Alcohol

Liquor Store Privatization Is Around the Corner in Pennsylvania and Tennessee

Legislators in Pennsylvania and Tennessee may do the unthinkable during their respective 2013-2014 sessions.

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Legislators in Pennsylvania and Tennessee may do the unthinkable during their respective 2013-2014 sessions: loosen their stranglehold on alcohol sales. 

"Pennsylvania maintains one of the tightest, most restrictive liquor-control systems in America," according to the Pittsburgh Post-Gazette. The state's Liquor Control Board sets prices and store hours, polices distribution, and caps the number of stores.

camera_obscura [busy] / photo on flickr

But that could change this year. Pennsylvania Gov. Tom Corbett recommended privatizing liquor stores in his 2013-2014 budget proposal, and last month, the Pennsylvania House passed a bill for the first time ever that would transfer the ownership of state-run liquor stores to private entities over a period of time. According to Senate Majority Leader Dominic Pileggi, the measure faces stronger opposition in the upper chamber before it makes it to the Corbett's desk. The competing Senate bill, which seeks to "modernize" the existing model, does little more than tinker around the edges of the existing state-owned system.

Every Pennsylvania Democrat and five Republicans voted against the House measure. Many Democrats opposed the bill because the sale of state-owned liquor stores would eliminate positions within state government. Statistics available at the Pennsylvania Office of Administration reveal the number of state employees has dropped by more than 2,000 since Corbett took office in 2011.

"Voters want full privatization; they want convenience," says Nate Benefield, Director of Policy Analysis for the free-market Commonwealth Foundation. Benefield suggested that the only groups opposed to privatization are state employees and alcohol distributors. David Taylor, Executive Director of the Pennsylvania Manufacturers Association, said, "Getting Pennsylvania out of the booze business will send a message that positive change is possible in Harrisburg and that even the most entrenched self-serving interests cannot thwart the public will forever."

The argument against privatization goes something like this: "Eighty to 90 percent of our income comes from beer sales. How are we going to be making a living if everyone has it?" That's a quote from Mark Tanczos, president of the Malt Beverage Distributors Association of Pennsylvania. As Tanczos demonstrates, the resistance to liquor store privatization boils down to pure protectionism. 

That's a less than compelling argument in the eyes of Pennsylvania voters. A poll taken by nationally-recognized pollster Fairbank, Maslin, Maulin, Metz, and Associates in January revealed that Republicans and Independents support privatization by a more than two-to-one margin, while Democrats support it by 52%-43%. While Senate leaders don't seem to be in a rush to get something to Gov. Corbett, liquor privatization in Pennsylvania seems to be a matter of "when," not "if."

Booze reform in Tennessee

In Tennessee, consumers may buy wine and liquor at privately-owned retailers, but a push to allow the sale of wine in grocery stores has gained steam over the last few years. An organization made up of more than 28,000 Tennesseans called Red, White & Food is leading the charge in Nashville. This isn't the first time Tennessee has considered opening the market to competition. State lawmakers have attempted to legalize the sale of wine in grocery stores during previous legislative sessions, but have come up short. A renewed effort this session may make it to Tennessee Governor Bill Haslam's desk, but it still faces several hurdles.

"This year, the legislation would've created the ability for local governments to hold referendums to allow grocery stores to sell wine," says Jarron Springer, President of the Tennessee Grocers & Convenience Store Association, who is helping to push the legislation along in the General Assembly. (Currently, jurisdictions allow referendums for liquor-by-the-drink, package sales, and the establishment of distilleries. To get such a measure on the ballot, proponents must first garner enough signatures equal to 10% of the number of voters who participated in the last gubernatorial election.)

Asked about the greatest hurdle to passing wine in grocery stores by the end of the 2014 session, Springer said, "It's been a real challenge to get anyone from the [anti-wine in grocery stores] side to discuss this. Advocates want to bring opponents to the table to work through a compromise."

Springer also notes that the issue goes much deeper than wine in grocery stores. The complex nature of Tennessee's laws make it nearly impossible to alter one aspect of alcohol sales without disrupting another facet. The state governs how, when, and where wine and liquor may be sold, while localities decide how, when, and where beer may be sold. One proposed amendment to the Senate version would have expanded the hours of operation of liquor stores to include Sunday. Democrat Senator Doug Henry, who supports the sale of wine in grocery stores, does not support expanding the operating hours of liquor stores and would therefore not vote for an amended version of the original bill.

The proposed bill passed the Senate Finance, Ways & Means committee after an earlier attempt this session stalled the measure. Increased public pressure in recent years has brought wine in grocery stores closer to reality, and lawmakers may well find a solution by the end of this legislative session.

Other states are slowly moving toward liberalizing liquor laws. Washington recently privatized liquor sales by referendum, and Oregon may take the same path. Virginia Governor Bob McDonnell made the sale of state-owned ABC stores a priority in his 2009 campaign, but gridlock in the legislature halted that attempt for now. The trend, however, is in the direction of expanded consumer choice and reduced government interference. It's just going to take more time.

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  1. While Senate leaders don’t seem to be in a rush to get something to Gov. Corbett, liquor privatization in Pennsylvania seems to be a matter of “when,” not “if.”

    Maddeningly, observers have been saying that for decades. The legis-blobs just can’t bring themselves to do something that obviously makes sense and most people want.

    1. I think according to the last word from the most recent group of unelected bureaucrats was that it was their duty to ‘nudge us’ in the ‘right direction’.

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  2. Here in Washington, after kicking the state out the door of the liquor business, they crawled back in the window of Marijuana regulation.

