Carlisle AlcoAutoFest! Drive Yourself To Drink!

The Pennsylvania Department of Transportation (PENNDOT) in conjunction with the Pennsylvania Liquor Control Board (PLCB) are proud to bring you the first Carlisle AlcoAutofest! Due to the special relationship the PLCB has with PENNDOT, you will be able to drive to the Festival even in cars not sold or ever sold in Pennsylvania!(*1) Cars made before 1933 get in free!

Numerous vendors will be providing samples of drinks you can only "win" (the chance to purchase at variable pricing) by lottery in Pennsylvania. The PLCB will have two on-site stores selling the same things you can buy in every state store at prices only slightly to obscenely above list price. Taste the latest bottlings of Jim Beam White, Jack Daniel's Black, Smirnoff, Captain Morgan, and many other standard brands (that all cost less in Maryland, only 42 miles away) straight from the well-known PLCB overstock trailers sitting in the sun behind the fenced-in area near the porta-potties! It will be an experience you won't find anywhere else in the country!

It's only 5 days. How hot can it get?

PENNDOT will have convenient mandatory breathalyzer stops all along the main drag and at all exit points. They'll be using the same technology as the Wine Kiosks - Amazing, and fun! Safety is  always the PLCB's number one concern (the safety of PLCB jobs, that is). The PLCB's number two concern is money, "profits" (hoho, what a funny joke), so for the first time, the BLCE will be working with the Department of Revenue to collect taxes on bottles "won" by happy participants.(*2)

At checkpoint, show ID, face camera and blow

See your government in action and your tax dollars at work! Take a virtual tour of the PLCB luxury tasting room. Learn how people with minimal qualifications decide what the entire state will be allowed to buy. See how knowing about Livestock, Dairy, and Poultry can get you an executive position with the PLCB! Visit the Career Desk and find out how a career with the PLCB is right for you. None of that product knowledge or RAMP training required, like in the private sector.

If you're in a grumpy mood, the PLCB has just the thing. Take a seat in the Courtesy Training tent (supplied by a real company owned by the real husband of a real PLCB regional manager...which really was nepotism!), and see how PLCB clerks deal with stress like JFK did during the Cuban Missile Crisis (*3)! Ask the PLCB staff why bottles favored by alcoholics are cheaper in Pennsylvania. You'll be amazed at the answer they give.

Souvenirs will be available in the PENNDOT tent. Just take a number and have a seat while you decide what commemorative item your Aunt Martha really wants. Maybe she'd like the "You've got a friend at AlcoAutoFest" plate (shown above in classic Pennsylvania license plate blue and gold), or the "10 Bootleggers per Year" BLCE flag. (I like the "After 85 years only $1,000,000,000 in Debt" picture frame myself.)

See you there!

(*1) You just have to prove that all PA taxes were paid the year of importation into the state.
(*2) Taxes based on what the PLCB would have charged if they had any product, not on list price.
(*3) That was a real lesson in the original Courtesy Training contract.
The Carlisle AlcoAutoFest is not a real event. But it's about dumb enough for the PLCB to try it. 

The Gift That Keeps On Taking

Giving and getting booze as a gift in Pennsylvania is no easy feat.

Given the police-enforced monopoly that is Pennsylvania's wine and spirits marketplace, you might expect that there are laws to fence off all possible ways around those restrictions; for instance, no "gifts" of booze (that are then surreptitiously reciprocated with cash). But if you thought there was a one bottle or a case exception for honest gifts, you would be wrong. You still have to give the state its cut, even on a gift.

And you know who is responsible to pay the fees, taxes, and unknown markup on that bottle? Not the person giving, but the person receiving. A good friend of the blog recently quizzed the PLCB about all the steps necessary to give some hard to find, not available in PA no way no how, honest to goodness collectible booze to a PA resident. Here's what they learned.

As a rule it is generally unlawful for anyone, other than the PLCB or the holder of an importer’s license or a direct wine shipper license (or a sacramental wine license), to "import" any liquor (including wine) into Pennsylvania. 47 P.S. §§ 4-491(8), (11).

No problem, you think, I'm not bringing it in, someone else did and gave it to me. Ah, but it is also generally unlawful for anyone, other than a manufacturer, the PLCB, the holder of a sacramental wine license, or the holder of an importer license, to possess or transport any liquor or alcohol within the Commonwealth that was not lawfully acquired from the PLCB, a PLCB-licensed limited winery, a PLCB-licensed distillery, a PLCB-licensed limited distillery, a PLCB-licensed direct wine shipper, or a PLCB-licensed retailer holding a wine expanded permit. 47 P.S. §§ 4-415, 4-488, 4-491(2), 5-505.2, 5-505.4.

OK, so how do you LEGALLY get that bottle into the state so you can give it to somebody? Short answer: you can't. In a moment of supreme bureaucratic idiocy it was decided that the recipient has to do all the work. Why?  All I can come up with is that the PLCB can't screw an out of state person like they can screw a PA resident.


