 1200 stores will need to be over 15,000sf! These large stores often have lots of bottles, but by necessity need to focus on industrial products, not small producers. How is this going to increase selection? We don't need bigger Absolut displays. We need many smaller stores run by entrepreneurs who find and offer cool products. This bill would be the equivalent of mandating that over 50% of all restaurants be more than, say, 5000sf in size. Can you imagine what Philly would be like? A lot more Ruby Tuesdays, a lot less anything good. This aspect of the bill nearly makes it pointless to have privatization!”

I agree. The “protections” against private monopolies could be made much more effective by simply dropping the maximum licenses owned by any one company/person to ten instead of forty. Problem solved. If that loses support from big chains, well, first, too damned bad; and second, it will gain support from the people who are concerned about big chains grabbing all the licenses, and throttling selection. Who are we more concerned about? What’s good for business -- ho ho ho, don't you worry, little voter! -- is good for citizens? Sorry, that’s how we wound up with 75 years of the case law!

Finally, let the results of Granholm flow, and again: favor Pennsylvania’s citizens, not business interests who’d rather see no direct shipping of wine (or spirits or beer) because it might cut into their sales (studies show it doesn’t). Make the taxes realistic, and let direct shipping happen.

Those are the issues I have with HB11. I’d like to see them addressed, or explained, before I solidly support this bill. I've been told that some such changes are under way, but HB11 shows no changes online. Until such time as a majority of these issues are addressed and the police-enforced monopoly is done away with, I do not support this bill, and I urge you to consider these points before you support it. We have paid -- Lord God, we've paid -- for the misguided morality of our Repeal-era legislators and Governor Gifford Pinchot. We've earned a better road to privatization; one that takes our concerns into account first.

Where are we going to get that? I hope that Governor Corbett is doing what I'm starting to think of as his Swan Routine: serene and quiet on the surface, paddling like hell out of sight under the water. From the way he's talked about HB11 after the PFM Report came out (more on that soon) -- "a place to start" -- I don't think he likes it any more than I do. So here's hoping he puts leverage on Representative Turzai (and Jim Mann), or better, puts out his own version of a privatization bill that actually writes privatization for citizens.

And I thought Joe Da CEO was clueless...

Check out this tone-deaf defense of the wine "kiosk" debacle by PLCB Chairman PJ Stapleton in today's Inquirer.So much amazing stuff here, like this: "it is worth remembering that Wegmans made an investment with full knowledge that the kiosk reached far outside the face-to-face customer service Wegmans was accustomed to providing." So it was Wegmans' fault that the "kiosks" were so far to the left on the customer service bell curve that you couldn't see them with binoculars; they knew that these machines were supposed to operate on their own and should not have been surprised by that. Got it, PJ! Wegmans is crazy! (Well, except...the "kiosks" didn't operate that well on their own, which is probably what surprised and eventually seriously disappointed Wegmans.)

More? How about this petulant foot-stamping: "The wine kiosk was evidence of innovation at its finest, something the wine and spirits industry had not seen before. This made it an easy target for criticism." It clearly was not "innovation at its finest," since it didn't work the way it was supposed to. It was a kludge, an ATM welded to a soda machine, bolted to a security camera, with a breathalyzer duct-taped on the front (note: that was sarcastic, and no actual duct tape is used in the "kiosks." I don't think so, anyway). That's what made it an easy target for criticism...which both Wegmans and the Inquirer recognized. Not to mention...it was unnecessary "innovation," since there's already modern technology available to do what the wine "kiosk" was supposed to do, and do it better: it's called shelves.

Then he winds up with this whiny crap: "...what we could use is fewer inaccurate political attacks and more productive discussion and action on behalf of all Pennsylvania consumers." First: not political. It's an unpopular bureaucracy. No politics involved. Second: not inaccurate. Wegmans said the "kiosks" didn't work and made their stores look bad. They demonstrably didn't work as advertised, and that definitely makes the stores look bad (not to mention, taking up valuable retail space while they weren't working).

Finally, what would be "more productive discussion"? They give PJ space with a straight face, and that's not the first time the PLCB has been allowed on the editorial page. The PLCB doesn't want to discuss this, they want to keep doing what they're doing. Sorry, no longer on the agenda. Privatization hearings are coming, PJ: put on your dancing shoes.

And be sure to read the comments. Wow. Hope these people write their reps with anger like that.

