Articles & Questions
We make every effort to post articles and Q&A's related to current issues in the liquor law and hospitality industry and other legal matters of interest
to our clients.
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WARNING TO ALL PHILLY BARS AND RESTAURANTS -
SERVSAFE IS MANDATORY
Many of you know that all Philadelphia bars and restaurants must have a Food Safety Certificate (also known as “ServSafe”) on the premises at all times. However, some of you may not know that a Certified Food Protection Manager must be on the premises AT ALL TIMES that you are open for business. Recently, many bars and restaurants throughout the Philadelphia area have been CLOSED by the Department of Health because the certified person was not on the premises during their inspection. That’s right… Not cited or warned...CLOSED!
To be safe, you should have as many employees as you can be certified so that at least one certified employee will be on the premises if a Health Inspector makes a surprise visit to your establishment.
Also, make sure your Health License (Preparing and Serving Food License) is renewed and up to date, and hanging on the wall.
The ServSafe course is a 16-hour course given by the City of Philadelphia. You must be re-certified every five (5) years. Details can be found at www.phila.gov/health/units/ehs/Food Protection_Offi.html. Or you can call the City Health Department (Office of Food Protection) at #(215)685-7495. After you complete the course, you have to then apply for a Food Safety Certificate from the City. The cost is $30.00. Please note that it may take 30 days to process the application. You must pick up the certificate in person and show photo I.D.
Another word of warning: Just because you think you are a “bar” and not a “restaurant” does not mean you are safe. According to the Pennsylvania Liquor Control Board, if you have a “Restaurant Liquor License” then you are a restaurant. You are required to meet all of the requirements of being a restaurant, which means that you must be able to serve food to at least thirty (30) patrons at all times that you are open for business. You must also have seating for 30 patrons. So, even if you are a “shot and beer” joint, you are a restaurant according to the PLCB. That means, according to the City of Philadelphia, you must have a Health License and a Certified Food Protection Manager on the premises at all times that you are open for business.
Contact us if you have any questions.
PHILADELPHIA “BOUNCER BILL” NOW BEING ENFORCED
The so-called “Bouncer Bill” was passed unanimously by Philadelphia City Council on December 8, 2011. The bill was sponsored by Councilman William Greenlee. The bill was signed into law by Mayor Michael Nutter on December 21, 2011. The law went into effect on April 19, 2012.
Although the law has been on the books since last April, very few licenses are aware that it exists. Well, they are about to get a schooling and a harsh dose of reality! The City’s Department of Licenses and Inspection is about to begin strict enforcement of the new law in the coming weeks. Fines for a single violation start at $2,000.00.
The law was enacted in response to what some considered a problem with bouncers beating up or mishandling customers. Some described a “Roadhouse” mentality in some establishments, by permitting untrained and over-zealous bouncers free reign in evicting problem customers. The new law requires bouncers and security personnel employed by “Covered Establishments” to undergo formal training and to register with the City. The training must be obtained from an accredited and approved third-party company within 45 days from the date of hire. Registration requires submitting a certificate to the City that the applicant has completed the training. The City can revoke the registration if the bouncer is convicted of a crime or fails to complete additional required training. The law prohibits anyone from being a bouncer if he or she has a criminal conviction involving danger to another person.
The City’s Department of L&I has announced plans to commence strict enforcement of the new law.
You can download a full copy of the Ordinance was going to http://legislation.phila.gov/attachments/12353.pdf
NEW HAPPY HOUR LAWS
The law has been changed to allow you to have up to four (4) hours of “Happy Hour” per day. The prior law allowed a total of only 2 hours per day. This will allow you to adjust your Happy Hours for slower or busier days. However, you must now post a notice of all Happy Hours at least seven (7) days in advance. The following restrictions still apply:
(a) You can still only have up to a total of fourteen (14) hours of Happy Hour per week. That is, you might want to have a 4-hour Happy Hour on Thursday, Friday and Saturday, but that would leave you only 2 remaining hours for the rest of the week.