So if you go ahead and just illegally give that bottle to somebody in PA? Here's what they have to do, if they want to legally keep it and not just flush it down the toilet and deny all knowledge when the BLCE comes busting in.

BLCE!! HAND OVER THE GRAPPA! NOW!!

First, they have to know exactly what you are giving them...ahead of time (which kinda ruins any surprise if that was your intent). Then they have to fill out an application for importation and an application for the payment of tax on the liquor to be filed with the PLCB’s Bureau of Product Selection by the intended gift recipient (i.e., the person importing the liquor). (40 Pa. Code§ 9.51.) No word on how long it takes to get that information (because nobody in their right mind has ever done it).

Once it has been decided by the Bureau of Product Selection what fees and markup and service charge (remember that this is a SERVICE to allow you to bypass the incompetents in Harrisburg) to apply, you then have to contact the Department Of  Revenue, because the state taxes on the liquor would be levied by the Department of Revenue, and they have to determine the amount of taxes that would be owed on the gift, if any. If they're confused by this, tell them the PLCB sent you.

(By this time, you may be wondering: if Revenue is collecting the taxes, and the BLCE is doing the enforcement...if we got rid of the State Stores, what would we need the PLCB for? Good question.)

If you want to try and figure out approximately what the fees are yourself, before committing to this mindstorm of bureaucracy - be prepared to wait. It took two weeks to drag the info out of the Bureau of Product selection. They finally sent a reference to 40 Pa. Code § 9.52. Why did that take fourteen days? Probably because nobody in organizational memory had ever been asked the question before. You know...because an ordinary citizen would just give their friend the bottle of booze and be done with it. 

Once that is done, hopefully before you are too old to enjoy your gift, you have to go back to the PLCB’s Bureau of Product Selection and turn in your application for importation and an application for the payment of tax on the liquor (which Revenue gave you). Now even though you have paid the tax, the fees, the markup, and the service charge, the Board can still say no because they have monopoly power and there is no legal recourse for you to appeal to if they are feeling a little bitchy that day.

Think you are done? Of course not! Your friend can't just drive across the border with with his gift. Horrors! The world will come to an end. No, the State has to maintain CONTROL by having you hire a Transporter for Hire Class A or Class C licensee to bring it to your residence. Yeah, really. And by the time this is all over, you'll want to remember to tell your friend to please never bring you another gift.

By the way, if you decide you don't like the gift and want to sell it -- because it is, after all, your legal property -- then just turn it in to any State Store and they will take care of it for you. "But what about the money?" you ask? Don't worry, it won't cost you a penny! Really. You don't get any proceeds from the sale...but your conscience will be clear knowing you didn't break the law. I'm not sure what happens if you sell a bottle when you are out of state but I'd bet the PLCB has some way to screw you if you do that too.

More Pennsylvanians than this buy or drink bootleg booze every day

Suppose this just was too much and the giver decides to say screw it, it is too much trouble for my buddy to go through, I'll just bring him some beer. Guess what? There are NO EXCEPTIONS for beer at all. No jump through the hoops while you kiss our ass paperwork hurdles, no forms to fill out, no taxes to pay. It is illegal, period, to bring beer into the state.

Don't believe me? Here is what the PLCB has to say about it: "The importation of malt or brewed beverages is governed by different sections of the Liquor Code, 47 P.S. §§ 4-431, 4-492(8), and no exception currently exists that would allow for the importation of gift malt or brewed beverages outside the otherwise authorized channels of distribution."

So I urge you to put on that mask, and join the tens of thousands of Pennsylvanians who say, 'Up Yours, PLCB!' every day, and bring that cheaper beer, nicer wine, and better liquor in over the border in as much quantity as youu need as often as you want. Be an outlaw, be a Hero for Freedom of Choice. Perhaps I'll see you on the border.

Privatize.

Smuggler's Blues from Michael Dewey on Vimeo.

Feel safe, Pennsylvania: the Keystone Kops are on the job!

The BLCE recently covered itself in glory again by arresting someone who was looking to resell a bottle of Pappy Van Winkle bourbon, and by shutting down an alleged speakeasy operating in an American Legion post in Roaring Spring, near Altoona.

Eh? Buying better booze in Delaware, you say? We're on it!

I understand that — by the letter of the law — neither of these things are legal in Pennsylvania, but you can tell when a bad law is in place by the lack of enforcement. Tracking down one "whiskey flipper" on Craigslist (when hundreds of them are driving the high cost of Pappy), or closing down a rural veteran's hall because they were selling sixpacks and highballs (in a town with NO current bar licenses; though you could go up the road to the U.S. Hotel in Hollidaysburg, which I highly recommend) is not really doing anything to make the citizenry safer. Do you think some 18 year old kid was going to shell out $800 just to get a bottle of booze for the weekend, or that the American Legion was selling 6 packs out the back door to high schoolers?  I seem to remember PLCB employees selling things out of the back door in Philly, but that place wasn't closed down, was it?

