More fun with math and myths

"Modernization"  math

The Math:
Is there something in the water or air in this state that causes people to not be able to read and do simple arithmetic when it comes to talking about PLCB numbers? How many times have I proven Wendell W. "Haircut 100" Young IV wrong, or the PA Whine and Spiteful Council wrong, or the notoriously un-mathematical state store supporters wrong? Even Representatives like DiGirolamo and Ferlo couldn't escape. Representative Sonney, now it's your turn.

The "Save the PLCB" universe was all atwitter when a Republican (actually two, counting DiGirolamo) announced a direct shipping bill or supported the idea of a direct shipping bill. Here was the proof that modernization was what the people wanted (provided you were one of the people who got campaign contributions) and a great way to show that the PLCB was at the forefront of almost — but not quite — being consumer oriented. 

Now Rep. DiGirolamo said that his version of direct shipping would bring in an additional $25 million in use taxes (called 'profit' by the PLCB) based on additional sales of  $361 million at a 6.92% margin. These are his numbers, I just do the math.(1).

However, Rep. Sonney has a fiscal note attached to his bill with a chart right on top that shows the state will lose $13,750.000. The interesting thing is that if you read the fiscal note on page 2, Fiscal Impact, it says: "The PLCB projects that the reduction in the mark-up from 30% to 10% could reduce revenue by approximately $16,500,000 annually..."  It goes on to use completely different numbers from the chart on page one. I'm guessing that he doesn't even know this, but the point being made is that if nothing else changed but the reduction in mark-up, the state will make less.

The Myth:
But HB 189 does change other things.  Instead of 55 wineries signed up for the current system supposedly at least 300 more will join the party, which sounds like a lot...but is only about 5% of U.S. wineries. How much more direct-shipped wine will Pennsylvania citizens and businesses buy when there are 400 choices instead of 55? Rep. DiGirolamo says 5.4 times as much (2), he isn't saying where he came up with the figure.

Will the state still lose money if sales increase by over 5 times and the mark-up is only 10% on SLO's? This is the PLCB we are talking about, so nothing they do should surprise you. They shouldn't lose money, in my opinion, but never underestimate their incompetence.

So this is good for the state and the citizens, right?  Not really. It still places the PLCB as the roadblock for which items can be ordered. If the PLCB can get it, you have to order from them. As I pointed out, those 400 wineries that signed up only represent 5% of U.S. wineries. But will there really be 400 wineries that sign up? More importantly, don't expect to direct ship anything from outside the country — that isn't allowed.

HB 189:

1. Wants the wineries to pay $100 license fee.
2. Wants a list of all wines shipped to PA residents
3. Wants permission to audit the direct wine shippers' books.
4. Wants submission to the jurisdiction of the board, any other State agency and the courts of this Commonwealth for purposes of enforcement.
5. Wants to require proof of age of the recipient, in a manner or format approved by the board.
6. Wants all boxes labeled with the words "CONTAINS ALCOHOL:SIGNATURE OF PERSON 21 YEARS OF AGE OR OLDER REQUIRED FOR DELIVERY." (no other state requires this)

And it goes on. How many wineries will make special boxes just for PA? How many will submit to jurisdiction? How many residents want the government to know what and how much they ordered?  Is this really what you think of when you say direct shipment?

Will this bill change the tax code to determine what  the state uses as the definition of a nexus for tax purposes? Some companies will have no physical presence in the state and no third parties who act as agents or representatives of the remote seller who have a physical presence within the Commonwealth. This point was brought up to me by a lawyer who is sympathetic to privatization; it carries no legal weight, but is interesting to think about..

All in all, it's looking like another failed attempt to improve the consumer satisfaction when buying wine and spirits in the Commonwealth. Band-aids like Rep Sonney's HB 189 do little to fix the problem of a broken system that most think is insufficient to their needs and wants, and does nothing significant to  move the state forward to the free market system that all normal states use.


END IT - DON'T MEND IT



1.) $25 million divided by .0692 is $361,271,676.30
2.) Current SLO wine orders are $67 million, $361 million is 5.4 times as much

Cars & Bars

Just imagine if PennDot (the Pennsylvania Department of Transportation) were run as badly as the PLCB. I know, PennDOT's pretty bad — getting license, title, and registration seems to be unreasonably difficult no matter where you go — but every now and then, the PLCB does something so totally, flat-out stupid that it exceeds anything PennDot could dream up. Like the wine kiosks, for instance; EZ-Pass isn't perfect, but it certainly works a lot better than the PLCB wine kiosk fiasco did.

