Joe "CEO" Conti weeps for his threatened empire

Philadelphia Daily News political columnist John Baer writes on Representative Turzai's privatization plan here, and it's a good one. His first reaction to Turzai's idea: "I'll drink to that." It gets better from there.

Baer talks to Joe "CEO" Conti at the end of the piece. It's too good, too delicious not to quote Conti's "Why me, Lord, why me?" cri de couer...so I will.

Also, CEO Joe Conti tells me that past studies say that over time the LCB provides the state more money than a private system promises. He adds, "The board and our agency work diligently to increase the revenue we return to taxpayers, and we let the Legislature and the governor deliberate over privatization." 

As if you could stop them! And let's not forget that you're fleecing the taxpayers to get that 'revenue' in the first place. But I like Baer's response to Conti's "and we let the Legislature and the governor deliberate over privatization" line:

"I hope they do - if not this year, then soon."

Yeah. That's about all this Repeal-era relic deserves.

Turzai Rides Again: new plan to dump the State's retail monopoly in the legislature

Representative Mike Turzai of Allegheny County has introduced legislation to eliminate the state's retail monopoly on wine and spirits sales. This is a well-considered proposal, one I can definitely get behind. Check the points (and my comments):

• Privatizes wholesale operations by auctioning off 100 wholesale distribution licenses to the highest responsible bidder (key point: we do not want to leave wholesale in the hands of the PLCB)
• Auction off 750 retail store licenses (more than we have now)
• A biennial license renewal fee and a transfer of license fee, similar to other license application and transfer fees currently in place, will be assessed by the PLCB (make them both substantial)
• Auction off the inventories of the current state stores
• PLCB would be required to divest itself from the retail sale of wine and spirits over a two-year period (smart; it will take that long (and give us the chance to snaffle some bargains))
• No person or business may own more than 10 percent of the wholesale distribution licenses statewide; no person or business can own more than 10 percent of state stores statewide (crucial, and I'd like to see provisions similar to those in the gambling licensing that keep felons out of the business, and state representatives, too; no paddling your fingers in this while you have influence).
  
• The state would move to a gallonage tax, which would range between $2 and $6 per gallon for wine and spirits (generally lower than what we pay now, and... No more Johnstown Flood Tax, no more Johnstown Flood Tax!)
• The PLCB will retain its enforcement, licensing, inspections and alcohol education authority (with, I hope, more oversight than they have now)
• State and local police will have concurrent jurisdiction to enforce state liquor laws (excellent!)
• All store employees must be 21 years of age (okay; not a problem, although 18 year olds can serve wine and spirits at bars now)
• PLCB employees who wish to continue being employed by the Commonwealth will be given preference in applying for other state jobs; there would be tax credits for private businesses who hire them, or tuition assistance for college or technical school (very fair, and a major point)

Honestly, the only quibble I would have is the number of retail licenses (but if you allow beer distributors to expand their license to include selling wine and spirits for a one-time fee -- a large one -- I see a beautiful solution). This covers almost everything I would put in a bill.

Discussion? And what can we do to help?

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

Terrible PLCB news!

I just heard from an internal PLCB source who's been pretty reliable that the wine kiosk idea is dead. That's really bad news, because I was hoping it would be a public relations disaster for the PLCB. I'll just have to see what I can do to shove it up their nose anyway.

By the way, speaking of public relations disasters? The courtesy contract was renewed.

Another voice calls for simplifying the liquor code...in Connecticut

Just saw this editorial from Chris Powell in the Middletown (Conn.) Press. His thesis: the reason there are so many "mom and pop" liquor stores in Connecticut is because it's about political patronage. Take a look at these bits:

Through licensing regulations state government has erected many barriers to entry, particularly barriers to doing business on a large scale with low cost and efficiency. There are more than 40 categories of liquor permits and they are tightly controlled. Supermarkets can sell only beer, not other alcoholic beverages. State government controls the hours of operation for alcohol sales, and Sunday sales are banned. The state also controls and pushes up liquor prices...
Liquor takes up 100 pages in the Connecticut General Statutes, but state regulation is just a start. Then there are the usual municipal zoning regulations. State law even allows towns to forbid liquor sales on their own, and some towns still do, as if their own liquor traffic is properly foisted on neighboring towns.
The scheme has been to diminish competition, drive costs up, put more people into the business, and make them dependent on political favor.