The BLCE at least used to put up a front like they were doing their job, with over 200 arrests per year for illegal importation; now it is just a few poor slobs who get made an example of. Do you think it is because they have stemmed the tide of people coming in from Delaware with bottles in their trunk? Maybe it is just easier for them to rely on tips so they know where to look (sure makes it easier for someone to rat out an enemy and get them in trouble).

Arresting people for selling booze that the incompetents at the PLCB don't, won't and can't supply to the people of the state? They should give them medals, they're doing a public service! Just because the State Store System doesn't have it, doesn't mean that we don't want it. If the PLCB is doing such a great job, and their prices are so competitive, then it shouldn't matter what people bring in, because as many or more would be shopping here and not across the border.

The mere fact that PA's border bleed is one of the largest in the country indicates that we don't have the best selection, we don't have the best service, we don't have the best prices, we don't have the best stores and we certainly don't have the best run system that can respond to what the public wants. It's not even the best control state system; New Hampshire kicks our ass in customer service and cool stuff for its citizens (and much of the rest of New England; their prices are better, too.) In short, the PLCB and its State Police-run enforcement arm, the BLCE, are only protecting their own incompetence and lack of ability.

With tens of thousands of people crossing the border with out of state liquor and thousands going to BYOB restaurants with bottles not bought at state stores, maybe the BLCE needs a bigger tip to get them to spring into action. So here it is, our public service to help out the Police-Enforced Monopoly.  People buy liquor and/or wine at Total Wine, Moore Brothers, Joe Canal's, Benash, Wine Legend and even Wegmans and Shop Rite, and bring it back to Pennsylvania because — overall — the price, selection, service and convenience is better in New Jersey.

Now that you have a tip, go and infiltrate the state of New Jersey. Make it fair, arrest every citizen of the Commonwealth you see — including us if you see us, that's fair (and would make great blogfodder!) — and see what happens when that starts to hit the newspapers, social media, airwaves...and legislators' inboxes. Bring it on, BLCE, let's enforce the hell out of those laws and really let Pennsylvanians enjoy control as it should be enjoyed. To paraphrase the great Bard of Baltimore (and free liquor patriot) H.L. Mencken: Liquor control is the theory that bureaucrats know what's best for the common people, and should give it to them good and hard.

Oh, by the way...Pennsylvanians are bringing booze home from Delaware and Maryland, too. So get on it.

We think you know what that will lead to. Abolish the PLCB, make it about regulations and not retail, and rewrite the code to best serve what the people in 2015 want...not what one man in 1933 wanted.

We need the PLCB! Because it...does what, exactly?

When talk is raised about privatizing the state's 80 year old monopoly on sales of liquor and wine, of doing away with the PLCB-controlled State Stores, we hear a variety of reasons against it. "Reasons" like these:

"We need the PLCB because it collects taxes."

Really? The Commonwealth of Pennsylvania....

• collected about $1 billion in cigarette tax last year without state employees selling cigarettes.
• collected about $9 billion in sales taxes without having state employees in WalMart, Target, car lots, Burger King, KFC, Dollar General, dry cleaners, furniture stores or any of the thousands of other businesses in PA.
• collected about $1.25 billion in motor vehicle fuel taxes last year without having state employes work in gas stations.
• collected taxes on about 1 million firearms and ammunition sales without having state employees sell firearms or ammunition.

"We need the PLCB because it controls alcohol consumption."

Really? New York, New Jersey, and  Maryland have lower DUI fatality rates than PA. Ohio is statistically a tie and only Delaware and West Virginia are worse. (And Ohio and WV are control states...) New York and New Jersey have lower underage DUI fatality rates than PA; Delaware and Ohio are statistically tied; only Maryland and West Virginia do worse.

The UFCW -- the union that represents State Store clerks and has been a major lobbying foe of privatization of the stores -- claims that PA has the lowest death rate in the country associated with alcohol consumption: it is not true. The PA rate has gone up almost 31% since 2007 and is now higher than Maryland and New Jersey and may fall behind Delaware when the latest report is released. The most open private state in the country -- Louisiana -- has a lower rate than PA. What does all this mean? Alcohol consumption is affected by many independent factors, and "control" is not particularly effective.

There are already over 20,000 licenses for private businesses to sell alcohol; none of them have state employees on their registers. Why do the private employees have to take RAMP (Responsible Alcohol Management Program) training from certified instructors...but State Store workers don't?

"We need the PLCB because it keeps alcohol from minors."

Really? How do we know that this even works? State Stores are NEVER checked for underage sales by outside agencies, like the police, or the state's Bureau of Liquor Control Enforcement, but private businesses are. There is no independent proof that the State Store System makes any resident of the state -- young or old -- safer.

"We need the PLCB because it provides revenue for the state!"

Really? The State Store System provides under 4 tenths of one per cent of the state budget. It also owes over $600 million as its share of the pension deficit, a number that's missing from the PLCB's sunny annual report.