And then there is this story, an absolutely hilarious decision by our fine Liquor Gestapo — hilarious if it wasn't so freakin' sad. Imagine that you just bought a used car, got insurance, made sure your license was up to date, got plates, and now you are happily tooling down the highway, singing the song of the open road. Suddenly, a state trooper shows up behind you, lights a-flashing, and they impound and tow your car away...for a violation THE PREVIOUS OWNER COMMITTED FIVE YEARS AGO!!

PLCB Towing, at your service whether you deserve it or not!

That is what the PLCB did to Rubb BBQ in Philly; they decided that the new owners of the liquor license should have to endure the license suspension that was handed down to the previous owners in 2010, because they'd gone out of business before the suspension could be imposed. What?

Now they can give all the reasons they want as to why this follows the rules but guess what? They make the rules (and before you say, no, the Legislature makes the rules, ask yourself: how did beer delivery suddenly become OK even though no law was changed?), and just like they scurry to spruce up stores and get courtesy training when faced with the possibility of privatization, if nobody complains about what they do, they aren't going to voluntarily try to fix it. Apparently a liquor code violation has no statute of limitations, unlike, say Assault and Battery, 2 years; Burglary, 5 years; Involuntary Manslaughter, 2 years; or anything that resembles a real crime. This is even longer than the statute of limitations for graft (2 years) that the PLCB should be so familiar with.

Do you feel safer? I know I don't, as long as there are people in the PLCB who think this way.

Privatize and help fix stupidity like this.

(PA Title 42, Part VI, Chapter 55, Subchapter C was used to find the above limitations.)

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!

Privatization facts & figures

All the arguments against privatization — job losses, revenue losses, public safety endangered, less selection and higher prices, less convenience, and worse service — are addressed and refuted below, with facts and common sense. Arm yourselves with knowledge, and pass it on to your legislators.

Jobs - Everyplace in North America that has privatized some or all of their liquor distribution system has seen an increase in employment. Jobs in the industry tripled in Washington State and Alberta, Canada, the last two places that fully privatized. They doubled in Iowa, which kept wholesale sales but privatized all retail. Are the jobs exactly the same as what they replace? Probably not; are all jobs the same at every store where you shop now? Why would alcohol sales be any different?

Revenue and Border Bleed - Sales have gone up in privatized systems, every single one; how much is dependent on taxation more than anything else. Case in point is Washington State, which already had the highest liquor taxes in the country before they privatized and added new fees. Sales have still gone up in state, and the fee-driven increase in border bleed has increased sales out of state. If they hadn’t raised taxes, in-state sales would have increased even more. Washington State’s border bleed is nowhere near the border bleed rate in PA. The border bleed increase for an entire year in Washington is about a weeks worth of the border bleed PA sees.  While privatization will not eliminate border bleed in PA, it will, just from a convenience standpoint, decrease it. A privatized PA will still not be able to equal pricing of states with lower taxes, but it will make it easier to buy locally. People pay more for convenience all the time, even when less expensive alternatives exist reasonably close. Case in point is buying almost any food or dairy item in a convenience store — “a damn Sheetz,” as Senator Ferlo would snarl — instead of a grocery store. The key is to not raise taxes.

Revenue 2 – Iowa actually decreased their taxation and still reported making more than they would have if they kept their state stores.

Revenue 3 - It isn’t only direct liquor taxation that has to be taken into account. For PA, there will be business taxes that the current system doesn’t pay. There will be more income taxes from owners and workers, since there will be more of each. There will be new jobs created that do not exist under our current system, delivery to bars and restaurants being one example, and increases in current jobs to accommodate new business. Again, just one new warehouse in Washington State employed 1,100 workers, which was more than the entire state store workforce of 937. In the long term, money will be saved by not having taxpayers responsible for future retirement and medical shortfalls. The current amount the taxpayers owe for PLCB pensions is $550 million and is expected to go up to $600 million by the end of this year.

Safety – Under the current system PA has more DUIs, DUI fatalities, underage DUI, binge drinking and underage binge drinking than 4 of the 5 privately run states on our border, and is just average compared to the rest of the country. Washington State has seen an 8% reduction in DUI crashes and DUI fatalities since privatization. While some may claim that is because there was less policing, policing has no effect on the decrease in DUI fatalities. Alberta, Canada has decreased their DUI fatality rate to one of the lowest on the continent (37% lower than PA) since they privatized, even though they have over 1,300 retail liquor outlets now for a population of under 4 million. Is there a connection? No way to say without further study, but it’s plain to see that privatization didn’t make the situation worse.

Safety 2 – Limiting underage access has always been a point for those opposed to privatization. While the true rate of underage purchases in PA State Stores is not known, since they are never independently checked (or policed in undercover sting operations, as privately-owned liquor stores in other states are) it would follow that it should be about the same as other localities which have similar requirements. Washington State was at approximately 93-94% compliance before privatization and is at about 92% now. Another thing we can learn from Washington State’s experience is how to limit direct unobstructed egress to cut down on shoplifting.