A response from the opposition

As noted earlier, I received some lengthy comments about Rep. Turzai's plan that, although presented as "neither for or against," seem pretty clearly posed to cast a bad light on privatization. No matter: I have always posted comments that are in opposition...but these were just too long, so I asked if it would be all right to copy them into a full post. Permission came (late last week, but hey, it was the weekend, and today was my birthday; I had other things that were more fun to do), so here it is, unedited and -- for now -- without comment, except to point out that Rep. Turzai's bill is only a proposal, and not the only way privatization can happen (so a problem with Turzai's bill is not necessarily a problem with privatization)...and that I apologize that this is so long. It is -- of course! -- "Anonymous." Here we go...

I have dissected HB 2350, Turzai's proposal of privatization. I have a few points I do want to bring to everyone's attention. I am disclosing that I am neither for or against any of these, but wanted to make light of "additional" changes that will be happening. The original bill will be in standard format, the changes will be capitalized unless otherwise indicated.

Point 1:

“Section 211. Enforcement. There is created within the Pennsylvania State Police a Bureau of Liquor Control Enforcement. The Enforcement Bureau AND MUNICIPAL POLICE DEPARTMENTS shall be responsible for enforcing this act and any regulations promulgated pursuant thereto. Officers and investigators assigned to the bureau OR A MUNICIPAL POLICE DEPARTMENT shall have the power and their duty shall be... to investigate.”

This includes both already established licensees such as restaurants, and also new Privatized Liquor Stores. Currently the way the situation works is that a municipality police force can respond to a call at the bar, give them civil citations, and are then reviewed by the Liquor Board to determine if the offenses were localized, or if they violated the liquor code. If any violations of the liquor code are found, the BLCE will conduct an investigation to make a citation which is held pending against a license when renewal time comes around. This new passage gives authority to the municipalities to determine if the liquor code has been violated. Currently, the liquor board can only object to the Renewal of a license based upon investigations by BLCE (with respect to murder/drug), with reference to local citations. The process would not change, but the Board may not be able to justify the refusal of a renewal with the chance that the evidence could be tainted or incorrectly collected if training is not done well. This could mean a costly price for training for the municipality officers (which may come from local funding), as well as oversight of these municipalities. The cost and or ramifications of this should be factored into consideration. We saw this in Philadelphia when the Philadelphia police did not register the complaints of a murder by a licensee, and with no adjudicated evidence, the board was legally unable to refuse the renewal. Now these very same officers will be in charge of determining whether or not a citation justifies an abuse of the liquor code.

Point 2: (All new addition)

“Section 305-A: Discontinuance of wholesale operations by the board and initial franchises. (b)(1)(4)(i-iii) No Applicant may hold more than 5% of franchises within the Commonwealth, and no more than 10% of the Franchises in any one county which has ten or more franchises, and no more than 1 franchise in any once county which has fewer than 10 franchises.”

A point to consider with this is that the "Purchasing Power" the state currently has will be gone. The state will be moving from one (albeit controversial) wholesaler to 100 (305-A(b)-Board shall establish 100 Franchises...granting authority to deliver liquor. I have no stats to support whether or not this will affect the pricing, as we may go from 1 bulk purchaser to 100. There is also a limit to the number of wholesalers within a county, in that there would not be one wholesaler who would be able to operate in more than 5 counties (or 5 in one county) (Pennsylvania has 67).

Point 3: (All New addition)

“Section 310-A Physical Limitations a(1) The premises of each wine and spirits store shall... (allow) the sale of liquor and permitted merchandise.”
In many other states, liquor stores also sell cigarettes, memorabilia, and many other items to supplement their earnings. Such items as wine screws and glasses would be permitted, but other items such as cigarettes/t-shirts, etc would not be permitted. Any struggling store would not be permitted to sell anything other than alcohol and alcohol related (necessary) items. Additionally, no more than 30% of sales can come from non-alcoholic beverages.

Point 4

“Section 313-A (All New Addition)(a) Sale of State Store Inventory. An awarded franchise and license shall grant the successful bidder the opportunity to bid upon the remaining inventory.(B) Schedule of closure. The board shall develop a schedule of closure for State stores, Under no circumstances hall any state store remain open for retail sales beyond 18 months.”

This section states that 1 bidder will be awarded the ability to purchase all remaining stock. Some stores will continue to be open for up to 18 months, resulting in a period of competition between the state and private business.