The State Store System limits employment, since every state or province that has fully privatized tripled employment in the industry.

The State Store System does not pay any business taxes -- 2,000+ private stores would.

The State Store System does not pay any license fees -- 2,000+ private stores would.

The State Store System limits access to product, thus limiting sales made and taxes collected (and sending thousands of Pennsylvanians across the border to buy booze -- and gas, and smokes, and lottery tickets -- every day).

These aren't reasons; they're illusions!

Why is selling liquor and wine considered an essential part of government? If we could go back to 1933, do it over again, pick a different way of selling liquor and wine...is this what we'd choose?

Really? 

Why does the legislature refuse to correct this aberration? Is it because satisfying union bosses is more important to them than increasing employment, going along with 40 years of public opinion polls, or treating citizens like adults?

Really?

Privatization IS Modernization. Really!

The PLCB annual report - Let's look at some numbers

By all accounts, the PLCB had a good sales year. Well, hurray. It's nothing to brag about -- though they will, and have -- since they are the only game in town. The population grows (slowly, but it grows), the economy gets better, and people spend more money on booze. It isn't because the PLCB is doing a good job; it is because the citizens have no other choice.

PLCB touts "record sales": report shows net income down

That doesn't stop the PLCB from presenting their annual report as if they had something to do with the growth in sales. Here are some things they crow about in the report:

1. License fees returned to local municipalities $ 4,521,545 -- If the PLCB didn't get in the middle, local communities would get this revenue as a regular stream when businesses paid for their licenses TO THE LOCAL COMMUNITIES.

2. Philadelphia and Allegheny counties received $8,269,803 in returned local sales taxes. -- Again, if the PLCB wasn't in the middle, the taxes would be collected and distributed anyway. It must be nice to crow about following the law...except, of course, when it comes to trips and gifts for senior level PLCB employees.

3. Paid Total Annual Rent of $42,034,434 for 606 stores. -- This begs the question of how much rent would be paid if there were 2400 or so private stores? 2400 stores is about what the national average is for a population of almost 13 million.

4. Tweets sent: 723. -- Now this is pretty funny. A $2 billion enterprise managed to send out fewer tweets than my 16 year old niece does in a month. And then they go on to say that the PLCB was mentioned 2,516 times. This post counts as one of those mentions, just as an example, and so does this: "Hey @WolfForPA, can you do something about the PA Liquor Control Board, like get rid of it? ‪#‎priorities‬ ‪#‎wine‬ ‪#‎freedom‬" (tweeted by @mainlinehousewife on Nov. 4)

5. Updated the Fine Wine and Good Spirits eCommerce site with 'complete and accurate product names,' product descriptions and standardized acronyms. -- Really? From the people who completely cocked up the beer registration list just a few years ago? Let's look at just a couple easily-found examples.

George Dickel Tennessee Whiskey. The No. 8 brand is listed in the bourbon section and the No. 12 brand is listed in the Whiskey section

Jack Daniel's Tennessee Whiskey has one listed in the bourbon section "Jack Daniel's 1St Edition Straight Bourbon Master Distiller Collection" Which only exists in the mind of some PLCB employee since Jack Daniel doesn't label ANY of its whiskeys as "bourbon." Not one. All the others are listed in the Whiskey section as they should be, except for one that is in the Blended Whiskey section; but Jack doesn't do blended whiskey either. I will give them credit though: it only took them 80 years to finally learn how to spell "Jack Daniel's" correctly. I pointed out mistakes on that as recently as this past spring.

6. Also restructured the website search engine to allow searches using misspelled words, abbreviations, and synonyms producing much improved search results for customers. -- Let's see how that works.  Sticking with Jack Daniel's type in Jack Danial's into the search box.  You only misspelled it by one letter putting an "a" instead of an "e" in Danial's. The result.....a page and a half of Calico Jack rum first, but JD does show up on page 2.  

How about we just forget the "'s" and put in Jack Daniel into the search box.  Again a page and a half of Calico Jack rum and then the JD on page 2. An improvement! ...until you realize that if you spell Jack Daniel's correctly and search for it, you still get a page and a half of Calico Jack rum first! The trick, apparently, is to just put in Daniel's, and you'll get all the JD  listings. Just don't misspell it or forget the "s" or the apostrophe, because then you get nothing contrary to what the PLCB says. Not quite ready for prime time and certainly not a product a $2 billion company should be proud of.

I can find a lot more but let's look at some money.

Sales on the captive Pennsylvania population did go up 3.2%, which is to be expected, given that the state has a monopoly and overall spirits and wine sales were up nationally. But Gross Profit only went up 3%...and Net Income (which in a 'real' business would be called 'Profit') went down by 3.6%! Wondering why? Here's a clue: operating expenses went up 5.2% (which is a lot, considering what it bought them, as we'll see in a bit). Operating income went down, even though the much-ballyhooed 'bailment' is in effect (where the PLCB doesn't pay for a product until it leaves the warehouse). Contributions to the BLCE went up 4.1 %, but BLCE enforcement of border bleed is at the lowest it has ever been. Oddly, during this record alcohol sales year, the amount that went to Drug and Alcohol programs went down 3.6%, which seems a little contradictory, given the 'control' mission of the PLCB.
 