Selection - Under the PLCB, urban areas essentially subsidize rural areas for alcohol selection, something that would seem to go against their stated mission of limiting access. This is the retail equivalent of PENNDOT making sure there is a Jaguar dealer in every county, because without government intervention they wouldn’t be there. Where the population can support them there will be larger stores, and in areas that can’t support those, there will be smaller stores. This is the retail model found almost everywhere. It is not the government’s job to make sure you can buy a wide selection of booze, especially when they say it’s detrimental (but they still want to sell you more of it). It is their job to make sure that a business climate exists which will allow retailers to try to sell whatever they want within the regulations and restrictions. To date I have not heard a reasonable explanation as to why the state should subsidize alcohol like they do milk.

Selection 2 - That in-store selection will increase is not in question. One only need to look across the country to stores like Bev-Mo, Total Wine, Roger Wilco, Binny’s, HighTime, B-21 and hundreds of others to see what the private sector can provide. They provide it based on consumer demand, not by what a bureaucrat or committee with unknown or non-existent credentials selects for them in a small capital city, far from major markets. What is in question is what variety will be available in rural areas. The answer is the same as it is for any other product. If the demand is there, the market will provide it, just as it does in rural grocery stores and hardware stores. If what you want is not available locally, chances are you will be able to order it, the same as now, only you probably won’t have to buy a case at a time as it is with a good portion of the current system. The entire state of big, small, specialty, urban, and rural stores will be open to you. Not that every store will ship but it will certainly be more than now, because real businesses strive for customer service since their existence depends on it and not state police enforced monopoly power.

Prices – There are no absolutes in pricing. So much would depend on the system that is selected. Do we continue with the three tier system or do we eliminate one tier and allow more direct buying? Are taxes collected at the wholesale or retail level? Will the taxes increase or remain the same? Depending on what combination is used, you can say that prices should go down or prices should go up. The one thing you can say with certainty is that in a competitive market prices are lower than they would be given the same circumstances in a non-competitive market. As the third largest retail buyer on the continent one would expect the State Stores to have some of the best pricing available in the country. However, this is not always the case and the differences are more than taxes alone can account for.

Convenience – Since closing 20% of their stores in the past 40 years and having the lowest amount of stores per capita in the country (even lower than Utah!) there is no doubt the current system is inconvenient. Quite simply, anything that doesn’t open hundreds, if not a couple thousand more locations will not provide convenience seen in other states, and is a Band-Aid at best. It is obvious the PLCB cannot begin to compete in this area because they can’t afford it based on their business model of having everything the same store everywhere. Don’t let them buffalo you: the PLCB chooses the number of stores to open, not the legislature; the number of stores is not enforced by the Almighty Liquor Code (with the exception of the number of stores allowed to be open on Sunday). So while the population has increased over the last four decades, the number of State Stores has decreased from over 750 to about 605 today. Just to reach the national average, Pennsylvania should have about four times that number. “Modernization” does not begin to answer that issue, with one proposal saying they want to put 400 sq. ft. “stores” inside other stores, which they are already allowed to do now, and have been for at least 30 years. What exactly does that do for the consumer that the same size private store (which they claim wouldn’t provide the selection) would, besides remove that business opportunity from the citizenry?

Service – Unlike other retail stores, if you don’t like the service you can’t go anywhere else. You are stuck with the same training, the same attitudes, the same level of passion. In the world of private stores, if you don’t like the service you can go somewhere else and reward them with your business. The stores with bad service will eventually fail, and if somebody else sees the opportunity another will open. In the private sector you will find stores with a sales staff of well-trained professionals along with stores whose sales staff can barely tie their shoes. You have the choice of what level you require. Same size fits all is not a tenet of retail, although it seems to be gospel for the PLCB. There are private stores who have sommeliers on staff. The whole of the PLCB, 600 retail stores and an entire state’s wholesale wine trade, doesn’t. To be fair, the PLCB does have a sommelier as a part-time consultant. One. Part time. For the entire state. The third largest retail wine buyer on the continent does not have a full-time top tier wine person. I can’t be the only one to think there is something wrong with the system that not only allows this, but doesn’t care.

Privatization does create winners and losers. The winners are the citizens who now have access to a free market; the losers are those who can’t adapt to the free market system. While no system is perfect, looking at the rest of the country it is easy to see which one is preferred by consumers and businesses whenever there is a choice.

TELL YOUR LEGISLATORS YOU WANT THAT CHOICE!

Let's Kill Another Privatization Myth II

Time to debunk another myth.

"Pennsylvania has such a high DUI fatality rate because we have so many rural roads...not because the PLCB doesn't control sales of alcohol very well."