(b) A “Happy Hour” is still defined as a period of time during which you may reduce the price of some or all of your drinks. You still cannot have “all you can drink” or “two for one” or any of the other prohibited promotions.
(c) You still must stop the Happy Hour at 12:00 Midnight. There still can be no promotions after Midnight.
(d) The new law does not make it clear if the hours still have to be consecutive, but it is clear that the prices cannot change during those hours.
A REMINDER ABOUT DAILY DRINK SPECIALS
The regulations of the Board dealing with Discount Pricing Practices say that you can have a "daily drink special" where you discount the price of one (1) specific type of alcoholic beverage all day, up until 12:00 Midnight. What constitutes a "type" of drink has been the subject of debate for several years. When it comes to beer, the PLCB has stated that you must offer a specific brand of draft beer, such as "Bud on draft" or "Coors Light bottles."
Here are some examples of what is and what is not permitted and when it comes to the daily drink special:
Allowed : Not Allowed:
Bud draft All draft beer
Heinekin bottles All imported beer
Rum and Coke All mixed drinks
Margarita All tequila
If you are planning to run a drink special, and you are not sure if it is legal, please feel free to contact us for clarification.
NO MORE PHILADELPHIA TAKE-OUT BEER PERMIT
The much-maligned City of Philadelphia Take-Out Beer Permit has been struck down. On July 11, 2011, the Commonwealth Court of Pennsylvania rendered a decision stating that the requirement of Philadelphia licensees to apply for an Off-Premises Sales Permit (“OPS”) from the City of Philadelphia’s Malt and Brewed Beverage Hearing Board and the Pennsylvania Liquor Control Board is unenforceable. Licensees located in Philadelphia County may now sell malt or brewed beverages for off-premise consumption (up to 192 fl. ounces) without the requirement of obtaining an OPS. That means no more $300.00 to the City and $300.00 to the state. That means no more ugly green posters. In fact, the Off-Premises Sales application has been removed from the PLCB website. Great news for all Philly retail licensees!!!
NEW OFF-PREMISES CATERING PERMIT
Here’s one that came out of nowhere. Did you ever wish that you could serve liquor at a catered event off your licensed premises? Now you can! All hotel, restaurant, and eating place licensees can now apply for a special permit that allows them to cater functions off the licensed premises, where they can serve food and liquor. A “catered function” is defined as the furnishing of food prepared on the premises or brought onto the premises already prepared in conjunction with alcoholic beverages for the accommodation of a person or an identifiable group of people who made arrangements for the function at least 48 hours in advance. The fee is $500.00 per year for the initial permit. No further fee will be charged for any subsequent permitted events issued to the applicant. Alcoholic beverages may only be provided during the hours the licensee can normally sell such beverages (until 2:30 A.M. for most licensees). All servers at the catered site must be certified in compliance with the Responsible Alcohol Management provisions (“RAMP”). Any catered function cannot last longer than one (1) day, and no more than fifty (50) such events may be held by the particular licensee in any given year. A catered function cannot be held on premises already licensed. Only licensees holding an active license can apply for the permit. No permits can be issued to a location that is subject to a pending license renewal objection by the Board, or a pending license suspension, or the one (1) year prohibition on the issuance or transfer of a license due to a citation action. Written notice of the catered function must be provided to the local police or, if none, to the Bureau of Liquor Control Enforcement, at least forty-eight (48) hours in advance of the function. No alcohol may be taken from the permitted location, but the applicant may transport alcohol to and from its licensed premises. Retail licensees may sell wine, liquor, and malt or brewed beverages by the glass, open bottle, or another container, and in any mixture for consumption on the permitted premises. Eating Place licensees may only sell malt and brewed beverages on the permitted premises.
A REMINDER ABOUT NOISE
The regulations of the Pennsylvania Liquor Control Board state that the sound of music or other entertainment cannot be heard outside of the licensed premises. This means that if an agent of the Pennsylvania State Police Bureau of Liquor Control Enforcement stands outside of your bar, at your property line, and he can hear your jukebox, that is a violation and you will likely receive a citation. Such citations carry penalties ranging from $50.00 to $1,000.00 for the first offense. What is more troubling is the possible cumulative effect of such citations. If you get too many violations against your license the Board can decide not to renew your license—which means you are out of business.