Point 5

“Section 317-A (All New Addition) (d)(2) Wine and Spirits store licensees may sell wine or spirits between 8am and 11pm on any day except Sunday.(e) Age Limitations - An employee of a wine and spirits store licensee shall be 21 years of age or older.”

While most State Stores are not open on Sundays, there are a few that currently do operate (in the past few years some are authorized to be open on Sundays.) This bill will renew the old statute, and no privatized store will be permitted to be open to the public on Sundays once again. The second clause here will limit the privatized store in their hiring process. Currently through the lcb a person must be 18 years of age (similar to a waitress that serves alcohol.) By having a lower age requirement, wages can often be lower since many of the current employees are part time (intermittent) college students. Based on the new law, this "temporary" work force will not be permitted to be employed by the new stores.

Point 6

“Section 342-A (All new addition) (a) Tax on retail sales of wine and liquor. A tax of 6% is imposed on each retail sale of wine and liquor for on-premises and off-premises consumption by a licensee to an unlicensed person.”

“Section 448 (New addition) A tax of 6% is imposed on each retail sale of malt or brewed beverages for on-premises consumption.”

and

“Section 401 (all New Addition) (b)... New tax rates (to be collected by manufacturer and/or importer)
$3.50/G wines<17%
$4/g wines>17%
$4.50g sparking wine
$5/g Liquor >17%
$6.50 17%>Liquor<55%
$7g Liquor>55%”

On the first point here, currently when you go to a wine and spirits store, you pay 6% sales tax, 18% emergency flood tax, and 30% mark up. What you do not pay is 6% sales tax on prepared drinks when you go to a bar or restaurant (at least, you are not supposed to be charged.) I was unable to find in the bill whether or not the 18% tax is being repealed, so if it is, please indicate the section for me. But add up the total costs here. 6% sales tax/18% flood tax + private store mark up. Then add the second tax of 6% for any on-premise sale and citizens may end up paying more (and in restaurant/bar) twice for the same alcohol. Furthermore, according to section 448, malt beverages for on-premise consumption would also be subjected to a 6% sales tax.

Previously to the best of my knowledge, licensees (restaurants) would pay the sales tax on the liquor from the state store or distributor, but were not permitted to charge sales tax on the poured drink. So in essence, if the 18% flood tax is not lifted, then by privatization (according to this bill) we as consumer's will be paying an ADDITIONAL 6% tax on alcohol (if you drink both in restaurants and at home.)

As for section 401 with the manufacturer tax. I was unable to find the current rates, however as this is new language in the bill and I could not find prior language, I am assuming here that this is also an increase.Based off this, the only savings that Pennsylvania citizens would see would be if the Retailer was willing to have a profit margin smaller than 30% (or in the case of licensee restaurants, 24%, and with diminished buying power (again, this is arguable and I am not taking sides), we may actually see a rise in prices instead of a decrease.

Again, please correct me with the passage if this is incorrect.

Point 7

“Section 491 (added information) (e) A direct shipper may ship wine on the internet order of a resident into this Commonwealth provided that the wine is shipped to a (Pennsylvania Liquor Store) WINE AND SPIRITS STORE selected by the resident.”

While this does not address direct shipping inter-commonwealth, it does lay to rest the argument of "why can't I get wine shipped to my house." Even under privatization, you will still need to pick up your alcohol at a liquor store, sign for it, and pay all applicable taxes. There will not be direct shipping. Again, I was unable to find the language that deals with inter-commonwealth, and I am unsure if this is meant to cover both instate and out of state transactions.

Point 8: (all new addition)
“Section 495 (c.1) In addition to the requirements of subsection (b) and (c), a wine and spirits store licensee, or the servant, agent, or employee of the wine and spirits store licensee, shall use swipe identification card technology to verify the age of any person who appears to be under 30 years of age.”

Currently, I believe most if not all state stores use this practice. This will not change under privatization. This can be seen as both a prevention of under age sales, or as a hurdle to stores that may feel looking at an ID is good enough. I would imagine that BLCE and now municipalities will be monitoring these systems and signatures more closely.
This will also mean that by law these stores will be required to card everyone who appears to be under 30, and scan their ID, even if they are a daily patron.