Don't overlook another big one: Return on Assets (usually called Return on Investment) went down 14.8%! ROA gives an idea as to how efficient management is at using its assets to generate earnings. Also, even though there was only 1 more store than last year, wages as a percent of sales increased an astounding 18.3%, which is not a good indicator of efficiency either.

Of course, a real business has to list all their debts on their reports to shareholders...and I don't see the over $600 million that is the PLCB share of the pension debt listed anywhere. Maybe it doesn't count since the taxpayers and not the PLCB have to cover it. 

Like any business with a PR department, the PLCB tries to put on its happy face when reporting on what a super duper job they are doing, but the end result is still less selection, less convenience, higher prices, no real increase in safety, and certainly more aggravation for the consumer than in states with a privately-run liquor retail and wholesale industry. One only has to travel to see that for yourself.

Where the PLCB Money Goes: Then and Now

Let's have a look at what the PLCB has done with its money -- our money -- since the new millennium has started.

Fewer stores, more employees: In July 2000 there were 692 stores with 2,869 full time workers and 1,072 part-time workers In December 2013 there are 604 stores with 3,080 full time workers and 1,417 part-time workers. Stores decreased by 14.6% and employees increased by 13.5%.

Higher gross, lower margin: In 2000 the PLCB had record sales of $1,083,330,579 and record operating income of $89,868,893 or 8.30% of sales. In 2013 the PLCB had record sales of $2,171,946,398 and record operating income of $151,877,723 or 6.99% of sales a decrease of 18.6% in operating income for every dollar spent in sales compared to 2000. (Hardly surprising, given the increase in overhead represented by the previous point.)

Cost overruns: In 2000 the Auditor General found the PLCB incurred $408,000 in additional costs due to problems in Its implementation of a new computerized Warehouse Management System. In 2010 the Auditor General reported the PLCB incurred excess costs of $500,000 due to problems with the new inventory system (on top of being over budget). The inventory system was contracted for $25.8 million and as of June 2010 has cost $66.6 million, or 158% over budget.

More for ads, less for education: In 2000 the PLCB contributed 0.76% of gross from sales to drug and alcohol education.  In 2013, the biggest year they ever had, they donated only 0.66%, up from the 0.53% in 2012 (also a "record year").  The PLCB doesn’t release how much they spend on advertising, but what they have released indicates they spend 30-40% more on advertising than education.

More booze, less enforcement: In 2000, the PLCB gave 7.39% of gross from sales to enforcement of the liquor code.  In 2013, the PLCB only did 6.19%, a shortage that works out to over $5 million less for enforcement. So even though the number of licensed establishments increased and the population increased, there was less liquor code enforcement. State stores still aren't checked at all for compliance.

More embarrassment, less arresting? In 1992 the Auditor General reported that: "Policing bootlegging and illegal importation of liquor without payment of Pennsylvania taxes should be the primary mission of the liquor law enforcement personnel."  In 2013 there were 2 reported cases of “bootleggers” caught. It could be that the more support for privatization there is, the less border enforcement takes place...since that would highlight the huge problem of people who purchase out of state. It might have something to do with the $5 million the BLCE doesn’t get since they were no longer funded at year 2000 levels too.

Same lack of relevant experience: In 2000 no member of the Board has had any experience with running an enterprise anywhere near the size of the PLCB.  That hasn’t changed at all in any year since and they still only work 21-22 days a year.

"Multiple weaknesses" in procurement: In 2000, the Auditor General reported that: “Weaknesses exist in the administration of the Pennsylvania Liquor Control Board's warehouse management system consultant contracts.”  In the 2010 Audit the Auditor General reported that: “…multiple weaknesses in the PLCB award process, including lack of documentation. As a result we could not verify the PLCB adhered to proper procurement standards or exercised proper due diligence in awarding the contract.” (Remember that one of the PLCB “modernization” plans is to have less oversight in procurement.)

The PLCB has not changed in the fourteen years since 2000...except to be a larger bureaucracy with less customer service and more problems, that spends less on its very reason for existence: control. The problems are systemic, pervasive, and totally ingrained in the PLCB's processes and workforce. They won’t be fixed until the entire system is replaced with privately-run wholesale and retail operations -- as it is in the majority of other states and countries -- and they are able to fully concentrate on regulation, compliance, and enforcement, and not sales.

Privatization is Modernization – accept nothing less.

What they made, what they say they made.