Many people have complained that this law is unfair since it does not carry any requirement that the noise actually bothers someone, or that the music is of a certain decibel level. Efforts have been made to change the law, to no avail. The law is what it is. Licensees should be cautious and make sure that their music or other entertainment cannot be heard from the outside.
ATTENTION ALL BAR MANAGERS! RAMP IS NOW MANDATORY
It is now MANDATORY for all bar managers to have RAMP training and certification. Effective as of February 20, 2012, Act 113 of 2011 has made it mandatory for all Board-approved managers to take the Responsible Alcohol Management Program (RAMP) for Owners/Managers within 180 days of the date they are appointed as manager. If you fail to comply, you can receive a citation from the Pennsylvania State Police, Bureau of Liquor Control Enforcement.
Despite this requirement for Managers, we recommend that all employees take the RAMP program. It is simply good for business. RAMP was created by the Pennsylvania Liquor Control Board to help licensees and their employees to serve alcohol responsibly. RAMP offers practical advice on such subjects as:
How to detect signs of impairment and intoxication.
How to effectively cut off service to a customer who has had too much to drink.
How to identify underage individuals, and deter minors from coming into the bar in the first place.
How to detect altered, counterfeit, and borrowed identification.
How to avoid unnecessary liability.
How to help reduce alcohol-related problems (underage drinking, vehicle crashes, fights, etc) in your community.
Q. I hold a restaurant liquor license. I have a Sunday Sales Permit. On Sundays we have an early brunch which starts at 8:00 A.M. We serve such items as scrambled eggs, sausage, bagels and bread, cereal, etc. A friend told me there has been a change in the law that allows you to serve liquor earlier than 11:00 A.M. on Sundays. Is this true? Can I serve Mimosa (orange juice and champagne) at my Sunday brunch?
A. Your friend is correct that there has been a recent change in the law dealing with serving alcohol on Sunday. The old law was that you can serve alcohol on Sunday, if you have a Sunday Sales Permit, starting at 11:00 A.M. The new law says that you can serve alcohol even earlier, starting at 9:00 A.M., if you serve the alcohol with a meal. So, if you start your Sunday brunch at 9:00 A.M. instead of 8:00 A.M., you can serve Mimosa or any other kind of alcoholic beverage for that matter.
It is important to note that the earlier serving hour only applies if you are serving alcohol with a meal. A meal is defined as “food prepared on the premises sufficient to constitute breakfast, lunch or dinner.” This does not include snacks, such as pretzels and potato chips. Your Sunday brunch described above clearly meets the definition of a meal.
*If you do not hold a Sunday Sales Permit, you may not serve alcohol on Sunday at all.
*If you hold a Sunday Sales Permit and do not offer a meal, you may serve alcohol after 11:00 A.M.
*If you hold a Sunday Sales Permit and offer a meal, you may serve alcohol starting at 9:00 A.M.
NEW NOISE LAW
Q. I have heard that there has been a change in the law concerning noise violations. Is this true?
A. Yes. As a result of changes to the Liquor Code enacted in December of 2011, the noise law has been changed. Previously, the regulations of the Pennsylvania Liquor Control Board (Section 5.32) stated that it is illegal for the sound of your music or other entertainment to be heard outside of your licensed establishment. This meant that if a BLCE Enforcement Officer stood directly outside the door of your bar, and he or she could hear your music, you could receive a citation. This has been a constant worry for bars that have music because it is often impossible to keep the sound of your music from escaping from your building, particularly as patrons enter or exit. These “noise citations” have been known to accumulate to the point where the Board could object to the renewal of the license because of the number of citations. Bars have been closed because of these noise violations.
