Just Had A Thought

 I'm in the process of being interviewed by email for a story about the PA Liquor Code and how people are finding ways around it (like BOTLD and, of course, beer and wine in supermarkets and Sheetz), and I sent the following quote in...that really seemed to sum up the whole thing so well that I thought I'd share it. 

So many things in PA liquor law are done ostensibly in the name of "control," when really the liquor code controls competition more than it does consumption. It has long since stopped serving the citizens, and only serves existing businesses and politicians. 

You Were Right; The Pappy Lottery Was Rigged

Reported on PennLive.com: Five PLCB executives were investigated by the State Ethics Commission for, let's not mince words, cheating on the PLCB's Pappy Van Winkle "lottery." 

Let's do a perp walk. 

• Board member Michael Negra
• Cliff McFarland, director of supply chain 
• Tom Bowman, director of product selection
• Bryan Kelleher, director of the bureau of business development for wholesale operations
• Carl Jolly, a retail operations manager

All five of them were found to have participated in a scheme to snap up 'unclaimed' Pappy Van Winkle 12 Year Old bourbon (the "Lot B" bottling prized by the pros) and other allocated whiskeys. See, the PLCB would hold a lottery (which often led to website crashes, and was widely believed to be rigged, though no evidence of that has surfaced...yet) for PA residents to take a chance at buying one of the state's allocated bottles of various whiskey releases. After the results were announced, the winners would then be able to buy the bottles at the PLCB list price, which was, admittedly, often hundreds of dollars less than at private stores in other states. 

'Shopping' at the PLCB Executive Store

But amazingly, not every bottle would be claimed. For instance, the lottery cited in the PennLive article, the January 2020 lottery for the Lot B bottling, had over 17,000 entrants for 999 bottles, and 24 went unclaimed. The rules of the lottery said that those bottles would then be released for a "second-chance" lottery...but the PLCB decided not to do that, and instead the vultures at the top feasted on the remnants. 

Want more? The lottery allowed winning entrants to purchase a single bottle. Ha! Jolly, for instance, despite not having even entered the lottery (why would he? That's for us suckers), "bought three bottles of Pappy Van Winkle bourbon for $410 and separately a bottle of Weller 12-year Reserve Bourbon for $40." That was in one lottery. We're not told how many bottles in total 0were bought by these PLCB parasites. 

There is an aspect to this that is particularly hard to swallow. Their participation is not contested; they all did it, some of them multiple times. They didn't steal the bottles; they bought them, at list price, with their own money. There is apparently no credible evidence that they flipped the bottles to make money; Lot B, for example, is currently going for well over $1,000 in the so-called "secondary market." 

But because there was "insufficient clear and convincing evidence of a pecuniary benefit", the State Ethics Commission found that there was "no violation" of the state ethics code. That's bullshit. The whiskey wasn't theirs to buy, and even if they didn't sell it, they had that potential. That's like saying you're not guilty of theft because you stole a Van Gogh...and then just kept it. I mean, you didn't make any money on it, right? No harm, no foul, baby!

Despite that "innocence," the Ethics Commission's report says that they were each "ordered to fulfill his agreement to not purchase any items offered by the Pennsylvania Liquor Control Board outside of the process by which a Commonwealth resident may purchase such items." Don't the words "fulfill his agreement" sound like a deal was made? 

Of course a deal was made. And once again, the PLCB gets away with this crap. And what do we do? Nothing. That's what we do. Because the miserable PA Legislature has other things to do. Like making it harder to vote, and easier to frack.

Do you remember when the PLCB was the ONLY retail operation to shut down voluntarily in March of 2020? Absolutely closed for six weeks, and not only that, they boarded up the windows because they were afraid of us, that we rampaging drunks would loot their stores. 

Actual PLCB store, Wilkes-Barre, March 2020

Why are these guys still around? Will no one rid us of this troublesome agency?! 

Apparently not, because neither Shapiro's or Mastriano's campaign responded to me when I asked them about their positions on PLCB privatization. I'd remind you that I'm a nationally known whiskey writer, I've testified about these issues before the legislature; I'm not just a blogger howling in the night...but they didn't respond. 