I just wanted to bring these few things up to those that read your blog, and to yourself. While you may still hold the premise that privatization is good for the act of privatization itself, it may not pan out the way most people expect. Any savings to the consumer may be a wash with the added sales taxes and manufacturing taxes, inability to hire "temporary" workforce college kids, and Sunday sales (where currently available) will be a thing of the past.

Again, if you find anything incorrect with my reporting please let me know. I will not take offense to corrections if you can find the information.

And that's that. As I said: unedited, and again, this refers to Rep. Turzai's proposal for privatization, which has not yet been through the sausage-grinder. Feel free to comment, or not.

"PR": please call me

I just got a lengthy series of four comments on Rep. Turzai's proposed privatization bill from someone signing themselves "PR." I didn't post them: not because I disagree, or because I'm censoring them, or anything like that. I didn't post them because they're just way too long for the comments field.

So I'm asking PR: if you read this, could you leave a comment on whether it would be okay with you if I copied those comments -- in their entirety -- out of the moderation notification I got -- and put them up as a regular post on the blog? You raise some interesting points; it's just that they'll look like hell and be hard to read as comments. Let me know.

A response to one anti-privatization talking point...

John Rzodkiewicz, who is apparently a State Store employee (at least, that's what he claims on his Facebook profile, and I have no reason to doubt him), has made some well-spoken counters on my pro-privatization Facebook page. I've developed a respect for the man. Recently he posted a link to a piece about the failure of privatization in Washington State (ahem...written by the Washington wine and spirits wholesalers association...), and followed it up with this comment:

Pro- privatization was ahead 85% to15% early on before debate.After some sober analysis the people saw no state has made more money from liquor after privatization, and just said no to selling off their public asset.

I felt compelled to respond, and wanted to share that response here.

John, the problem is, it's NOT a "public asset." It's an out of date, paternalistic anomaly, it is an insult to the character of the citizens of the Commonwealth to think we need to be "controlled," and under Joe Conti it has become an arrogant embarrassment.

"Wine kiosks"?! Questionable "courtesy contracts" awarded to family members of PLCB managers? The public humiliation of the BLCE because of incredibly shoddy record-keeping on beer registration? This is a system that NEEDS privatization to take it out of the hands of the people running it.

Honestly? For me, and for many others, it's not about the money. It's about the ridiculous monopoly. If I'm 15 minutes from my home in New Jersey for work, I'm not allowed to pick up a bottle of wine on my way home? That's not economic, that's unAmerican. And it's the only way the PLCB makes their "profit" -- a piddling 20-25% of the total they continue to claim they send to the General Fund -- by having a police-enforced monopoly that requires PA citizens to buy at the State Stores.

This isn't about the money, the "public asset," for the most vocal opponents of privatization: the UFCW.* It's about their jobs, that's all. Understandable, but this is not a public jobs program; or at least, it shouldn't be. It's a fossil. They can get jobs in the new private stores.

Give US a referendum, John. We'll deliver privatization.



*Again, and again, and again: I am not anti-union. I am strongly in favor of privatization of the Pennsylvania State Stores; that's all. I do realize that would mean the loss of union jobs...but new jobs would be created immediately.

Amazing: PLCB apologist

Phillywinefinder.com is a well-known supporter of the PLCB's wine "program." PWF is a frequent commenter on Philly bulletin boards, where he supports the Chairman's Selections, the Premiere Collection stores, and the PLCB's website; he even has a list of "Philly Wine Rules" to lay out his manifesto (mind you, I'm assuming PWF is a "he," because that's how most wine types in the area refer to him). They are both expected -- Buy Chairman's Selection Wine, Shop at Premium Collection Stores, Use the PLCB Web Site...I mean, duh -- and jaw-dropping: Pay Attention to Temperature and Light in Storage and Serving (translation: the PLCB is dumb enough to keep wine in hot storage and sunlight), Don't Expect the State Store Employees to be Robert Parker and Jancis Robinson (no problem, I don't), and then this bombshell: Cultivate Friends and Family in Other States, which is to say, drink good wines when you're in New Jersey and, what the hell, break the law and bring them home to Pennsylvania. I do it, sure, but I don't really expect to hear that kind of advice from someone who says

We dare you to follow these tips and strategies and see if you don't stop shaking your fists with rage at the PLCB and instead become a convert and frequent shopper of the Wine and Spirits Stores of PA!