    These people are like zombies… they never go away. I think they have to be burned with fire.

  3. If only we could get the Provincial Nabobs here in Ontario to privatize The LCBO and Beer Stores; the brands of beer they carry are selected by bureaucrats and reps for larger distributors. No amount of begging or complaining will get them to carry beers which are easily purchased in Quebec, Alberta, or the Maritimes. Fuck I hate this province.

    1. As a Canadian, I don’t believe you are allowed to use the word “Fuck” or “hate”. There are speech laws, you know.

      Meanwhile in America, I don’t buy beer unless it was made within 100 miles of my house. Why? Because the beer they make within 100 miles of my house is fuckin’ awesome. This is slowly becoming true in just about every state that hasn’t made it impossible for small microbreweries.

      1. It’s too bad that so many of those microbreweries, in attempting to make up for all of the watery piss on offer by the majors, have over-hopped their beer to the point of some of it being undrinkable.

        I’ll take your word that the beer within 100 miles of your place is good; on average, the micro-breweries are only batting just above the majors everywhere else.

        1. We have a microbrewery here that produces an outstanding American pale ale (with decent application of Cascade hops), but also a stout and porter that lack the pronounced hops.

          As much as I like hops myself, I actually find myself agreeing with you. It seems that most of the microbrews I’ve tried lately (the local one excepted) is approaching an IPA in hoppiness. It’s a bit overwhelming, especially if you like some variety.

        2. Most of the stuff that comes out of microbreweries is ale, most likely because ales take much less time and trouble to produce than lagers. So we are presented with a huge variety of over-hopped medicinal tasting ale and a shortage of crisp, clean lager.

          Consumers seem ok with that, so the brewers are making the correct free market economic decisions, but I wish it was otherwise.

      2. Confusingly I went on the reason cruise which docked in Victoria, British Columbia, and some of us went on a tour of “brew pubs” – bars tied to microbreweries serving local beers. One “docent” informed us that microbrews came into existence in 1982 when the microbrew law was passed. That seemed a very Canadian belief. But does this mean only in the wilds of west Canada have the created, via legislative fiat, microbrews, while Ontario languishes. Please inform.

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  4. Beer is not sold in state stores. The quote about beer is irrelevant.

    1. It does appear, though, that HB790 would do away with the restricted number of beer licenses, right? On top of the privatization of state-run stores?

      Help me understand.

    2. It’s not sold in stores either, you can only get beer at a bar or beer distributor…or in some rare cases, Giant Eagle (not sure why). We have a gas station here called Sheetz who give out these brochures asking people to petition to allow beer to be sold at grocery stores and gas stations.

  5. Nope, the Senate is going to bail, even though it’s 27-23 GOP. They have nerves of jelly. Plus other stuff I could tell you. Plus they’re all disracted about the massive scandal at the PA Turnpike, their patronage playground.

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    1. Even I am afraid to click it.

  7. As with pot, let’s make distribution of drugs and alcohol to minors, and driving while under the influence of either, major crimes (felonies?). Why else regulate their distribution?

    1. Lets just forbid them to government workers and elected politicians. Or perhaps require them to be under the influence at all times?

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    1. Perfect grammar fuckups, I would like to subscribe to your Newsletter.

  10. You’d think you would show a little more skepticism given what has been happening in VA. VA politics is a model of transparency compared to PA. There are a lot of people who will loose a nice subsidized gig if this goes through. As we have seen in VA, they will fight very hard.

    1. Will it run if let loose?

  11. The coverage of Pennsylvania is conflating a couple of things.

    The system here has two general tiers:
    1. Wine and distilled spirits. These are sold only at state-owned Wines & Spirits stores, with unionized workers and separately unionized managers, with some wineries selling their own wines directly through their own retail operations.

    2. Beer. Beer is sold in quantities up to (IIRC) two six-packs at any establishment with a liquor license. (aka “bottle shops”). If you want more than that, you have to buy it in case multiples or kegs from a beer distributor.

    The quote from Tanczos is clearly protectionist, but he’s talking about the state-established oligopoly on beer distributors rather than the state-owned stores. Pennsylvania HB790 would do away with that beer oligopoly, but it’s something a little different from the state’s directly run organization.

    I’ll believe that this has been opened up when it actually happens, and not a moment before. There are a lot of entrenched interests here, from the union that runs the workers in the state stores, to the union that runs the managers in the state stores, to the owners of beer distributorships (some of whom are grandfathered in locales that have since gone dry), to the restaurant owners who paid some $400k for a liquor license (what they cost where I live) and want to recoup the investment. You think voters matter? Right. Prove it.

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  13. I grew up in Philadelphia and came to Cleveland in 1978 to go to law school, and I was shocked to be able to buy wine and beer at a grocery store! You had to go to an Ohio liquor store to buy hard liquor, but State stores have been privatized since then, and service is better. However, even with privatization in Ohio, there are dubious distinctions: only certain stores are licensed to sell hard liquor as well as beer and wine, and, although you can purchase beer and wine with a credit card, you can only use cash to buy hard liquor! In addition, the State pretty much sets prices for all liquor, because the price of all liquor is pretty much the same wherever you buy. Ohio still has a long way to go!

  14. Jack Daniels and George Dickel both made in Tennessee, the former in Lynchburg the latter in Tullahoma, both around an hour south of Nashville. Lynchburg is in a dry county. You can’t buy Jack Daniels until you drive to the next county (Bedford, where you can go to the International Tennessee Walking Horse Show) over, but you can take a free tour of the plant and the caves and springs from whence they get their water.

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