Which leads me to believe that we're screwed. Shapiro is just another Democrat who will veto any privatization bill -- for reasons unclear -- and Mastriano apparently is either beholden to the religiously anti-booze or will be too busy fighting for freedom, whatever he thinks that means. 

But don't worry. These guys promised not to buy booze outside the normal channels again. Pinky swear. 

Looks like it's gonna be a long eight years. 

Out Of Control

I've been at this for years, since 2008, although I did pretty much drop the ball during the pandemic (which I regret, deeply, because a LOT of things needed to be said, but that's virus over the dam now). One of the consistent themes through all of those years was the way the Liquor Control Board was actually out of control. 

I've brought up numerous examples of this. The famous wine kiosks, the Rise of Conti (and the essential abolishment of his CEO position after he fell from grace), numerous clashes with Governor Rendell (told you I'd been at this for years), the lying about 'variable pricing,' and the disastrous allocated whiskey lottery that they never could get right, and finally just gave up on.

Whoops, not THAT Frank Burns!

But one of the most egregious, amazing examples was one I missed during my COVID hiatus, when Representative Frank Burns (D-Johnstown) tried to find out how many "zombie" licenses the PCLB had for future auction (these are seized or unused licenses; after a year, under relatively new law, they revert to the PLCB, where they can be auctioned to the highest bidder). 

The PLCB said no! That's right: a government agency refused to give regulatory information to a duly-elected legislator. So Burns went to the Office of Open Records. They said the PLCB had to give him the information...and The Lords Of Liquor Control refused again, appealing to the Commonwealth Court. The court ruled in Burns's favor, so of course, the PLCB (which has an unending supply of crap lawyers) appealed the ruling to the state Supreme Court. The PA Supremes fairly quickly denied the PLCB's appeal, upholding the Commonwealth Court ruling, giving the agency 30 days to present the information.

Yeah, I'm Frank Burns. Arrest the PLCB.
(And the snozzberries taste like snozzberries!)

Aside from the truly interesting fact that Rep. Burns is a Democrat, and the state Supreme Court has a solid Democratic majority (so they clearly do get what the PLCB is, but consistently refuse to privatize it), what do we learn here? 

The PLCB directly denied a legal request for information from a state legislator. This wasn't a frivolous request, like 'Hey, how many bottles of Maker's Mark do you guys have right now?' It was information that concerned constituent requests and a valid issue, namely, how is a purchaser supposed to know what the value of a license is when the PLCB won't tell them how many are going to be available? 

The PLCB gave its stock answer, which had always worked for it in the past: 'That's proprietary information, my good man.' But this time, they ran into someone who was just as willing to go to court as they were, and they lost. (Burns paid the legal costs out of his own pocket, by the way; the PLCB...yeah, they paid out of our pockets.)

Commonwealth Court Justice Cannon

They not only lost, the judge "bought none -- not one iota -- of what the Liquor Control Board was trying to sell. [Wow, the PLCB sucking at selling something; shocker.] The Right-to-Know Law is clear -- the information here is public record,” said Burns's lawyer, Terry Mutchler, the first director of the state's Office of Open Records. “It is a very strong decision that advances the law by giving deeper guidance on the components of records that agencies consider pre-deliberative. And also, because it points out that although the LCB may be ‘business-like,’ it is not a business.” (Yes, that's why I included the entire quote.) 

This is classic PLCB style. Don't just be wrong; deny you're wrong, waste thousands of taxpayer dollars denying you're wrong, and then when you're proven wrong, be assholes about it. Assholes? Yeah, the PLCB's main comment on the Supremes' decision was along the lines of, 'Wow, we were really looking forward to proving our case, but we've been denied justice.' Typical. 

This is all by way of proving the point I've been making for years, the one I simply cannot believe the General Assembly does not get: the PLCB is a rogue agency. Burns gets it. He believes that the Board wields too much power and has become arrogant and unresponsive to the public’s wishes. “The LCB has their own little kingdom with a moat around them for protection,” said Burns. “They’re not accountable to anyone, and that has to change. If they can treat a legislator like this you can only wonder how they treat other people out there.”

