The Pennsylvania Licensed Beverage and Tavern Association (PLBTA) members want answers to how House Bill 2272 will impact their business before throwing support behind it.
The bill, sponsored by Rep. Natalie Mihalek, R-Allegheny, intends to privatize liquor sales and get Pennsylvania out of the liquor business.
Chuck Moran, executive director of PBLTA, said privatization of Pennsylvania’s liquor business may be a good idea, but the statewide association representing licensed family-owned bars, taverns and restaurants has questions about how the State House bill could impact their businesses and their customers before they can support such a change.
Because of those questions, the PLBTA is taking no position on the bill but instead is offering to help plan for privatization so that small businesses don’t suffer unintended consequences if the legislation and constitutional amendment pass.
Tavern and restaurant owners are concerned that the proposal is too simple for a complex state liquor system. The main text of the bill reads, “The Commonwealth shall not manufacture or sell at wholesale or retail, liquor.” Beyond that, the bill gives the state 18 months to get out of the liquor sales business, he said.
The PLBTA Board of Directors recently agreed that the state should not be in the wholesale and retail liquor businesses, but said it is critical that, if the state does exit liquor sales, it be done in a way that protects small business taverns and licensed restaurants and their customers through meaningful protections and liquor code changes.
A major concern, Moran said, is what comes next as large well-funded players start working to rewrite liquor code. “While our lobby is active, it is small compared to many … and tiny compared to the major players (think Amazon, Walmart, Costco).
Historically, when a small business walks into a state store to pick up their liquor supplies, they’re paying the exact same price as the large chains no matter how much is bought. It allows the small business to sell at the same price/profit margin as a large chain.
“Like we see with malt beverages, we anticipate the large players getting incredible cost breaks that would allow them to sell drinks cheaper. My average member’s business is about 63% the sale of alcohol, and 37% food sales. So, they rely heavily on the sale of alcohol,” Moran said.
“Our Members have really taken a number of gut punches in recent years between Acts 39 and 166 of 2016 followed up by COVID mitigation orders, variants, supply chain issues, and workforce problems,” he said. “The last thing any family-owned tavern or restaurant needs now is a change in the system that puts these small businesses at yet another disadvantage at a time when they are already struggling to recover and stay open.”
Acts 39 and 166 hurt restaurants to the tune of hundreds of thousands of dollars when they lost the exclusive right to sell six-packs to go, according to the PBLTA. “Today, a beer distributor can sell at any level … growler to keg. Gas stations and grocery stores got into the business of selling six packs too. It was significant competitive intrusion for small businesses,” Moran said.
The PLBTA said a privatization effort should address problematic and antiquated liquor codes and should be done with the public understanding that that small business taverns and restaurants and their customers will benefit with a different wholesale and retail arrangement.
Moran said his members in philosophy favor privatization but are concerned that without meaningful protections for small businesses, privatization could place them at a disadvantage compared to large multi-state chains.
“We anticipate well-funded, major players including those from out-of-state would view HB 2272 passage as an opportunity to have a ‘redo’ of the liquor code,” he said. “As such, beyond privatizing wholesale and retail sales, the eventual privatization plan could impact all phases of liquor control, licensing, and supply.”
Customer convenience is also an issue for the PLBTA, as it has been seeking various customer related changes already, including increased discounts, cocktails-to-go and modernization of Happy Hour regulations.