For years lawyers and industry advocates have been fighting for a change in the law in this area. We finally made some progress. The new law adds a section to the Pennsylvania Liquor Code entitled “Noise” and provides that: “A licensee may not use, or permit to be used, inside or outside of the licensed premises, a loudspeaker or similar device whereby the sound of music or other entertainment, or the advertisement thereof, can be heard beyond the licensee's property line.” (Emphasis added). We are not sure exactly what this means, or how it will be interpreted in the future. However, it does appear that the BLCE Enforcement Officer must stand outside the property line, not just outside of the building, in order to hear the offensive noise. Of greater importance is the fact that the law now says that the Board may not use such noise violations as the sole basis for objecting to the renewal of a license unless there have been six (6) noise citations adjudicated against the licensee within a twenty-four (24) month period.
This is welcome news for bars with entertainment.
AGE COMPLIANCE PROGRAM – A "TRAP" FOR LICENSEES?
Age Compliance Checks have been around for quite some time.
The purpose of the Age Compliance Program, at least initially, was to educate licensees that it is illegal to serve underage persons, no matter how old they look. However, recently some licensees have complained that these checks are being used as sting operations, where police use older-looking teenagers and other young adults to act as decoys in an attempt to catch and cite unsuspecting licensees.
The law authorizing and creating the “Age Compliance Program” was signed by Governor Schweiker on December 3, 2002. The law authorized the Pennsylvania State Police, Bureau of Liquor Control Enforcement (“BLCE”) to hire and train minors, aged 18 to 20, to conduct “compliance checks” at liquor licensed establishments. The program was supposed to be educational in nature. It was modeled after the compliance checks already being conducted for tobacco sales, where underage persons would try to buy cigarettes. If the proprietor agreed to sell the cigarettes to the minor, the proprietor would be issued a warning. We have all seen the commercials. The purpose was to educate proprietors that is it illegal to sell tobacco to minors and that there are dire consequences for violating the law.
Similarly, the idea of the Age Compliance Program was to check liquor-licensed establishments to see if they were complying with the law and to see if they were using a proper age verification system. Often, older-looking minors would be used to impress upon the licensee that it is illegal to serve a minor no matter how old he or she looks. If the licensee was found not to be in compliance with the law, that is if the minor was served alcohol or was not properly carded, the licensee would be issued a verbal and written notice of non-compliance.
The bill, House Bill 850, which was sponsored by Rep. Paul Clymer (R-Bucks), was passed unanimously in both the House and the Senate. “This is another tool in our arsenal to try and save lives,” said Clymer. The measure had strong support from both MADD (Mothers Against Drunk Driving) and PAUD (Pennsylvanians Against Underage Drinking). Alcohol compliance checks had already been used in most states of the U.S. for many years. According to many observers, the program was expected to be educational in nature, and that through education, voluntary compliance with the law would be increased, fewer minors would be served, and fewer injuries and deaths to minors would be experienced throughout Pennsylvania.
The law officially went into effect in February of 2003. However, regulations detailing how the program would work were not implemented until November of 2004. The program did not really start in earnest until about January of 2005. During that extended period of time, nearly two years, the program has turned from an educational program into an enforcement program.
Under the program, which is run by the BLCE, minors aged 18 to 20 are trained as “Underage Buyer Volunteers.” They are recruited mainly from college campuses. These “volunteers” enter licensed establishments, under the direct supervision of an adult BLCE officer, and attempt to purchase alcohol. Many licensees have reported that the volunteers look like they are 25 or 30 years old.
Under the program as initially conceived, if the licensee served the minor or failed to properly I.D. the minor, the licensee would be given a verbal and then a written notification as to whether or not the licensee passed the compliance check. For most observers, it was not expected that citations would be issued or that arrests would be made. However, in practice, many licensees are complaining that these compliance checks are being used as nothing more than sting operations, resulting in citations and arrests.
According to the official records of the Pennsylvania State Police, 284 compliance checks had been conducted as of February 2006. Of these, 183 licensees have been found in compliance and 101 licensees have been found not in compliance. What the statistics do not show, however, is how many of these 101 licensees have been issued citations or have been arrested. It is believed that most if not all received citations.
Furthermore, some licensees have complained that the Age Compliance Program is an entrapment since the BLCE appears to use older-looking minors to enter the establishment and ask to be served.