Finally, a full 6 weeks later than last year the PLCB released their un-audited numbers to the public.  Now we all have heard that they made $660 million in a record sales year. That is like saying the PA Dept of Revenue "made" $23 Billion. Collecting taxes is not making money. The PLCB collected $520,483,384 in taxes and then overcharged the people of Pennsylvania $128,365,957 for the privilege of going to a state store.  To be fair they did pay for the BLCE to enforce the state monopoly that prevents the citizens from going anywhere else to purchase wine & liquor and to keep track of the all important beer registration list, neither of which they seem to do all that well.  They also paid out $2,567,319 or about half of their advertising budget to drug and alcohol programs. You would think that an agency charged with, "...exercise of the police power of the Commonwealth for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon..." (PA Liquor Code 1-104) would at least spend less on advertising and more on education but that's not how they roll.

So what else does this latest set of numbers tell us?  I noticed that for the first time in at least two decades that they didn't take an advance from the state ($110 million the last few years) to get things going.  We'll have to wait and see if they can keep it up or if this is just a one time thing to make the numbers look good under the threat of privatization.  Liabilities would have gone up 10% if they had taken it verses the normal 2-3% for the past few years.  History isn't on their side.  Bailment was also something that would control costs but inventory, the thing bailment was supposed to reduce, went up 11% from the previous year.  Cash went down 44% from 2012 and Accounts Receivable decreased a whopping 94% which may be a good thing if other entities are paying their bills almost immediately or it may not be that good if the business isn't selling as much goods or services.  The published reports don't provide enough information to figure it out. Store operations only went up $2 million but they closed 8-10 stores (PLCB audit 2012 lists 608 stores, testimony in May says 596) and the Chairman says that they are short at least 250 employees so I guess that is one way to keep it even but how long can they keep this balancing act going is the question.

While record sales are nothing new to the PLCB I wonder why the record profits don't follow the same pattern.  It took 5 years for Operating Income to beat the FY 2008 total, There were record sales in FY 2009 and profits went down 24%, there were record sales in FY 2010 and profits went down another 36%. Three of the last four years ended with negative assets which had never happened before. Total Net Assets still hasn't passed 2006 levels. In terms of percent of Income Before Operating Transfers the BLCE and Drug and Alcohol programs get less now than they did in 2000.

At some point next year we'll see the official audited report and know exactly what happened but until then we have to deal with what little is released.

I, like the majority of Pennsylvanians fail to see the need to keep a exceedingly small minority in place to the detriment of 12.75 million residents. The numbers just don't justify the continuation of the state in the retail and wholesale spirits business.

Privatization is the Ultimate in Modernization.

Breaking The Law: the tale of the tape

Yesterday I went Out Of Control. I broke the law by driving to New Jersey and — deliberately and with intent — bought twelve bottles of table wine, mostly Italian and California reds, with a few whites, at Joe Canal's in Lawrenceville. They were not mass market wines; nor were they “fine wines.” I picked the bottles out on my own, based on price, reviews, and “shelf talkers” written by individual clerks whose tastes I’ve learned to trust. The bottles were also mostly offered on special through Canal's Bottle Club: a free membership, like a shopper's card. I had no shopping list going in, just looking for wine for dinners over the next month or so.

In all honesty, I was just buying wine; I had no ulterior motive, no agenda. We were out of table wine, and I was close to Jersey, so I went. But last night, after everyone else went to bed, I got curious about just what the price differences were. So I scanned the bottles with the PLCB's -- admittedly -- fairly nifty Android barcode app, and here’s what I got. The Canal’s price is first…followed by the posted price from the PLCB’s database, where available.

2010 Zenato Valpolicella Superiore — $10.96 — $13.99
2011 Rancho Zabaco Dancing Bull Zinfandel — $7.34 — $9.99 (“sale price”)
2012 Frenzy Sauvignon Blanc — $8.29 — $10.29
2012 Box O 'Birds Sauvignon Blanc — $10.96 — $18.39*
2011 Feudi del Duca Montepulciano d'Abruzzo — $8.66 — NA
2010 Varner Wine Foxglove Chardonnay — $13.49 — NA
2010 Ravenswood Winery Vintners Blend Cabernet Sauvignon — $9.44 — $11.99
2012 Sileni Estate Cellar Selection Sauvignon Blanc — $9.99 — $13.39
2011 Ravenswood Winery Vintners Blend Old Vine Zinfandel — $8.01 — NA
2010 Penfolds Koonunga Hill Shiraz - Cabernet Sauvignon — $9.99 — $9.99 (“sale price”)
2011 Poggio Anima Samael Montepulciano d'Abruzzo — $11.99 — $15.79
2011 Di Majo Norante Sangiovese Terre degli Osci IGT — $7.96 — NA

In summation: PLCB did not list four of the wines. Of the eight wines that were available in the PLCB system AND at Joe Canal’s in Lawrenceville, NJ, all but one was more expensive at the PLCB, at an average of a little over $2.50 per bottle. ONE wine was the same price at both Canal’s and in the PLCB system. And of course, none of the wines were cheaper in PA.


