Republican Leader Mike Turzai introduced Gov. Tom Corbett’s liquor privatization bill in the state House Tuesday. As the bill moves closer to a vote in the next few weeks, stakeholders weighed the pros and cons of the plan.
“This bill means the end of 3,500 good jobs,” said Richard Granger, strategic programs director of United Food and Commercial Workers Local Union 23, the organization representing Wine & Spirits store workers in Western Pennsylvania. “We say the current system supports good, family-sustaining jobs, whereas within the rest of the liquor industry in other states, that is not the case.”
House Bill 790 would get rid of more than 600 state-run liquor stores and allow for beer and wine sales in grocery stores, pharmacies and big-box wholesalers like Costco and Sam’s Club.
“The biggest pro is that it really puts Pennsylvania where 48 other states already are,” said Nate Benefield, director of policy analysis for the Commonwealth Foundation, a business advocacy group. “We are one of only two states where the government is in control of wine and liquor. In poll after poll, people see privatization and know what it means in other states: competition.”
While polls in Pennsylvania show overwhelming support, opponents warn of residents in other states that recently have gone through privatization suffering from buyers’ remorse.
“The big stores are only going to carry the brands that move the fastest,” said Jay Weiderhold, president of the Pennsylvania Beer Alliance, a trade association of beer wholesalers. “Most beer distributors carry hundreds, closer to thousands, but Costco only carries 15. When you get all these stores that don’t have the shelf space, you’re going to have to drive farther to get something like Ithaca Flower Power IPA.”
Weiderhold said the current system has allowed a thriving environment for microbreweries. He said Pennsylvania has one of the highest number of craft beer producers in the country.
“There’s over 100 brewers in Pennsylvania,” Weiderhold said. “They’re almost all small guys. The impact of letting an entity like CVS sell is, the smaller beers get a risk of being squeezed.”
Many opponents of the bill argue the public’s demand for privatization stems from a frustration born out of lawmakers’ resistance to previous attempts to modernize.
“We’ve been asking for (approval to sell) six-packs and 12-packs for years,” said Bob Sonson, owner of the Beer Stop on Chestnut Street. “But they’ve given distributors no help throughout the years. They say we’re antiquated, but it’s not because we haven’t wanted to change.”
Sonson, who has owned and operated his business for 40 years, said the legislation would put current beer distributors at a disadvantage. He said it would cost his business $150,000 for a six-pack license, as opposed to $17,000 for convenience stores.
“It’s unfair,” Sonson said. “I think it’s going to kill the beer industry. I don’t know why Corbett has a vendetta against us.”
Some arguments against the proposed privatization are a possible proliferation of “mom and pop” liquor stores in low-income areas and well-trained liquor store staff being replaced by minimum-wage workers.
“Who is more likely to sell alcohol to minors?” Granger said. “Do you care about that minimum-wage job, or do you want to be the hero at your high school?”
House Bill 790 would use $1 billion in revenue generated by the sale of state liquor system assets and licenses to sell beer, wine and liquor to fund educational grants in the commonwealth. But with the state liquor system generating nearly $500 million in profit last year, many contend that the state would be giving away one of its strongest assets.
Wednesday, state Sen. Jim Ferlo, D-Allegheny, circulated a co-sponsorship memo for a bill that would modernize the state liquor store system and the beer distribution system instead of privatizing sales. He said liberalized rules for both tavern and distributor sales, as well as increased independence for liquor store management, would fix many residents’ complaints.
“It’s a disingenuous public relations attempt at public approval to suggest that they’re going to fund public education” with the sale of state liquor assets, Ferlo said. “It’s a completely wrongheaded plan. Both Democrats and a number of Republicans are focused on a modernization approach.”