Bang on, Rep. Burns. The Liquor Control Board is literally out of control, and the reason is that it is answerable only to itself. It is a government agency with its own plentiful source of revenue. It has its own enforcement arm, its own courts and judges; it regularly thumbs its nose at the legislature, the governor, and the Pennsylvania courts; and it arbitrarily changes state-written regulations by 'interpreting' them as they wish.

It does not need to be reformed, or 'brought to heel,' or be regulated. It needs to be done away with. It serves no purpose that is not either anti-consumer or superfluous. Everything the PLCB does can be done more efficiently by existing state agencies. Except the actual wholesale and retail sale of booze: thanks, we can do that better on our own, no state agency required. 

Here's how I laid it out almost exactly 14 years ago in this blog: "...privatize booze sales, put licensing and inspection in the hands of the Dept. of Agriculture, tax collection in the purview of the Dept. of Revenue (they've got some experience with that), put the anti-alcoholism and underage drinking prevention programs under the Dept. of Health, and fully hand over enforcement to the State Police. [Then] give a re-write of the [Liquor] Code over to a commission that includes interested consumers for a change, and charge them with writing a simpler, more understandable Code."

The PLCB shut down for six weeks during the pandemic, and Wolf himself said  (link goes to a PDF) we didn't need them, because now we could buy booze at the Acme store. The PLCB is corrupt, the PLCB is outdated, the PLCB has only 600 stores for the entire state. The PLCB won't let you buy booze in Jersey or Delaware, they force us to buy from them. 

Why the hell aren't we done with this? Why does the Legislature put up with it? 

Privatize. End this out of control agency. 

What Might Privatization Look Like?

The future is as clear as vodka...

Two years later...I haven't given up, but I'll admit that the pandemic re-ordered my priorities. I've got [THE RAGING FEAR] my concerns under control now, and I'm starting to think about other stuff again. Like privatization. 

There's talk of using a state constitutional amendment to get rid of The Police-Enforced Monopoly that is the State Store System. This tells me two things. One, Republican legislators are tired of Democratic bullshit about this issue, and they're going nuclear. And two, that Republican legislators have stopped thinking clearly. 

Demolition of the PLCB, amendment-style!

It's my strong opinion that this would be the bluntest of instruments to achieve the goal of privatization of booze sales in the state. An amendment would not have the detail necessary to do this well, and would leave open all kinds of maneuvering room for backroom deals of the type I'm pretty sure we all know would happen. 

What kinds of deals? How about minimum square footage requirements, like they included in Washington State's privatization deal? The "reason" is that they're 'saving' us from 'a liquor store on every corner,' but it's really a deal for big-money donors like chain grocery and liquor stores to get a new oligopoly on retail liquor stores, trading a shitty monopoly for a still-limited oligopoly. We don't want that, believe me. 

Or they'll boost taxes to "make up for the shortfall" from the loss of the PLCB "profits." Once again, like Washington State's privatization deal, this is wrongheaded, and will lose us the greatest benefit of privatization: competition. It will put PA liquor stores (and bars, and restaurants) firmly behind neighboring states' stores on price, leading to even more border bleed. 

Because you know that the hated Police-Enforced Monopoly will not go away. We'll still be forced to buy booze in PA. Bullshit on that. Bullshit!

Okay, calm down, Lew. The constitutional amendment idea is not a good one, despite the Democrats forcing consideration of such extreme measures by their bullheaded intransigence on this issue. We need to come up with some way to make this an attractively bipartisan issue. 

Some of the problem is that the lazy legislature acquiesced when the PLCB put the supermarket safety valve in place, and didn't do the right thing: create a separate grocery/deli/c-store/gas station license for retail off-premise sales. That led to supermarket and c-store chains buying R-licenses at insanely inflated prices (over $500,000 in some instances), and now — shocker! — those businesses are dead-set against any move toward such a license. Great. 

But that's a whole other post, and I will get to that, and soon. I'm back on this. 

Time to take over the world, Pinky!

Meanwhile...What do I want to see in privatization? All open to tweaking, but...