I have written many articles on the consequences of serving alcohol to a minor. It is the most serious violation a licensee can have on its record. This Age Compliance Program is just one more reason to immediately re-examine your age verification system to make sure minors are not served in your establishment.
ARE YOU ADEQUATELY INSURED?
We live in a highly litigious society. People today tend to sue every time they are injured, regardless of the circumstances. Bars, restaurants and other business owners are particular targets for lawsuits. The number of lawsuits tends to rise in a difficult economy. I personally have seen the number of “frivolous” lawsuits increase in recent times. As a result, it is very important to be adequately insured.
Business owners are often unaware that the insurance that they have is inadequate. They pay for insurance year after year, and are shocked to find that when they have a claim the insurance company denies coverage for one reason or another. Below I have outlined some of the available business insurance coverages and how they may be applicable to your particular business:
Property insurance covers the building and its contents. It insures against fire and other casualty. There are different forms and types of coverage, such landlord and/or landlord and tenant coverage. For the business owner, this policy is usually secured as part of a standard business owner's policy, tailored to fit your individual business. You need to make sure the amount of your coverage is sufficient to cover the value of the building and its contents. You also need to look into whether you will need glass breakage coverage, signage and landscaping. You also need to look into coverage for wind, flood, natural disaster, earthquake, wildfire, and other risks that may affect your area. Almost all policies exclude coverage for nuclear accidents, terrorism, and the like. Also, make sure your deductible is appropriate. The higher the deductible is, the lower your premiums will be; but be sure that you can afford the deductible in the event of a loss.
Of primary concern is whether the policy covers replacement cost or actual cash value. ACV covers only the depreciated value of the item of property, whereas replacement cost covers the actual cost to replace the item. Obviously, replacement cost coverage is much more expensive, but it is preferred if you want to replace the lost or damaged items at today’s current cost. You also want to explore whether the policy covers necessary upgrades caused by new building code compliance. For example, the City of Philadelphia Building Code is periodically updated, and in the event of a loss you will have to comply with the new Code when re-building.
Liability insurance is the most expensive type of coverage. This type of coverage insures you against claims and lawsuits for injuries to patrons and other persons on or about your business. In Pennsylvania, a patron is called a “business invitee,” and is owed the highest duty of care. Because you are profiting from that person being in your establishment, you are required to exercise reasonable measures to insure that person’s safety. A business owner may be held responsible for injuries to patrons due to slip and falls, defects or dangerous conditions on the premises, injuries due to assault and battery, etc. Insurance for these types of claims is called “General Negligence” or “General Liability” insurance. Bar owners may also be held liable for injuries occurring on or off the licensed premises if a patron is served while “visibly intoxicated.” These are sometimes called Dram Shop claims. Insurance for these types of claims is called “Liquor Liability” insurance. Liquor Liability insurance is the most expensive type of insurance, but it is a must-have if you sell alcohol to the public.
General liability policies usually contain a Liquor Liability Exclusion, which means the policy does not cover Dram Shop claims. You must have separate Liquor Liability coverage to gain this protection.
Make sure the amount of your coverage is appropriate. Your lease agreement may dictate the minimum amount of coverage you must maintain. Again, make sure your deductible is appropriate. The higher the deductible is, the lower your premiums will be; but be sure that you can afford the deductible in the event of a loss.
There a number of exclusions contained in liability insurance policies that you must be cognizant of. The most important exclusions to look out for are:
Assault and Battery Exclusion. This exclusion provides that no coverage will be afforded if the injury to the patron arises from an assault, such as a fight between patrons, or injury which occurs while a patron is being evicted, or a stabbing other intentional injury. Since most claims against a bar owner involve either intoxication or an assault, you should make every effort to obtain this coverage.
Firearms Exclusion. This exclusion has been appearing in more and more policies lately, and many business owners are unaware of it. This excludes coverage for any injury that occurs as the result of the discharge of a firearm, whether intentional or accidental. Given the fact that more and more people these days seem to be settling their differences with a firearm, you should seriously consider this coverage.