Okay, I will, since I don't apparently have to actually buy things there to be a 'convert!' Honestly, these are the kinds of contortions you have to go through to find something good to say about the PLCB's State Store System. It's like finding something good to say about the case law: um...less light damage?

Odd strategies aside, that's not what I wanted to talk about today. No, instead it's about the opening paragraph on that Philly Wine Rules page.

There's one thing that almost all booze swilling Philadelphians (because if you hate the PLCB, you must be a booze swiller) seem to agree on: they all hate the archaic liquor laws and monopolistic system of alcohol distribution administered by the Pennsylvania Liquor Control Board (PLCB). (Yup. He's got that part right.)  Articles, editorials, blogs (Ah. That one would be me), forum posts, and more have nothing but curses and condemnation for the vile agency and its hated rules and retail monopoly. (Actually, that's not true. I have Reasons, and I have said good things about the PLCB. I like the online product catalog, for instance.) Hatred runs so deep that even when the agency tries to do something right (like remodeling the stores or improving customer service) they get slammed (I said nothing about remodeling the stores, and I said the way they went about improving customer service was ethically questionable; as it turned out, the State Auditor General agreed with me). Anyone who tries to defend the PLCB gets called a shill, because, so the thinking goes, no rational person could defend such a dreadfully awful regime without having some kind of vested interest at stake. (Given that most people who do defend the PLCB are either current or retired members of the system, or Wendell W. Young IV, the president of the union that represents the State Store System clerks...I'd say they mostly are shills.)

Well. Someone has a problem. First, I do not think PWF is a shill. He has said on many occasions that he is not related to the PLCB in any way, and I choose to believe him. I'm actually somewhat refreshed to see someone arguing for the PLCB that isn't a shill. That said, PWF's arguments almost all revolve around the Chairman's Selection program and the 'find anything anywhere in the state' website...and when pressed, he simply replies that people can always go across the border.

I can't discuss the Chairman's Selection program; I'll admit that I don't know enough about wine. I've been told by wine lovers that it's gone downhill since Jonathan Newman left, and that it is a dumping ground for old wines and wines that didn't sell elsewhere. I do not know if that is true. I do buy some CS wines myself, and have not generally been disappointed.

(I also buy some of the lowball wines the PLCB has, like the Rex Goliath Cab...then when I tried to buy it at my local store -- good old 0909 -- I couldn't find it, and the clerk I asked about it just shrugged, said, 'I guess we don't have any,' and started talking to another customer without offering to check backstock or telling me there was none. Hard to believe, right? Well...I DID find four bottles in Verona, PA, and the clerk there was great. On the register; I found it myself.)

But the website? Please. It's only possible because it's a statewide monopoly. It's like the case law "protecting" beer; if that's the best you can offer me, I'll take my chances with all the other benefits of privatization!

And running across the border? Break the monopoly, and the State Store System will be a money loser, I guarantee. Because more stores open on the border all the time -- a huge Roger Wilco just opened at the far side of the Burlington Bristol bridge -- and if people aren't worried about getting caught, they'll stream over there. The fact is, it's against the law. You can't argue in favor of a legal monopoly by saying you just skirt it whenever it becomes inconvenient; what about the poor bastards in Scranton, or State College?

The system is archaic and monopolistic. That's why we want to do away with it. And if I'm just cursing and condemning...what's this, PWF's latest tweet?

"cheap way to bash #PLCB: pick obscure #wine and whine that PLCB doesn't have it when in fact very few states offer it anyway."

A cheap shot, but proof he's rattled. Anyway, fella...I don't need to do that. The PLCB's all target, all the time! The wine kiosks: HA! Even when they work, they're ridiculous. The courtesy contract: ethically challenged and exposed the basic problems with the state-owned retail system. The bottle charge increase: it's on! It's off! It's on! The beer registration raids: enforcement left looking like idiots because the PLCB's registration list was stuffed full of errors. Jonathan Newman, the best thing that happened to the PLCB in years: driven off by the political hackery that has always dominated the PLCB. Joe "CEO" Conti: a patronage plum offered to a politician who wasn't savvy enough to dodge the right way on the pay increase. And on, and on, and on.

Are there good wines for sale at the State Store System? Of course there are; there are so many wines it would be hard to miss. Would a private system offer more choice? Absolutely, because it would offer me the choice to go somewhere else.

Poor bride...