While PA does rank 6th worst in total in the US for Rural Road fatalities (2009) we rank 16th worst in DUI fatalities (2011). For fatalities per 100 million rural road miles driven PA isn't in the top ten or even top twenty but is number 23 (2009).


I had this page full of numbers and charts and math to prove the point but it comes down to this: 
Of the six border states and PA itself, PA is 5th worse in rural road death rate per 100 million miles traveled. It also turns out that PA is 5th worse in DUI fatalities.  In fact the rural road death rate and the DUI fatality rate coincide with each other for all seven states.  New Jersey has the lowest rural road and DUI fatality rate and West Virginia has the highest.  Common sense shows that the rural road fatality rate is a causation of DUI rate and not the other way around. Maybe the next excuse by the clerks will be to blame PennDot because we have too many potholes...anything but the lack of control by the PLCB

STATE	Rural Road
	Death Rate
New Jersey	1.48
Maryland	1.89
New York	1.95
Ohio	2.2
Pennsylvania	2.23
Delaware	2.41
West Virginia	2.62
(rates based on per 100 million miles traveled)

Looking at DUI fatality rates per 100,000 population we have

New Jersey - 1.7
New York - 1.9
Maryland - 2.7
Ohio - 3.0
Pennsylvania - 3.4
Delaware - 4.0
West Virginia - 4.7

I do want you to notice that the 4 states with better than PA's DUI rates all have private liquor sales and the one other control state (WV) has a worse DUI rate.

You could say that having the PLCB is killing more Pennsylvanians than would happen without it..

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 Rep John Taylor: "a ridiculous use of enforcement manpower"

Last Thursday's raid on three Philly bars -- all owned by the same couple -- for "unregistered beer brands" has caught fire in the media. Hundreds of comments are swamping stories on the Daily News website, stories like the one today where Rep. John Taylor (whose 177th District is home to the Memphis Taproom, one of the bars raided) blasted the raids.

THE TOP Republican on the House Liquor Control Committee said yesterday that the State Police engaged in "a ridiculous use of enforcement manpower" last week when more than a dozen officers staged raids on three Philadelphia bars, suspected of selling beers not registered in Pennsylvania.
"I don't know why they would use that many people to track down an issue like this that could have been handled with a routine inspection," said state Rep. John Taylor, whose legislative district includes one of the bars, the Memphis Taproom, in Port Richmond.

Taylor puts his finger right on the problem. Here's what I said in a comment on Andy Crouch's Beerscribe blog:

Why is a “raid” necessary? Here’s an option: instead of five armed cops walking in on a lunch crowd and seizing beers, how about one bureaucrat comes by with a clipboard to see if unregistered beers are on the premises? If any resistance is offered, backup is a phone call away, and resistance won’t look good on the complaint. Find the unregistered beers and — here’s another thought — get the wholesaler on the line and arrange for payment of the fee and registration on the spot. Done, under the radar, no business disruption, the beer’s registered, the state’s happy, and it costs so much less than sending five cops (and looking like idiots in the press).

I remember having this same thought about ten years ago when I went to my first State College Micro Expo beer festival (a festival that was largely regulated to death, unfortunately). As I arrived about half an hour before the fest started, one of the fest organizers was being lectured -- hectored, really -- by a red-faced PLCB enforcement agent about unregistered beers at the festival. "There are unregistered beers at this festival," he shouted, "and they will not be served, or I will shut this thing down!" The organizer took care of it -- a pain in the ass, but what are you going to do? -- and later told me that the PLCB had first contacted him about the problem less than two days before.

And I thought to myself then...wouldn't it have been better all-round if instead of getting up in the guy's face like that, the PLCB agent had instead said, I understand there are some beers coming to the fest that are unregistered. Let me help you with the paperwork, you cut me a check, and we'll get that all squared away in time for the fest? No stress, no screaming, and the state...has revenue. Wow. Would that make sense? What am I missing?

Oh, and in case you were wondering? The PLCB went after the unregistered brands at the fest...because of an anonymous tip. Best guesses were that it was a local distributor (Zeno's certainly wouldn't have done it: they were making money hand-over-fist that day selling beer to happy geeks). Kinda makes you think that this "anonymous tip" thing should go away too.

And now...video

Here's the story on Action News. I especially liked this part:

Authorities stress if Hartranft thinks any of the confiscated beer is registered all he has to do is show them the paperwork. "We would happy to have for them to come down, show us they are registered. If they are they can sign the property record and take custody of them," explained Sgt. La Torre.

That would be the same Sgt. La Torre quoted in the Daily News today, I suppose.