Punitive Damages Exclusion. This excludes coverage for punitive damages that might be awarded against the insured for willful or egregious conduct.
CAVEAT: Insurance companies often take the position that no coverage will be afforded to a bar owner in a case where a patron is injured by an assault or a firearm by someone who is intoxicated, even where there is Liquor Liability coverage, if there is an Assault and Battery Exclusion or a Firearms Exclusion contained in the policy. That is, even though the patron was intoxicated, if the injury resulted from an assault or a firearm, no coverage will be afforded. Given that most claims against bar owners these days result from an assault or a firearm, the insured must be acutely aware that these exclusions exist, and should make every effort to obtain these coverage endorsements.
Employee Theft Coverage
This type of coverage insures you in the event that an employee steals from you. Given the unfortunate reality of employee theft, this coverage should be considered.
Workers Compensation Insurance
This type of coverage is required of most employers by state law. It requires you to purchase insurance in the event of an injury to an employee. If an employee is injured while on duty, and you do not have this coverage, not only will you be held liable for his injuries, wage loss and medical bills, but you could be criminally charged for not carrying this insurance.
Business Interruption Insurance
This insurance covers your loss of business income in the event of a covered casualty, such as a fire. Given that property damage claims can take months to resolve, you may need this coverage to recoup your business losses while the claim is being adjusted and construction is on-going.
DENIAL OF COVERAGE, BAD FAITH and DECLARATORY JUDGMENT ACTIONS
An insurance company is required to act in good faith in covering
claims under an insurance policy, and to defend the insured if they are
sued in court. If the insurance company fails in this duty, they can be
held liable for damages in a lawsuit brought by the insured for
Recently we have seen a drastic increase in insurance companies denying claims outright, or attempting to get out of coverage after they initially provide coverage and defense. There are four (4) options for an insurance carrier once they receive notice of a claim. These are:
1. Coverage. They can cover the claim, and defend against the claim if a lawsuit is filed against the insured.
2. Non-coverage. They can deny the claim for one reason or another. Reasons for non-coverage include raising one or more exclusions contained in the policy, alleging that the policy expired or is somehow void or not in effect (for example non-payment of premium), or alleging that the insured misrepresented some fact in the application process thereby voiding the policy.
3. Coverage under a Reservation of Rights. This is where the insurance company provides coverage, but sends a letter to the insured that it is reserving its rights to deny coverage later if it is determined that a policy exclusion or some other reason for non-coverage applies.
4. Declaratory Judgment Action. In this case the insurance company initially covers the claim and defends the insured, but then files a lawsuit asking the court to “declare” that the policy is void or does not provide coverage for some reason.
If the insurance company chooses options 2, 3 or 4 you need to contact an attorney immediately to protect your interests. We have over a quarter century of experience in defending lawsuits and going against some of the largest insurance companies in the Country.
PLCB ISSUES ADVISORY NOTICE ON BEER DELIVERY BY LICENSEES
On March 11, 2015 the Pennsylvania Liquor Control Board issued new guidelines on beer delivery by licensees who apply for a “Transporter For Hire License.”There are three kinds of Transporter for Hire licenses. These are Class A, Class B, and Class C.
For most licensees in the state, Class B licenses are the way to go. A Class B license will allow you as a retail liquor licensee to deliver to your clients food as well as beer for take-out to their homes. There are certain restrictions that apply. For example, the purchase of the beer as well as the food must be made over the telephone or in person at the liquor licensed establishment by credit card, debit or cash. That is the point of sale. The goods, being the food and beer, can then be delivered to the client’s home. In most instances this involves a client calling up your establishment and ordering for example a pizza and a six-pack of beer. The customer pays by credit or debit card for the full amount of the food and beer. Your delivery person can then deliver both the food and the beer to the person’s home.
Highlights of the guidelines are:
* A retail licensee cannot accept payment for the malt/brewed beverage at the time of the delivery. The sale must be completed on the retail licensee’s premises.
* There are no limits on how much malt/brewed beverage a Transporter-for-Hire licensee can transport, but a single sale by a retail licensee cannot exceed 192 ounces (two six-packs).