Here's a story of just how handy and cooperative the State Store System is. A bride spends hours planning her wedding wine list: variety, quality, reasonable price. She takes it to the PLCB store, which, the agency tells us, has a better selection than the big stores in NJ and Delaware...and yet, they don't have the wines, and most of them would take weeks to order. ARGH! She has to re-do the entire list, even though she could get most of the wines at her local store...in New Jersey.

Real world story, from someone with no axe to grind. Poor Pennsylvania. Poor us.

What the Winos are thinking

I have to assume this thread on PhiladelphiaSpeaks.com reflects what the wine-lovers are thinking. They don't like the PLCB, and who can blame them?

By the way, Keith Wallace is right: the two candidates for PA governor have different stands on the PLCB. Tom Corbett is not against reform of the PLCB and The State Store System; Dan "I Balanced Pittsburgh's Budget On The Backs of Drinkers" Onorato is dead-set against it. I do not encourage anyone to be a single-issue voter, least of all on this one; but if you need to make up your mind, factor it in, eh?



Apologies: I posted this over at the Session Beer Project blog first by mistake!

Nice summation

Take a look at this "Liquor Privatization Roundup" from John Geeting at his Lehigh Valley Independent blog. The payoff is key: "Restricting the PLCB's mission solely to public health regulation is the best option for the largest number of consumers, while the current system is only good for a handful of public liquor store employees and rent-seeking liquor license holders."

Other people are thinking and writing about this a lot more. Keep it going. I'll try to do more...to keep it going.

Big anti-PLCB piece in Philadelphia Weekly

The issue of Philadelphia Weekly that came out yesterday features a lengthy anti-PLCB screed by Tom Cowell; nice work. (There was a good editorial on the wine kiosks the day before in the Lebanon Daily News, too.) The blog got some mention (bottom of page 2), but much much more importantly, Cowell had clearly been reading it and getting ideas: the number of stores compared to Chicago, how relatively little money we actually get from a complete monopoly on booze sales, the stupidity of the rebranding scheme, the way the PLCB is really just the tool of the legislature.

Which is exactly why this blog is here, to inspire thought and action. Cowell took it and ran with it, talked to union head Wendell Young, found some more issues (the patronage inherent in the State Store System, for example), and got a new crowd of folks stirred up. I'm very happy to see it happen.

Keep spreading the word. PRIVATIZE IT NOW!

(And if you feel like supporting me in the comments to this piece...feel free, but remember to keep it on track: it's all about abolishing the PLCB and rewriting The Almighty Liquor Code!)

Wino 9000

Okay, it's silly and juvenile, but I'll admit it: I giggled. Take a look at someone who has treated the wine kiosk ideas with exactly what they deserve: derision.

Pocono Record has it right...

Oh, yeah, brother: preach it:

...the wine kiosks smack more than a little of Big Brother. Without a live person monitoring wine purchases, consumers will face some pretty intrusive procedures before they can walk out of the supermarket with a bottle of cabernet to go with their steak au poivre.

The editorialist at the Pocono Record puts their finger right on the wine kiosk problem. When you buy a bottle of wine at a private store in New Jersey/New York/Delaware/Maryland/etc., that's all you buy: a bottle of wine, and you walk away. When you buy a bottle of wine from one of these Wine-O-Mats, you buy a lot more: you buy a breathalyzer test, you buy an ID scan linked to what you bought (and how much you bought), you buy the knowledge of how much wine you buy over a year, and -- at least, according to the head of the PLCB's employees' union -- you buy an etched code on the bottle that links it to you...and all of that goes on your permanent record.

Is that what you want from your government? Big Brother literally looking out at you from some ridiculous wine-vending machine, sniffing your breath and taking your picture just so you can get a bottle of Yellow Tail (because I'm sure there will be Yellow Tail in these things, they've got a whole section of their own in the stores)? I mean, I'm not a huge fan of the Patriot Act, but at least I can understand why the government might want to listen on phone lines to pick up terrorist activity...why the hell do they want to keep a record of which bottle of wine I bought? What damned business is it of theirs?

It might be time to throw some bottles of wine in the Philadelphia harbor...

"How to Avoid Selling Wine in Pennsylvania"

Nicely done piece on the "wine kiosks" at Vinography; go have a look.

Here's how it starts:

So if you had a bunch of grocery stores, and those grocery stores sold wine, but you didn't really want people to buy any wine, what would you do?