State Police Sgt. William N. La Torre, commanding officer of the Philadelphia office of the Bureau of Liquor Control Enforcement, said that he was not aware of any beers that had been mistakenly confiscated.
La Torre said that the beer would be kept in a secured location, as evidence, until the case is resolved, probably in six to eight months. If an administrative-law judge finds that the bars possessed unregistered brands, the State Police typically would seek a forfeiture order to destroy the beer, he said. Depending on the temperature of the storage location, some of the beer will likely turn sour in that period.
Maida said that the couple's attorney had told them that they have until 6 p.m. tonight to compile evidence to prove that the confiscated beer is properly registered.

And if they don't get the evidence by...oh, by two hours ago, they can't get the beer. The Sgt. La Torre on the TV, some time later on than the newspaper interview, sounds like a much more conciliatory man. I reckon he don't need a weatherman...

More details (thanks to Don Russell and Bob Warner)

The Daily News has more details on last week's raids here (be sure to read the comments; public anger is high on this one). Highlights:

• four kegs and 317 bottles were seized, which will be kept at "a secured location, as evidence, until the case is resolved, probably in six to eight months." If the beers are found to be unregistered, they will be destroyed (if they're found to be registered, well, they might as well be, after 6-8 months in unrefrigerated storage).
• Leigh Maida estimated the value of the beers at $7,200, and said over half of them were properly registered; beers like Duvel and Monk's Cafe Sour, both of which are sold all over the state (but the name on the list doesn't match the label exactly...which would seem to be the fault of the State).
• "State Police Sgt. William N. La Torre, commanding officer of the Philadelphia office of the Bureau of Liquor Control Enforcement, said that he was not aware of any beers that had been mistakenly confiscated." 
• Francesca Chapman, a PLCB spokeswoman, said that the registration requirement helps the state assure payment of state beer taxes and helps prosecutors identify alcoholic beverages in drunk-driving cases or any other type of prosecution. (Because just taxing every beer that comes in isn't enough? Because looking at the label won't do it? If you're not putting the right name of the beer on the "list" to begin with, how much help is it?)
• La Torre said that the investigation was sparked by "a citizen complaint. It doesn't matter where the complaint is coming from," he said. (I would say that if the "citizen complaint" came from the owner or employee of another beer-related business...it does matter.)

Nice work. Now...let's dig further into this. Sgt. La Torre is hardly in any position to decide whether where the complaint is coming from "matters." No offense to the officer, but he's a tool being used by the complaining party, and his willingness to protect that person does him no honor. One of the basic principles of American justice is the right to face your accuser. Brendan Hartranft and Leigh Maida, the owners of the three businesses, their partners, and their employees deserve to know who chose to lodge this complaint specifically against them, while these supposedly unregistered beers are sold at bars across the city, the region, and the state. Why not get lists from the wholesalers who delivered these beers and raid every single bar and distributor who received them? Is the BLCE a tool or is it an enforcement agency?

The reasons given for brand registration do not hold up. TAX EVERY BEER, and it doesn't matter what beers are brought in. Every retailer, bar or distributor, is required to keep paperwork on where they buy beers -- wholesaler or direct from a self-distributing PA brewery -- so that's your assurance of payment of state beer taxes. Why do you need to identify the alcohol beverage in a DUI, and why isn't the label identification enough? This is the Internet age: Google the damned thing if you need to know (and you won't be able to identify a draft beer anyway, so what's the point?).
 
Which brings up another question. Is brand registration actually about ensuring that wholesalers are getting every sale they should be from retail accounts, and retailers are not buying from the "wrong" wholesaler? If it is, why is the state in that business? That should be a problem for the wholesaler to bring in civil court; why are we spending tax dollars to proactively enforce that?

Again, this is an issue for the Legislature. Rewrite the Code. Abolish the PLCB.

The Memphis 44 Resurrection Raids: and why you should care

This past Thursday the Bureau of Liquor Control Enforcement and the PLCB carried out three simultaneous raids on Memphis Taproom, Resurrection Ale House, and Local 44. The raids were the result of a complaint that the three bars were selling beers that are not registered with the State. (No one has, at this point, stepped forward to take credit for lodging this complaint; I'm assuming that they're hiding behind "Anonymous.") Each bar was visited by five armed officers -- again, simultaneously, presumably so no one would call the other bars so they could somehow hide cases or kegs -- who proceeded to check beers against the list of registered brands, and confiscated ones they couldn't find on the list. They evidently didn't look too hard: Brendan Hartranft, owner of Memphis, told me yesterday that they seized bottles of Duvel, a beer that's been imported into the US for over 30 years, and is clearly on the list.