*Deliveries can occur at any time, but sales must take place before 2 a.m.
* While food and non-alcoholic beverages can be included with the delivery of malt/brewed beverages, it is not required.
*Deliveries can only include items that are preordered by the customer, so a licensed transporter cannot use his/her vehicle to sell other items with the alcoholic beverages at the same time. For example, a licensed transporter cannot use its vehicle as a food truck.
* The person making the delivery must be at least 21 years old. There must be written evidence the driver is an employee or a contractor of the licensed transporter.
*The delivery vehicle must be identified with the Transporter-for-Hire licensee’s name, address, license number and the licensing identification (LID) number in letters at least 2 inches tall on each side of the vehicle. Magnetic signs are allowed.
*The Transporter for Hire licensee is required to check the ID of the person accepting the delivery, and the licensee must maintain records documenting that verification.
* The sale and/or delivery of alcohol to someone under the age of 21 years old or a visibly intoxicated person is a violation of the Liquor Code, and the retail licensee is liable for any violations.
* A person or entity that holds multiple retail licenses needs only one Transporter-for-Hire license to cover all of its licensed establishments.
The text of the press release can be found at:
If you are interested in obtaining a license to deliver beer to your customers, call us at #(215) 568-2235 or email us at WBMorrin@aol.com.
NEW VIDEO GAMING BILL?
We are still awaiting any real change to the laws regarding giving bar owners the opportunity to operate video poker machines in their establishments.
Despite the hard work of such associations as the Pennsylvania Tavern Owners’ Association, and with the support of legislators such as Rep. Pashinski (D-Luzerne), we still have no new Video Gaming Bill which would legalize the use of video gaming machines for video poker, blackjack, bingo, keno, and other games in establishments who hold a liquor license, including restaurants, bars, taverns, hotels, and clubs.
Regardless of your political affiliation, or your views on gambling, it is imperative that you contact your local representative (councilperson, representative, congressman, mayor, senator, or governor), and state your firm belief that reform in this area should be passed.
It is not the total answer to our problems, but it is a first step in assisting bar owners to remain viable and competitive in this difficult economy.
LEGAL NEWS AND ALERTS
Gov. Wolf’s New PLCB Liquor Law: A Swing and a Miss
PRESS RELEASE, June 17, 2016.
Copyright, William B. Morrin, 2016
Pennsylvania Governor Tom Wolf signed House Bill 1690 on June 8, 2016, which is due to take effect in 60 days. His camp has touted it as the most progressive change to the Pennsylvania Liquor Code since Prohibition. It is not. This attempted swing at the fences toward privatization is in reality a total whiff.
Wolf said after signing the bill: “This is truly a historic day for Pennsylvania and the most significant step the commonwealth has taken to reform our liquor system in 80 years.” The bill promised substantial reform, more convenience for consumers, and financial benefits to business owners. The bill delivers nothing but a sell-out to the casinos, big business and the PLCB itself.
The new law, House Bill 1690, is advertised as allowing wine sales to some, and beer sales to others, in grocery stores, gas stations, and other localized businesses, as a means to provide more convenience to consumers. But behind the façade, the new law does little to achieve that lofty goal.
First, there is no new “beer license” for gas stations, grocery stores, or convenience stores. Anyone who wants to sell beer must still buy an “E” (Eating Place Retail Dispenser or beer-only) license on the open market, and apply to transfer that license into the location. Nothing about that process has changed. The only change is that gas stations, which previously were prohibited from applying for a beer license because of their proximity to “liquid fuels,” can now do so. However, like everyone else, they will have to buy an “E” license on the open market, apply to the PLCB for transfer, deal with all of the zoning issues and community protests, and risk denial of the license due to community opposition. To propose that there is any real change in this area of the law is misleading at best.