Adding up what I saved (and throwing the PLCB a bone by using the Canal's price for the four wines they didn't carry), and figuring in the PA sales tax (6%) vs. the NJ sales tax (7%)...I saved a total of $27.35. Add in the $2.34 I saved by filling my tank in NJ on the way back, and subtract the cost of fuel for the 40 mile round trip (just a hair over $5), and I saved a nifty $24.61 on the trip. Cha-Ching! I'd have saved money even if I had to pay the $2 toll across the Burlington Bristol bridge! (I used the free crossing on I-95; it's closer.) As it was, this more than covered breakfast for Nora and I; hell, I could have bought a second bottle of Dancing Bull and STILL been ahead.

What's this prove? Nothing, really, because as I've always said, privatization is NOT about the price. But it does show up the bullshit that the PLCB and "Windy" Wendell Young and their ilk spread about the PLCB have "on average" lower prices than New Jersey: out of 8 identical wines, the PLCB didn't beat Canal's price ONCE. So much for that vaunted "buying power." It also shows that the PLCB's claims about their "huge" selection...are crap, when out of a randomly selected dozen wines (they were, but I realize you don't have to trust me), at a store about ten miles from the PA border, the PLCB only lists (which is not, as we all know, the same as "stocks") eight.
 
Lies, lies, lies. We cannot let them control the terms or the facts of this debate. Just because we know the lies they tell, doesn't mean everyone else does. For instance, PLCB partisans have recently been claiming "$2 billion in revenue" for the stores in website comments and letters to the editor. Well, sure...gross revenue. But after it's gone through their amazing overhead, it comes out to the puny profit we all know about. We need to make them tell the truth. When you see bullshit, call bullshit.

And if you can, screw 'em: buy out of state. There are obviously good reasons to.

Oh, and if the BLCE is reading this? Just kidding. I didn't really buy these wines, I just went and window-shopped. I love the police-enforced monopoly and would never do anything to undermine it. I love you. As far as you know.

*This is actually the price for the 2011 vintage, the 2012 was not available. But the 2011, 2010, and 2009 vintages were all listed, and all at this same price...so I feel fairly honest putting it up there.
 

How to 'save' the State Stores and make privatization go away

All this time we've been talking about privatizing, and the union and the social conservatives and the beer retailers have been railing about it, and yet the talk continues...wanna know a secret?

It would be really easy to get Pennsylvanians to accept the State Store System forever.

Really. Here's all you have to do.

1. Change the name of the Johnstown Flood Emergency Tax. Just change the name. Call it the Pennsylvania Alcohol Excise Tax, and most people will never say another word about it. It's the idea that the tax was for the Johnstown Flood and we're still paying it that drives them crazy.
2. Get rid of Joe Conti and the CEO position. The man's a disaster: the wine kiosks alone would prove that, but the constant ethics investigations are a drag as well. The CEO position is such an obvious patronage job that it's painful.
3. End the police-enforced monopoly. Just give up. It's rarely enforced, and it's galling to Pennsylvanians. Accept you're going to have to compete with businesses over the border...just like every other retailer does (and consider lowering the PA Alcohol Excise Tax to be more competitive...and watch sales go up, and overall revenues go up as people have fewer reasons to buy booze -- and food, and gas, and everything else -- outside of PA).
4. Kill the case law. It's not part of the State Store embroglio, but it's a thorn in our sides, and taking it away will calm us down. 
5. Link advancement of product knowledge to retention and promotion in the work force. If the union wants to keep their jobs, have them make this major concession: their retail jobs will actually depend on them selling products. 
6. Double the number of stores, kill the stock requirements, and allow local control of stocking. Do we really need 2500 SKUs in Clarks Summit, when you can -- supposedly -- easily order something through the stores? Cut the operational costs of running State Stores. Allow local control of ordering, not one plan put in place in all stores by a committee in Harrisburg.
7. Put the BLCE back under the PLCB. The PLCB and their enforcement arm don't work together. The BLCE used to be part of the PLCB; put them back together.
8. Make the PLCB answerable to the State Government. A lot of the arrogance and crap we've seen out of the PLCB over the past five years stems directly from the agency's independence. There's no reason it should be so independent. The easiest way would be to make it part of the Department of Revenue.

Do those things, and Pennsylvanians will be satisfied enough that privatization will never pass. Not in my lifetime.

Why do I lay this out, when I dearly want privatization to pass? Simple. I know the Legislature and the PLCB will never get their shit together enough to do any of this, even though none of it would hurt state revenues.

State Store Stings: a confirmation

As a follow-up to my previous post on whether or not the BLCE ever does "stings" using underage purchasers in the State Stores...I have a partial answer. I wrote to the BLCE and the PLCB about the issue, and just heard back from Stacey Witalec, Director of External Affairs at the PLCB (who has, by the way, been extremely helpful and pleasant over the past month or so; quite welcome). Here's what she had to say.

I checked in with BLCE on this for you and because our stores are not licensed establishments, BLCE does not perform compliance checks in them.

