Latest liquor privatization proposal would ask for voter input

A Pennsylvania Wine & Spirits store

A Pennsylvania Wine & Spirits store Commonwealth Media Services

The General Assembly is considering yet another bill that aims to privatize the state-run liquor business. This time around, however, the state lawmaker bringing up the issue wants to place the proposal in front of the people. 

The House State Liquor Control Committee held a hearing Monday to discuss state Rep. Natalie Mihalek’s House Bill 2272, which would create a constitutional amendment to privatize the commonwealth’s liquor system. 

Republican legislators have attempted to replace the state-run system with privately run liquor stores for decades. Gov. Tom Wolf vetoed the last proposal that reached his desk back in 2015. But Mihalek’s constitutional amendment would require both chambers of the General Assembly to pass the legislation in two consecutive sessions before it would go to the voters as a ballot initiative, meaning the earliest voters could decide on the issue would be May 2023.

Criticisms of the state-run system peaked early in the pandemic when liquor stores were forced to close. Citing the commonwealth’s control over the stores, such as regulations that require liquor to be purchased in limited quantities or at different cash registers than food, Republicans have called for the private market to take over the industry. 

“We are one of two states in the entire nation with a government monopoly on the sale of liquor and the only state in the nation to shut down the sale of spirits entirely during the pandemic,” Mihalek said in a statement. “The best way to move forward on legislation we know matters to our constituents is to allow them to have the final say on it.”

Opponents of privatization, including a representative of state store employees, argued that the Pennsylvania Liquor Control Board is a profitable system that provides good jobs and millions of dollars back to the commonwealth. Wendell Young, president of United Food and Commercial Workers Union Local 1776, representing more than 35,000 workers in supermarkets, state liquor stores and more, has been vehemently opposed to past privatization efforts. 

Testifying at the hearing, he said the proposal doesn't give voters a choice because it fails to outline what the transition to a private system would look like. If voters were to decide in favor of privatization, the constitutional amendment would take effect 18 months after approval. 

“Your proposal doesn't allow the voters to weigh in on any of those larger issues [outside] what your two sentences, less than 25 words, say,” Young said. “The choice you're giving them is to send you back to figure something out in the next 18 months. I think that if you really want to give the voters a choice, tell them what that thing is.”

PLCB Chair Tim Holden, who stressed the board doesn’t get itself into “the political fray,” shared the board’s fiscal numbers from the last year. According to its annual report, PLCB returned $764 million to the commonwealth’s general fund, as well as $29.2 million toward state police liquor control enforcement and $5.3 million toward state drug and alcohol programs. 

The Distilled Spirits Council, a trade association representing spirit producers and marketers, hasn’t taken a formal position on privatization but recognizes some of the problems within the commonwealth’s system. 

“Both the Distilled Spirits Council of the United States and the American Distilled Spirits Alliance strongly support control state systems around the country and work with these states to help implement market modernizations that support consumers. Unfortunately, the Pennsylvania system has many flaws that harm consumers and prohibit reasonable access for adults who choose to drink,” David Wojnar, senior vice president and head of state public policy, Distilled Spirits said in a statement. “We have tried working with the PLCB for years to implement common sense measures that address the severe lack of spirits stores for Pennsylvania consumers, the need for transparency related to pricing and the unfair fees placed on producers.”