One of the things you might consider doing would be to lock all the wine away in cabinets, so that people couldn't touch the bottles.

And it goes on in that vein, brilliantly. Seriously, folks, as the commenters to the post say: why aren't Pennsylvanians more insulted by this?

Didja Forget About the Courtesy Contract?

Do you remember how pissed off everyone was about the PLCB's "courtesy training contract?" Back in March, it came out that the agency was going to spend $173,820 on training State Store System clerks "how to greet someone, where to stand, and how to read a customer's cues." When that hit the fan, the PLCB tried to distance themselves from it by denying it was about manners: "A $173,000 contract on teaching manners – as has been widely reported – would be ridiculous," said PLCB Chairman PJ Stapleton. Yet the RFP for the training stated the following as the very first objective for the training:

1. Improve basic customer service skills, such as greeting customers appropriately, servicing customers, and completing sales with professionalism and courtesy."

"Greeting customers appropriately" and "completing sales with...courtesy" don't involve manners? Let's not be coy: bullshit, PJ. "Basic customer service skills" are good manners.

But that's old news...and that's the whole point of this post. We all got terribly upset -- rightfully so -- and more so when we found out that the contract had been awarded to the husband of one of the PLCB's regional managers. We were outraged, and an audit was called for, which exonerated the agency on legal grounds, but found that the agency had exercised poor judgment in awarding the contract to the husband of a manager and that "training to improve employee courtesy, manners and product knowledge wasn't a worthwhile expense." HA! So there, PLCB!

...and then we forgot about it, leaving them off the hook, again.

Well, not my man Eric Heyl at the Pittsburgh Tribune-Review. Eric's a columnist there, calls me for comment (a classic at the end of that one) from time-to-time when he has a booze story. For some reason, the Pittsburgh newspapers are hotter on exposing the PLCB's idiocy that the Philly papers are, and Heyl wields a blowtorch in his latest column, titled "Excuse me, but your discourtesy is showing."

Heyl brought back the courtesy contract. It went ahead, you know: training started in April, and Heyl, a taxpayer, wanted to know if what we'd bought (although the agency states that it's not tax money, it's their revenue that paid for the training, I can only assume they're being facetious in this claim: if they hadn't spent it, it would have gone into the general fund, so I fail to see a meaningful difference) was having any effect. As he put it:

The controversy was dying a lingering death in relative anonymity when I decided to nurse the poor thing back to health. I did so by using the LCB's own statistics to attempt to measure the manner-polishing program's effectiveness since it began in April.

See, the PLCB actually keeps track of customer service complaints, and Heyl got those numbers. What triggered the desire to improve customer service, the training? 84 customer service complaints between April and October of 2008...out of 27.2 million transactions. As Heyl said, "No wonder Solutions 21 was hired. Agency officials had to be embarrassed over that deluge of dissatisfaction." Indeed.

So, what did we buy, how has the training addressed this burning issue? "Between April and October 2009, the LCB received 103 complaints in 29.7 million transactions." Yeah. It got worse: one complaint for every 288,000 transactions, as opposed to one in every 324,000 before the training. The training was ridiculous, unnecessary, and it was ineffective. Nice trifecta.

Heyl asked Joe "CEO" Conti about this, bless his soul (all emphases added):

"Eighty to 100 complaints is really so anecdotal that I don't know that we'd use those as a barometer" of the program's success, he said[...] (But 84 complaints was enough to trigger a training contract at $173,00?)
The LCB can renew the Solutions 21 contract annually for the next five years. While the agency hopes to eventually perform the training in-house, Conti would not commit to that happening as soon as next year.
"At this point, I can't give you a firm yes or no as to whether we will need an extension (for Solutions 21)," he said.

How about you, boys and girls? Can you give "CEO" Conti a firm yes or no as to whether we need any more of Solutions 21's "training?" Well, don't bother, because he won't listen. Tell your state Senator! Tell your Representative! Tell them something like this (I just did):

The PLCB hired Solutions 21 to teach basic sales manners to their clerks in April. The Auditor General found that the agency had exercised poor judgment in awarding the contract to the husband of a PLCB manager, and that such training was in general not a worthwhile expense. Not only that, it hasn't worked: the PLCB's own statistics show that customer service complaints have gone up since the training started. PLCB CEO Joe Conti recently said that Solutions 21's contract may be extended. Please consider advising Mr. Conti that this would be an unwise use of funds that would otherwise go to the General Fund.