I'm an old fart, so when I heard of this, I immediately thought of the raid on The Farmhouse in Emmaus, about 15 years ago. In that case, the folks at the Farmhouse -- which was quite the advanced beer spot in those days -- were doing a series of beer dinners, and had scheduled a winter beer dinner. Traditionally, the holiday beer dinner is the one where you pull out all the stops, and they wanted to have beers no one else had. They tried doing that the legal way -- by getting the beers registered -- but the PLCB dragged their feet and wouldn't clear the paperwork. Finally, the decision was made to get the beers without registration -- maybe not the best idea, but there you are -- and the result was that in the middle of the dinner, over 50 guests were shocked to see three carloads of armed BLCE march into the dining room, where one of them loudly proclaimed "This dinner is OVER!" The guests were asked to leave, and The Farmhouse was shut down for a full inventory of their alcohol. Other than the one unregistered beer...nothing was found. The manager told me that when the head enforcement agent left, he stopped long enough to shake his finger in the manager's face in rage, and yelled at him, "I know you have untaxed alcohol in here, and I'm going to find it!" He never returned.

So what's this tell us? First, that the PLCB is incompetent. Beers were seized at the three bars that were on the registered list, and I know of at least one beer that was not registered that was not seized at any of the three bars. As co-owner Leigh Maida said, "Some of what they confiscated at one location, they left alone at another. Some of what they took is listed plain as day on the PLCB list of registered beers." Brendan told me he does not intend to take back the beers that were wrongly seized. "I don't know what they've done with them," he said. "I don't even know they're my beers."

Second, that the PLCB has no sense of proportion. This violation is approximately equal to a parking ticket -- unregistered brands, for crying out loud? -- but they put fifteen officers on it for three hours, and who knows how much preparation time. Meanwhile there are countless nuisance bars, there are bars serving mislabeled liquor, there are bars all over Pennsylvania where patrons are being overserved...and they blew hundreds of dollars of our money out their butts following up an anonymous tip that someone was serving "unregistered brands"? Come on, guys: if you had the cyber-brains the Bensalem cops have, you could be cruising BeerAdvocate or Facebook and picking up a case like this every week! Seriously, just checking out BeerMenus.com would probably make your quota. But then you wouldn't be available for some "anonymous tipster" to launch you against someone they want to screw, so forget that, right?

That's a direct lead to Third, the idea that someone -- oh, let's say it: that some rival bar or restaurant owner, or maybe a brewer with their nose out of joint (An anti-Memphis44Resurrection commenter at Uncle Jack's site notes "They [Brendan and Leigh] started all of this when they drove to Baltimore to pick up an illegal keg and thumbed their noses at the local brewery" (and there have been suspiciously similar comments made in a number of Philly blogs/forums over the past six months). Which local brewery is left as an exercise for the student...) would deliberately rat out another small beer business leaves a very bad taste in my mouth. That's nasty. That's low. That's...shitty. And there's no excuse for it. None.

Which leads us, however, to the big one, Fourth: this is clearly a violation of PA liquor law. Just take a look, right here, and you'll see it's number 9 on the list of UNLAWFUL ACTIVITIES. There's not even any wiggle room here: "It is unlawful to sell, offer for sale or deliver any brand of malt or brewed beverages unless such brand has been registered by the manufacturer or franchised agent thereof with the PLCB." Period. If sale or offer of an unregistered beer has taken place, a crime has been committed. If you sell a beer without the proper paperwork being filed and approved and the $75 fee paid, you're in the deep stuff. It doesn't matter that many many bars and distributors across the Commonwealth are doing it all the time -- and they are, I know it, they know it, and God bless them, because the beer's good -- it is breaking the law.

Well... Why? Why is there a law? I think we're assuming that this is a tax issue. If a brand isn't registered, tax is not being paid, and nothing gives state booze agencies the giddy-up quicker than the thought of losing some pennies (we are talking about pennies, too: PA does have one of the lowest beer taxes in the country). But that's not what's happening in almost every case. The beer's going through channels, tax is being paid, it's just that the state doesn't even realize that it's being paid tax on unregistered brands. (If you're guessing that the state doesn't really care, so long as it gets its taxes...you're right.) It's not even the $75. The real problem is that the state wants the paperwork done, and the fee paid, even for brands that come in once a year, in tiny amounts -- again, no sense of proportion -- and the paperwork takes too long to clear (stop me if you've heard that before).

So let's say it. Brand registration is bullshit. It's a pain in the neck in a state liquor authority full of pains in the neck. Bring the beer in, pay the taxes, sell the beer to the customers. Done. Who needs the registration step? If every beer is taxed, the state gets all the tax revenue, and there is no incentive to break the law because the PLCB is being a pain in the ass with paperwork.

The real problem here is not the PLCB, of course. They went over the top with this one, and they cheerfully allowed themselves to be used as some assclown's goon squad -- which is really troubling -- but they were just following orders. Who gave the orders? The Pennsylvania Legislature, which continues to balk at simplifying and rationalizing The Almighty Liquor Code.