First, and non-negotiable: the PLCB ceases to exist except as a regulatory agency...if needed. No state stores, no state wholesale. They've proven that they cannot run this fairly or honestly. They're done. As a regulatory agency, their operations must be made more transparent, and their power to "interpret" state laws and regulations to the point of nullification must end. 

Second, very important: learn from Washington State's mistakes. And they made plenty of them. A study panel should look at what Washington did, and what Alberta did, and come up with recommendations to make sure that we do better. Ask consumers in those places, too. 

Those two are huge, big picture things. Here are more direct things. 

1. Allow ALL R and Hotel licensees -- bars, restaurants, hotels -- to sell any type of alcohol beverage to any legal customer for on-premise consumption. With the purchase of an additional Off-license permit (for a reasonable annual fee to the state), they would be allowed to sell full bottles/cans to go. No more limits, no more "step outside and you can buy another" bullshit. Licenses increased to one per 500 adults in a county. Licenses become non-transferable five years after passage, which should end the ridiculous secondary market in paper.

2. Beer Distributors become all-alcohol stores with off-premise sales. Beer distributors MAY dispense draft beer in sealed (have to work on that definition) to-go containers. Number of licenses is increased to one per 500 adults in a county. License is non-transferable, starting five years after passage.

3. Create a new license for grocery stores, convenience stores, drugstores, and gas stations. Takeout ONLY, no on-premise consumption. Number of licenses are not limited, pay a reasonable annual fee to the state (with allowance for review after five or ten years), and are not transferable. License holders MAY also buy or retain a separate R-license for on-premise consumption if they want. 

4. Open up wholesale. Beer wholesalers may add all other alcohol. New wholesalers allowed, reasonable annual permit, non-transferable. More wholesalers means more competition, which means better prices and service. Charging $100 million for a wholesaler license is not a way to get more wholesalers. This may need tinkering; for instance, are multi-state wholesalers allowed to operate in the state? We may want to say no to that, or we may not. 

5. Pennsylvania citizens AND licensees may buy and sell from out of state. Period. This has gone on for way too long. If the state can't tax and regulate booze in a manner consistent with neighboring states, that's too damned bad. Look at it as incentive to do better. 

6. Sales tax to be applied at wholesale (or producer) level. Convert the Johnstown Flood Tax from a tax on price to a flat gallonage tax, like the rest of the country, and peg it to current national average. If that means less revenue, screw 'em. What Pennsylvania's tax does -- unintended consequences -- is make blotto booze (cheap wine, cheap vodka) even cheaper, while making better booze even more expensive. If we're taxing alcohol for some health or moral reason, the gallonage tax is more honest; if it's just about raising revenue...well, why not put an excise tax on everything and share the pain?

7. Rip out the old Liquor Code and start over. Aim for simple, understandable laws that ruin as few businesses as possible, but changes them where they are unfair, or not in the public interest. For instance, booze wholesale should emulate food wholesale: competition allowed, exclusivity as something that suppliers would pay for. The Code is currently open to way too much interpretation and confusion, and that has to end. 

8. Perhaps the most important is this: when this is done, when it's being written and decided upon, it must be 100% transparent. There must be citizen and industry representation on whatever task force does this rewriting of the Liquor Code, and regular reports must be presented; weekly, if necessary. There's too much money at stake to do otherwise, and we've already seen that it causes corruption. Obviously, I volunteer. Seriously, there should be representatives from all sides: wholesale and retail booze business (but only one each), consumers (one or two), anti-alcohol types (gotta be fair), the UFCW (no, really, it's only fair), and politicians. Maybe more stakeholders, that's just a first cut, but there must be representation and openness. 

These points will make me no friends in the industry. They completely upset the apple cart, and may ruin long-established family businesses. But they will create new businesses, and the solid family businesses will thrive and succeed...as long as big businesses, chain retailers, aren't allowed to write this privatization bill. And of course...nothing's set in stone, and politics is the art of the possible. 

It's about time, it's long past time, that the consumers, the voters, had a large say in how this gets done. 

Privatization. Yesterday, today, forever.

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

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.

Allow Pennsylvania licensees to sell spirits for take-out & delivery thru 12/31/20

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

They're boarding up State Stores as a precaution against looting. 

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