She's going to follow up and check on how many times there have been "issues" at the stores on this and get back to me, but for now...looks like a definitive answer: no, the Bureau of Liquor Control Enforcement does not treat the State Stores like they do private licensed establishments. Which would seem to take a LOT of the wind out of the "we don't serve underage; privatization would mean chaos" anti-privatization argument.

State Store Stings?

I have a Facebook page about this subject, Abolish the PLCB -- Rewrite the Code! (feel free to join, if you haven't already), and there are some serious PLCB apologists who joined and post counters to privatization. I suspect they're PLCB employees (present or retired) or fellow union members, but I have no proof...and my suspicions are mostly based on my incredulity that anyone else would support the PLCB, I'll admit that.

Anyway, one of them was posting a number of news reports (from other states) about sting operations that had resulted in arrests of liquor store staff or owners making sales to minors. This would always be accompanied by crowing about how privatization would bring more sales to minors, and that the PLCB clerks never ever sell to minors. Well, that's probably not actually true, because I've noticed that PLCB supporters have just started saying that there were only two sales to minors in the past 7 years, but that's still pretty impressive.

Only...wait a minute. Just how cozy is the relationship between PLCB store clerks and Bureau of Liquor Control Enforcement agents? So I started responding to all his posts: "Hey, does the BLCE ever conduct stings on State Stores? Just asking!" Never got a response.

To tell the truth...I don't know. Do they? Because if they don't...it's a meaningless statistic. I'd say I'd like to see it happen, but honestly? I wouldn't, because the way the regs are set up, any PLCB clerk who sells to an underage purchaser loses their job and their pension. I wouldn't want to see that just to prove a point. But...in the absence of such stings, this is comparing apples and oranges. Stick a pin in this balloon.

PLCB renews liquor license for convicted felon's nuisance bar: way to go, Joe!

Watch this video from Philly's NBC10, then tell me: is there any doubt that this is not just an agency that has outlived its usefulness, but one that is not even competent to perform the duties it has? After watching this report, I have to conclude that the PLCB has either made a policy of lying to the public, or has fostered such an atmosphere of incompetence that they actually don't know what they're doing. This is an agency in need of such re-working that it's time to do away with it. Tear it down, and start over, without the mistakes.

Beer Raid Resolution

Heard from Leigh Maida that the Memphis44Resurrection Raids are officially over; they got closure. All the details are here. What does all this come to? Well, for this incident, exactly nothing. Less than nothing: the BLCE blew thousands of dollars of your money out their collective asses to accomplish...a warning letter about a non-event.

Overall? A LOT of people learned just how archaic PA's booze laws are. That's a win for us. Don't let up!

I got some questions about this...

Just sent this e-mail to the members of the PA Senate Law and Justice committee (and my own Senator, Robert Tomlinson). I'll be at the hearings on Tuesday, and I'll report on what happens.

Honorable Senators,
I'll be attending Tuesday's joint hearing conducted by the Law and Justice Committee and the House Liquor Control Committee regarding the recent Bureau of Liquor Control enforcement (BLCE) "raids" in Philadelphia. This is a matter of great interest and concern to me (and to quite a few others, as evidenced by the public outcry at the injustice of these events). I've taken the liberty of creating the following list of questions I'd like to see addressed at these hearings. I hope you would consider them.

•    What purpose is served by brand registration? How does this arcane and clearly imperfect process best meet that need? If that need can be met by simpler means, why not do away with beer registration altogether?

•    Why was the cost of registration recently raised from $25 per brand to $75 (especially when other states have registration fees as low as $1)? Can there at least be an exemption of registration for brewpubs that only sell beer on-premises?

•    Why was the response to this complaint three simultaneous raids carried out by multiple armed BLCE agents, during lunch hour? Why not one plainclothes agent armed with a clipboard to straighten out what is clearly a bureaucratic issue?

•    What is being done to insure that the BLCE's “anonymous complaint” process is not used to harass licensees, either by competitors or malcontents?

•    Where is the oversight on the BLCE? The PLCB repeatedly said, in the aftermath of the raids, that it was not responsible for the actions of the BLCE; the State Police also distanced themselves. For that matter, who does the PLCB answer to, other than indirectly to the Legislature, through the Liquor Code?

•    At the heart of things, is the PA Liquor Code just too byzantine and confusing for licensees – and enforcement agents! – to understand? Could the Code be substantially simplified without undercutting taxation and enforcement?

•    And of course: why does the State continue to hold a retail monopoly on the sale of wine and liquor? As an American citizen in 2010, how is it possibly fair that I cannot legally travel 15 miles into New Jersey, buy a bottle of wine, and bring it home to drink? The monopoly is unfair, and there are no compelling reasons in the public good to continue it.

As I said, I will be present on Tuesday to see how the hearing proceeds, and to report on those proceedings. I hope the hearing is fruitful, and brings progress to the process of making Pennsylvania's liquor laws more fair, more transparent, and more responsive to the desires of the citizens of the Commonwealth.

Sincerely,

Lew Bryson