Sound familiar? Go read the rest. We're not alone, either in our problems or in our desire for a solution.

Why does beer brand registration exist?

In the wake of the beer registration massacre and fiasco, a question pops to mind: why does Pennsylvania law require beer brand registration? The answer -- as it is many times with The Almighty Liquor Code -- is not so easy to find. It's a lot like the case law: we've been doing it for 78 years, and no one has any real idea why we started.

What will people tell you? Well, how about Francesca Chapman, the PLCB's usual spokeswoman? Don Russell asked her why in his story in the Daily News, and she 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."

We'll get to the second part down below. For the first part, I don't see how registration helps in tax payment. Because of the three-tier system and PA's other laws about beer, there is a paper trail a mile long on every beer sale in the Commonwealth: beer comes into the wholesaler -- paperwork -- it goes out to the retailer -- paperwork. And the state can demand the paperwork at any time to see if there is beer on premises that did not go through the taxing process; same thing with self-distributing brewers. You can't escape the tax unless both parties are willing to engage in behavior that could very easily leave them without a license -- and therefore without a business. No one has seriously suggested that taxes were being evaded by selling unregistered brands.

Who's next? Unnamed "Harrisburg enforcement officers" in Rick Nichols piece on the raids in today's Inquirer say the reason is to "protect consumers." Nichols ponders, "How else to know whether the beer is from Victory (legit) or a backyard home-brewer (not)?" I hope he's being facetious (and I'm sure he is). Because if it's a bottle, it has to have a federally-approved label; if it's a draft, by law it's supposed to be dispensed from a tap with the name of the beer it's pouring clearly displayed. (and that's a law that I DO wish would be enforced more often...but that's another story). Does registration do anything? Not at all: again, there's already a paper trail in place that shows where the beer came from, and besides...nobody bothers counterfeiting beer labels. This is ridiculous on the face of it.

There's one more. A brewer I was talking to told me he'd attended a meeting where then-PLCB chief counsel Francis X. O'Brien Jr. about 8 years ago. They asked him why there was a need for brand registration (you'd think he'd know, right?), and O'Brien said it was for criminal cases involving drinking: underage drinking, DUI, and the like. If beer cans or bottles were found on the scene, the prosecuting attorney could use the brand's presence on the registered list to prove that the beer was beer, and thus contained alcohol. My first thought: you gotta be kidding! Then I remembered this court case in Reading a few years ago -- the story's funny, but the facts are serious: they actually needed to prove that Miller Genuine Draft was beer. I don't really think we need a whole system of brand registration just to prove that beer is beer. Could we, I don't know, "stipulate" that in the "rules of evidence" somewhere? Not to mention, it does them no good if the drunk was drinking draft!

I see no good reason for a brand registration law, not even the registration fee (it's less than $300,000 for the whole current list, and the BLCE just blew through about half that with these raids anyway). Unless...take a look at the registration form, particularly the second page. Is registration all about making sure what wholesaler has an exclusive on the brand; is this about marking your territory? If it is...I'm sorry, but once again, I do not understand why it is the state's concern. Let the wholesalers worry about enforcing their exclusivity contracts. There are civil courts, are there not? Does any other industry get this kind of enforcement support from the State? Maybe the dairy industry, but milk ain't beer. If this is what brand registration is about, and wholesalers are still caught with unregistered beers (and the registration list isn't worth the electrons it's printed on anyway -- Don, excellent work here!)...

Why are we registering beers at all? I really want to hear tough questioning on that when the hearings on these raids are held next month.

Vintage beers okay: nothing to worry about!

Just got off the phone with a PA brewer (who prefers to remain anonymous...and as long as the BLCE keeps that up, so will I), who told me they'd talked to the brand registration folks at the PLCB and had this to add to the discussion. Vintage beers -- older beers that are no longer brewed, or beers from defunct breweries like Heavyweight or King & Barnes -- that have already been purchased by a retailer are not in danger of causing a citation for unregistered beers. Once beer is purchased by the retailer, assuming it was registered when purchased, it is "grandfathered in," and the retailer doesn't have to worry. So if you're a bar owner or a distributor or a deli, and you've got beers you're aging? Don't worry about it.

Well, not exactly. Note that wholesalers are not afforded this protection, and there is nothing to keep the BLCE from checking their list, not finding those aging beers, and confiscating them. But you can't be fined or suspended for having them, and you can file paperwork to get them back.

I'm not sure just how good I feel about this.