Get mad. Get active. After all, as Arlo said, "If you want to end war and stuff, you got to sing loud."

"More proof: State should exit liquor business"

That's a quote from the Harrisburg Patriot-News editorial page. They're citing a study from the Commonwealth Foundation for Public Policy Analysis (full text of the study is here, and it's worth a read), a libertarian-leaning PA think tank, that found...well, essentially found what I was saying here, and then backed it up with facts and citations. They found that Pennsylvania's "control" of liquor and wine sales had no social benefit for the state.

Here's what the summary of the study says (all emphasis (except as noted) added by me, cuz that's what I do):

...arguments might be made for state control as a means of achieving some desired social outcome. In Pennsylvania's case, advocates claim that the social goals of reducing alcohol consumption, underage drinking, and alcohol-related traffic deaths justify controlling wholesale and retail alcohol markets.
Evidence from 48 states over time shows no link between market controls and these social goals [their emphasis]. Divestiture of Pennsylvania's state liquor stores would represent a financial windfall to the state, while posing no threat to public safety, as it would not result in the social ills many opponents of privatization fear.

Now. If all that's true, and it certainly would seem to be -- they've compared it the best way possible, looking at other states with similar and different regulations -- why do we keep the State Store System? It's not about protecting you from yourself. It's about the money -- oh, sorry, I mean the revenue. (Because the State doesn't take your money, they enhance the revenue flow.) And we already knew that. So if we're going to make the same (or better) in taxes under privatization, and there's no horrible effects of drinking too much under privatization lurking, and privatization could make the state a huge windfall and create a lot of jobs...what the hell are we waiting for?

As the editorial concludes: "It is no longer 1933. It is time for the state to get out of the liquor control business."

Divesting the PLCB: how and why

Two years ago the Reason Foundation presented a study to the PA Legislature on how and why we should privatize the Pennsylvania Liquor Control Board. It's online here, and you should really go take a look. It lays out several options -- full divestiture (my personal favorite), retail only (the State continues as the sole wholesaler), a slow transition, a pilot project approach, local divestiture (bad idea; more confusion is not what we need), and a public/private partnership (private company managing state stores? I'll pass on that) -- and does the pros and cons on each.

Feel free to send this to your state legislators with your advice.

Conti Speaks!

Interesting interview with Joe "CEO" Conti on the new Grub Street Philadelphia site. Kirsten Henri asked him about the "wine boutique" concept, and gets some answers that just leave you slack-jawed. For instance, the boutiques are "picked" by putting ads in local newspapers, and waiting for replies, a charmingly innocent way of making sure you get the response you want while remaining "courtesy contract legal." And a great exchange here:

Conti: ...we weren't looking to partner with restaurants, we were looking to partner with high-end gourmet food stores.

Henri: Maybe it's confusing because your first partner, Jose Garces, is known for being a restaurateur, not a grocer. [Score!]

Conti: Jose basically was doing this market in the Western Union building. When he heard we were placing boutiques, he called us.

Clearly Garces reads the real estate ads in the local papers; what, in the "Monopoly Opportunities for Advantage Available" section?

But this is my favorite:

Henri: Are you surprised some restaurateurs are bent out of shape?

Conti: How can I be diplomatic here? [I assume this means, "How can I insult your intelligence and get away with it?"] I'm from a restaurant family. I like to tease I'm a bartender by birth. My father was president of the National Restaurant Association. [This, BTW, is essentially Conti's self-stated qualification for his current position: heredity.] Yes, I was surprised. It's a very old-fashioned, parochial view of the restaurant market. Decades ago we realized the hospitality industry survives best when there are a number of options for the consumer.

Didja see that last line? "...the hospitality industry survives best when there are a number of options for the consumer." Guess that doesn't apply to retail wine and spirits sales!

These ridiculous ideas only point up how ill-suited state-owned monopoly booze sales are to modern commerce. These "boutiques" are clearly an unfair advantage to stores that are selected on the basis of personal choice by unelected, unregulated bureaucrats. The wine kiosks are a bumbling circumvention of supermarket sales.

Stop making it so hard! Privatization would fix all of this, increase jobs, continue the collection of taxes, and put an end to the embarrassing parade of corrup -- er, "the appearance of a possible conflict of interest." The Legislature needs to put an end to this farce, and now would be a great time.