People have suggested sending your complaints to the PLCB through their comment address. You can do that, it's here: RA-LBconsumer@state.pa.us. But who you really should send your comments to is your state legislator. Ask them why brand registration takes so long and costs so much that it discourages businesses from registering. Ask them why brand registration is even in The Almighty Liquor Code. Ask them why the PLCB saw fit to mount such a ridiculous raid for such a pointless infraction. And be sure to ask them why the PLCB would disrupt a business on the word of an anonymous tipster, when that's a practice that's just ripe for abuse.

This is bad enough as an isolated incident. But it speaks volumes about how backwards booze law is in PA, and about how badly it is enforced. Simplify the Code. Abolish the PLCB.

First courtesy training, now this

The PLCB, fresh from blowing millions of your tax dollars out of their butts* with the Courtesy Contract and the Great Table Leaf Re-Branding, is now going to spend even more money...training PA police officers how to use Facebook.

It's not that simple -- it never is -- but it's close. As you probably know, underaged drinkers are often dumb enough to post their drunking (intentional misspelling) pix on social networking sites. Hell, everyone knows it, and has known it, as this story about it from 2006 shows. The Bensalem PD is already using it for their own horny purposes. But that's not going to stop the PLCB from spending more bux to jump on this.

Here's the syllabus for the 8 hour course:

According to Leslie Coombe, director of the Liquor Control Board's Bureau of Alcohol Education, the Navigating Cyberspace training will cover:

•Social networking sites and how young people use them;
•What distinguishes social networking sites from one another;
•How to navigate social networking sites; and
•How to develop information from social networking sites into evidence.

So that would be:

• Facebook, MySpace, craigslist, Twitter -- Farmville; pix of chix and crappy music; all beer u can drunkk $5 dude; LOL RT LOL!
• Your mom's on FB too, MySpace looks like a cat threw it up, craigslist is about the bux, Twitter s shrt lol.
• Create a false identity. Login. Start friending/following like mad; lie when necessary. Click on links. Txt. Google site for "beers" "crunk" and "funnel". Call it a day, go get a beer.
• Lie to some kid about who you are, get an invite to a party. Show up with the squad, arrest all the kids you can catch, bust the owners of the house, too.
• And one more thing: Entrapment Is Something That Happens to Other Cops.

Hey, officer, just kidding about that last one, really. But I'd love to see what the folks at the Chambersburg Public Opinion would have done with this one. We're sending police officers to school for a day to learn how to Facebook? Are you kidding? My mechanic told me his small-town PD has a cyber-enforcement unit. Cops are up to speed already, and if they aren't, a one-day course ain't gonna do it. God, this reminds me of the narc convention in Fear & Loathing in Las Vegas.

I did say it wasn't quite as simple as the others, and here's another reason. The money comes from a grant...from the National Alcohol Beverage Control Association, the "business association" of control states' liquor monopolies. Where does their money come from? To tell the truth, I don't know (I do now; see below). Google has, for now, failed me. But I do have a call in to them, asking that very question, and I'm hoping for an answer (because I'm writing a piece about this, too). But if NABCA is funded by the control states' booze agencies...guess what that means? Give you a hint: those aren't monkeys flying out of your butt.

Update: I did get back with the National Alcohol Beverage Control Association, and it turns out that they get only a small amount of money from the states, less than a third of their operating budget. Most of their funds come from selling reports to investment analysis firms, the booze industry, and importers/wholesalers; they have solid, gilt-edged data from the states (it's every sale from every store in the state, as opposed to the patchwork reports from private-sale states), and it's valuable. Good idea, actually. So...no fear, the PLCB's wasting someone else's money this time. Whew.


*Paraphrasing a great line from one of my fave movies, "The Iron Giant," where Gen. Rogard says "You realize how much hardware I brought out here? You just blew millions of Uncle Sam's dollars out of your butt!" I know just how he feels...and yeah, Joe "CEO" Conti, it was our tax dollars, because if you hadn't wasted it on this project, it would have gone into the general fund, where it would have become fungible revenue. PLCB revenue wasted is the same as taxes to cover the hole.

"...bringing any alcoholic beverage into Pennsylvania is illegal..."

Well, I got my response. I recently wrote to the PLCB to ask them how a private citizen, who happened to be in another state and saw a nice bottle of wine for sale, and wanted to bring that bottle home to Pennsylvania, could do their duty to the Commonwealth, fill out a form, pay the taxes, or so on. How could we do the right thing in order to bring this into the State and be square, in other words?

After two weeks -- a relatively short time, considering it came from the PLCB's chief legal counsel -- I got my response this morning. I'd publish it here, only it came by e-mail in the form of a PDF image, which has so far resisted four different attempts to convert it to text. No problem; I've successfully uploaded it to Scribd, and you can see it below.