As far as wine sales, only “R” licenses (restaurants) and “H” licenses (hotels) may apply for the “Wine Extended Permit.” The new law will allow such restaurants and hotels, for a fee of $2,000.00 to start (there is an annual renewal fee equal to 2% of the cost of wine bought from the state store system over the previous year), to sell wine bottles for take-out at the rate of 4 bottles per person in a single transaction. Sounds good, but think about it. How many restaurants do you know that have the room to stock the amount of wine to satisfy the educated and sophisticated consumer of today? It is impractical. Further, the wine must be purchased from the state store system, so the mark-up will be minimal, and you cannot sell wine for take-out after 11:00 P.M. Very few of the restaurants that I represent will find this concept economically feasible. I truly hope I am wrong, and this becomes an economic boom for restaurants in this Commonwealth, but I sincerely doubt it.
The licensee blatantly left out of this new law is the “D” (Distributor) licensee. Beer distributors are not qualified to purchase the Wine Extended Permit, despite the fact that they generally have the physical space required to maintain a sufficient inventory of wine products to satisfy today’s cultured wine consumers. If the legislature truly wanted to allow private business to compete with the state store system, it would have allowed “D” licensees to sell wine and even liquor. It makes no sense.
The law also touts that “E” (beer-only) licensees will be able to convert their licenses into an “R” (restaurant) license, and therefore be able to sell wine, for a modest fee of $30,000.00, payable to the PLCB. However, this does not apply to cities of the first class. By the way, the only city of the first class in Pennsylvania is Philadelphia. So, the only city not included in this new law is the largest city in the state, the City of Philadelphia. Wow, really? Philly is screwed again.
So, let’s take a real look at what the law does accomplish:
*It expands the ability to apply for Casino licenses, for a modest $1 million application fee, with renewal fees of $1 million per year for the first few years and then $250,000.00 per year after that. Most noteworthy, and disturbing, it allows Casinos to sell liquor, beer and wine 24 hours a day, 7 days a week, and to give away beer and wine free of charge at special events. No other licensee in the state can do that.
*It increases the fees and taxes for nearly all licensees and applicants for new licenses and permits, with those fees payable to the state general fund. License renewal fees will increase by $700.00 per year. Safekeeping fees increase from $5,000.00 to $10,000.00 per year.
*It grants the PLCB new powers to discount prices and make more money for the state coffers.
*It allows the PLCB to now deliver products, taking away business from the Transporter for Hire Licensee.
*State stores will have more autonomy in setting their hours. No other licensees, except casinos and state stores, have been given expanded hours under this bill.
*State stores are now allowed to sell lottery tickets, providing more money to the state.
*Breweries and Limited Wineries and distilleries are given expanded rights (too complicated to describe here, and not applicable to the average licensee or the average consumer).
*Special liquor order (SLO) mark-ups are reduced to 10% instead of 20%.
The law does include some crazy “off the wall” provisions:
*Canadian drivers’ licenses are now permitted as proof of age.
*Licensees may now sell alcohol from 7:00 AM to 2:00 AM on Groundhog Day.
* Mug Clubs are now permitted. This enables the licensee to charge an annual fee to members of the club, who can use designated drinking containers for beer at discounted prices, without impacting their “Happy Hour” or daily drink specials. This raises serious health code issues as consumers may bring in their own “mug” to be filled with beer by the proprietor.
*Powdered alcohol is now illegal.
*A new “airport liquor license” is created, allowing alcohol sales from 5:00 AM to 2:00 AM.
*Minors are now permitted to “frequent” ski resort licensed establishments.
There are a number of goofy additions to the PA Liquor Code which I will not discuss here, mostly because they do not affect the majority of the average consumer, or the average business.
But, all in all, there is not much there to justify all of the hype. The House Appropriations Committee has estimated that the bill will bring in an additional $150 million in revenue to the state, but the impact on consumers and private business is very hard to predict.
In my view, this new law does little for the “mom and pop” bar or restaurant operator, who needs relief the most. It also does very little for consumers, who patiently await a “new age of privatization.” House Bill 1690 is, at its core, a failed attempt at real change, disguised as a political triumph.
I have said that the Pennsylvania legislature is engaged in a slow chipping away of the total control of liquor sales by the state, and that any change is a good thing. But anyone who had read and understands this law knows that it is a swing and a miss.
By: William B. Morrin, Esquire