Why Can't Pennsylvania Get a Little Privacy?

Privatized alcohol sales looked like a lock in the Keystone State a few months ago; now opponents appear to have the upper hand
May 30, 2013

The last time you had friends over, you probably made a run to the supermarket for supplies before playing the good host. If you live in Pennsylvania, it wasn't so easy. You drove to the supermarket, you drove to the state beer distributor and you drove to the state wine and spirits store. Pennsylvania is one of the few remaining "control" states, meaning that the state exerts direct control over alcohol sales.

Sound like a wasteful, inconvenient and costly hassle?

Most Pennsylvanians think so. The governor and lieutenant governor think so. Most of the Pennsylvania House of Representatives thinks so. Labor unions do not, however, and their full-throated opposition has stymied a proposal to privatize alcohol sales in the state Senate. Despite all the initial support, the longer the debate drags on, the further Pennsylvania seems to be from privatizing its alcohol distribution and sales. For the consumer, that means limited selection and more hassle.

Pennsylvania and Utah are the only two states whose governments maintain a complete monopoly on alcohol sales, determining what brands to sell, how much to sell them for, and where and when they can be purchased. Utah is ... Utah. But Pennsylvania is the ninth-largest wine-consuming state by volume, and by far the largest wine-consuming state that doesn't allow wineries to ship directly to consumers. The Pennsylvania Liquor Control Board (PLCB) is the single largest purchaser of wine and spirits in the country.

Since the 1970s, privatization efforts have been knocked out by the one-two punch of unions and temperance efforts. Most recently, Gov. Tom Ridge pushed to get the state out of the liquor business in 1997.

But the tide of support had been turning in recent years. In June 2011, a Quinnipiac University poll found that 69 percent of Pennsylvanians supported privatization. This past January, Gov. Tom Corbett announced a plan to shut the state's 600 state-owned wine and spirits stores and auction 1,200 private licenses to replace them. Additional licenses to sell beer and wine would be offered to supermarkets, convenience stores and large retailers such as Costco.

"Why do we continue to deal with an antiquated liquor system that is 75 years old?" Corbett asked. "The question should be, 'Why don't we have choice? Why don't we have convenience like the other 48 states in the union?'" The sale of the licenses would raise more than $1 billion for the state, which Corbett said would be earmarked for education.

Accompanying Corbett at the press conference announcing the privatization plan was Pennsylvania House Majority Leader Mike Turzai. In March, Turzai introduced House Bill 790 to privatize state alcohol sales. On March 21, the bill passed in the House by a vote of 105 to 90, and was soon referred to the Pennsylvania Senate Law and Justice Committee. But two months later, it's no closer to becoming law.

While the legislature debated, opponents of the idea mobilized. Mothers Against Drunk Driving announced their opposition to privatization in March, arguing that a Center for Disease Control (CDC) study concluded privatization harms public health by increasing unregulated alcohol consumption. (Dr. Raymond Scalettar of George Washington University Medical Center and former chair of the American Medical Association penned an op-ed for the Philadelphia Inquirer refuting the CDC report, writing it "was never designed to predict consumption in a privatized Pennsylvania market, and it certainly says absolutely nothing about alcohol-related harms.")

The United Food and Commercial Workers Union came out in opposition, concerned that the jobs created by privatization would not be union jobs. Independent State Store Union spokesperson David Wanamaker said parents "don't want Captain Morgan in the same grocery aisle as Captain Crunch." The State Troopers Association and the Fraternal Order of Police oppose privatization, although the state police commissioner supports it.

All the noise had an impact. In February, a poll by Franklin & Marshall College found 53 percent of Pennsylvanians in favor of privatization; in early May, that number had dropped to 47 percent.

The Pennsylvania State Senate is currently holding hearings on privatization, but Rep. Turzai's bill is off the table. Sen. Chuck McIlhinney, who chairs the Law and Justice Committee, has said he may submit a revised bill in mid-June that would veer toward modernization over privatization, maintaining the state-controlled wholesaler system and keeping the state stores open while also allowing grocery and convenience stores to apply for licenses to sell beer or wine. Maybe. "We may or may not get to it," he said after the first hearing earlier this month.

As with past efforts to get Pennsylvania out of the alcohol business, inertia favors the status quo. If Pennsylvania wine lovers want to buy their wine from anyone other than the PLCB, they're going to have to make themselves heard, even more loudly than those of the teamsters and teetotalers.

Legal and Legislative Issues

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