If you thought a statewide liquor store shutdown would keep thirsty Pennsylvanians from softening the impact of the COVID-19 crisis with an adult beverage, think again.
Using the Commonwealth’s monopoly power over the liquor industry, Governor Tom Wolf swiftly cut off alcohol sales by closing Pennsylvania’s Fine Wine and Good Spirits stores. Without missing a beat, Pennsylvanians flocked to border stores in New Jersey, Delaware, and other neighboring states to stock up on libations. Some such stores were forced to close because folks from the Commonwealth had cleared the shelves. Think of all of that lost Pennsylvania revenue — even more important now that we are in a financial crisis.
Even worse, Delaware police officers now stop Pennsylvania drivers who pile into the state to purchase liquor. Yes, we’ve come to this point.
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In response to huge demand and outcry against Governor Wolf’s decision to make Pennsylvanians the only people in the country without easy access to liquor to smooth the effects of the coronavirus, the Pennsylvania Liquor Control Board (PLCB) announced last week it would open rationed sales online for a limited number of high-demand brands. A little late to the current e-commerce train — but at least this was a step in the right direction.
Poor planning, ineptitude and (frankly) a lack of the skills required to survive in a free market resulted in a website that continually crashed as residents rushed to place their orders. As of this writing, the site has closed until further notice, with Pennsylvanians’ cups running dry in a crisis.
If Pennsylvania’s wine and spirit sales were in the hands of privately owned enterprises, disgusted customers of a non-working website would flee to better-organized competitors. Of course, the PLCB is a government monopoly and customers here have no other choice. Private stores have mostly replenished grocery store shelves after initial panic buying of cherished staples.
If Pennsylvania’s wine and spirit sales were in the hands of privately owned enterprises, disgusted customers of a non-working website would flee to better-organized competitors.
Here in the Keystone State, however, the government-run PLCB turns back the clock, so that we are essentially reliving a Prohibition era which ended a century ago. This stunning breakdown in the booze industry should be the last shove we need to jettison our state-run spirit stores, for good.
Let’s make a positive change for our citizens and small businesses. An online petition asking the state to allow licensed establishments to sell liquor for take-out and delivery now has nearly 8,000 signatures. This is precisely the kind of action we can take to catapult Pennsylvania’s alcohol markets into the 21st century.
The alcohol sales reforms of 2016, championed by Republicans in the Pennsylvania Legislature, significantly improved the situation for consumers in the Commonwealth by making beer and wine available in grocery stores for the first time in decades. Even this change, however, came with price controls and quantity limits. Moreover, internet sales remain taboo even as the web makes thousands of other goods available quickly and affordably. Local breweries, wineries and distilleries swim upstream against onerous PLCB rules while entrepreneurs outside of PA cash in on a growing taste for specialty libations and the ease of internet sales. The whole system remains strange and antiquated. Why?
Lawmakers who support the state-controlled alcohol trade refer to it as an important source of revenue for the state. The truth about the PLCB is that it skims from the private economy to fund the organization’s politically powerful union, providing cushy jobs complete with pension and generous benefits to select constituents. It’s a patronage program.
In reality, the state earns only about a 9 percent profit margin, an abomination considering the scope of its monopoly power and the lack of price breaks or other benefits for Pennsylvania residents. Tim Holden, chairman of the PLCB, proudly points to the $185 million net income transferred to the state’s General Fund this year, but multiples of that figure would flow directly to the citizenry under a free system — and sales taxes would rise by more than enough to make up for any lost government revenue.
The truth about the PLCB is that it skims from the private economy to fund the organization’s politically powerful union, providing cushy jobs complete with pension and generous benefits to select constituents. It’s a patronage program.
Other states show us that we can break this stranglehold.
A 2017 study conducted in Washington state found that by switching from a state monopoly to private sales, the state saved $188 million in administrative and programming costs in just one year—close to a 77 percent savings. Washington’s population is half the size of Pennsylvania’s, meaning the savings in our state could reach half a billion dollars. And it’s not just money saved, but also better service. Customers reported greater satisfaction after the state relinquished control.
As intrepid Pennsylvanians cross state lines to slake their thirst, lawmakers should also get creative.
Now is the time to embrace innovative ideas that allow for competition and choice in beverages, just like in every other lawful business in a free market society. This is about more than enjoying a well-earned drink during a pandemic. Let’s give our residents the opportunity to flourish in an industry that should be 100 percent in the hands of private citizens. Cheers.
Andrew Abramczyk is a senior policy analyst for the Commonwealth Foundation (CommonwealthFoundation.org), Pennsylvania’s free market think tank.