Please note, before we go any further, that they took pains to note that the State Police Bureau of Liquor Control Enforcement enforces the liquor laws, and the PLCB issues legal opinions that are binding on licensees only. "Since you are not a Board licensee, the following is offered for your guidance and information only." Ah. Kinda like the fine print on the video poker machines that Pennsylvania seems completely unable to stamp out. Okay. With that said, let's see what their opinion is.

The third paragraph puts it pretty damned simply: "The general rule is that bringing any alcoholic beverage into Pennsylvania is illegal, with limited exceptions." You have to be "the Board, a manufacturer, or the holder of a sacramental wine license or of an importer license" to transport or possess any liquor or wine within the Commonwealth that has not been purchased from the State Store System or a state winery. "Accordingly, you cannot simply cross the border into a neighboring state, purchase a bottle of wine and return to Pennsylvania, as both the importation and possession of such wine would be illegal."

However...turns out that you can bring in up to one gallon free of tax and mark-up...from outside the United States. So, New Zealand is okay; New Jersey, no way. And if the Board requests it, you have to produce evidence of such travel, the receipt proving you actually bought the stuff there (and not, for example, in New Jersey), and "an affidavit indicating that the purchaser was allowed to bring the liquor in duty-free" (no instructions on who would issue such an affadavit...). And before you think this completely painless, "The Board assesses a service charge for this importation." Of course they do.

You can receive wine and liquor from outside the Commonwealth as a gift, "so long as the proper paperwork is submitted to and cleared by the Board." And you pay the service charges and mark-up, and by the way, you have to pay the taxes to the Department of Revenue, so you have to talk to them, too.

Feeling like Kafka yet? Remember that you do have the ability to purchase wine from outside the Commonwealth! You may purchase it online! And then have it shipped to one of the State Store System's stores (of your choosing!). There are a few conditions, of course: the wine cannot be one listed on the Board's Internet catalog; you'll have to sign an affidavit that you are 21 and purchasing the wine for your own "use;" and you can't get more than 9 liters in a month. Oh, and there's a shipping charge, a handling charge, the 18% Johnstown Flood Emergency Tax, and 6% sales tax (plus an additional 1% in Philadelphia or 2% in Allegheny County). Bet they get a lot of traffic on that one.

In short, they conclude, "...there is no proper protocol for crossing the border to purchase wine in another state and then bring it back to Pennsylvania." And that's pretty much it.

(The letter was copied to the Bureau of Liquor Control Enforcement, to the Senior Director of the Office of Regulatory Affairs, the Director and Assistant Director of the Bureau of Licensing, and the Press Secretary. I'm not intimidated, I refuse to be.)

The beautiful thing is, they don't have to provide a proper protocol, or the reasoning for why that is not allowed. That's the responsibility of the Legislature, by way of The Almighty Liquor Code. Why is it that way? Because the State Store System and the PLCB were set up to be a total monopoly -- it's the Pennsylvania Liquore CONTROL Board, after all -- and you can't have a monopoly that leaks around the edges.

Oh, it does, of course; people bring booze into the State every day. You know it, I know it, the Bureau of Liquor Control Enforcement, everyone knows it -- except the PLCB, apparently, as Joe "CEO" Conti continues to hold that this is a very minor problem. Sure it is. Which is why there are all those big liquor stores so close to the border in Delaware and Maryland, and why the out-of-state liquor stores run full-page ads in the Inquirer.

I am deeply offended by the very idea of this monopoly. I drive to visit my in-laws in New York and Virginia several times a year. I'm an American. What right does the State of Pennsylvania have to tell me where I can or cannot buy a bottle of liquor? If it's all about the taxes, why not make it easy for me to pay the damned things? No, instead, we're told that "bringing any alcoholic beverage into Pennsylvania is illegal." That's asinine!

Let me make this perfectly clear. I deeply appreciate the time that the lawyers at the PLCB took to write this response. I do; I have no doubt they know who I am and why I wanted to know, this site gets hits from the PLCB multiple times a week, but they responded, and they didn't mince words. I don't hold the PLCB or the BLCE responsible for this ridiculous situation.

I blame The Almighty Liquor Code and the Pennsylvania Legislature. For 75 years we have been under the patronizing thumb of this monopoly. We have no choice except theirs, we have no options but theirs, we have no way to change it or make it better. This is not the fault of the PLCB. Rather, the PLCB and all it stands for -- monopoly, conflict of interest, political patronage, lack of choice, lack of response -- is the fault of the continuing refusal of the Pennsylvania Legislature to lift this Stalinist, paternalistic, antiquated system from our shoulders. It's 2009: could we be allowed to buy a bottle of wine wherever we want? Is that so much to ask? Or do you vant to see our papers?

Read the full text of the PLCB's response on Scribd here