Sample Law Paper on PA Liquor Control Board and the State System

After the 21st Amendment in 1933 that repealed the prohibition clause, Pennsylvania, formed the PLCB (Pennsylvania Liquor Control Board) with the primary goal of making the sale of alcohol in the state, “inconvenient and as expensive as possible” to discourage consumption. Accordingly, the agency operates as an archaic system with absolute control of alcohol sales in Pennsylvania. Compared to other state’s liquorcontrol boards, PLCB has the strictest laws and regulations. Majority of the statutes borrow from the prohibition laws. For example, the sale and distribution of alcohol is a state monopoly, heavily controlled by the agency. However, since 2010, there have been tremendous efforts aimed at liberalizing the alcohol industry. Currently, grocery stores enjoy a limited sale of alcoholic beverages- 6 pack beers, to customers using their restaurant license.

PCLB monopoly traces back to the formation of the independent body through a special resolution in 1st December 1933, three days before the official repeal of the 21st amendment. To date, hard liquor and wine sales strictly are solely under the agency’s control. However, in 2016, the state adopted Act 39 law liberalizing the retail sale of alcohol in select outlets such as restaurants. Currently, the Pennsylvania Liquor code mandates the PLCB to control the sales and distribution of “Hard Liquor” and wines. This means that the agency has absolute control, through its stores, on the amount and prices of all these alcoholic beverages.  The PLCB is run by three boards of directors appointed by the governor and approved by a two-thirds majority of the state legislative body. The boards of directors are in charge of making decisions on the management of state stores and regulation policies of the sector.

The legislative authority of the Board extends to the issuance of licenses to sell and distribute alcohol using a quota system. Under the quota system, the PLCB identifies the total number of licenses to be issued to a particular area depending on the total population, demand and per capita income. Also, the Board is in-charge of conducting public awareness programs on the adverse effects of alcohol. The education programs primarily function at ensuring that the consumption patterns of alcohol in the state. In sum, the PLCB legal authority covers three main areas: Control of the sale and distribution of liquor, Licensing of alcohol outlets and Conducting public education and awareness programs on the harmful effects of alcohol. The Board is also in charge of supervising all local referendums on regulations of the alcohol industry. For example, if a local municipality intends to adopt prohibition laws, the Board oversees the elections and based on the outcome of the vote, implement the new changes.

The PLCB autonomy and independence in the management of alcohol affairs in the state is one of the uniqueness of its blueprint. As such, the statutory codes that created the body ensured that its funding system was independent of control and manipulation of interest groups or politicians seeking to advance self-interests. The PLCB’s general fund receives contributions from license fees- Liquor License Fund, an 18% tax charged imposed on every alcoholic beverage sold in the state- State Stores Liquor Fund and 6 % state sales tax funds- State Stores Liquor Fund and annual Fiducial allocation from the Federal government- PLCB General Fund. The funding system guarantees independence and full autonomy in its operations.

According to the Auditor General’s report on the 2017, 2018 and 2019 FY income statement, the PLCB revenue has been on a tremendous increase. For the 2017-2018 fiscal year, the agency collected $ 2.59 billion, a 2.5 % increase from the 2016-2017 FY. These figures accounted for the revenue collected from the Boards 600 outlet stores run by the agency, the state sales tax and the 18 % tax on alcoholic beverages. During this period, it also received and processed 76,000 on-site permits for private entities operating alcohol counters for their customers in accordance to the 2016 Act 39 legal reforms assented to by Governor Wolf’s administration that allowed restaurants to sell alcoholic beverages. As a result of this increase in revenue, the Board increased its operating expenses by $ 64.2 million to fund enforcement and related activities.

Over the last two years, then net expenditures of the Board also declined mainly because of a change of the OPEB retiree pensions funding rules and contract fee for consultancy services. However, in comparison to other states, the Pennsylvania Liquor Control Board remains the highest consumer agency of alcohol products. Its income statement was higher than all other states in the US.

The state store system’s advantages outweigh its disadvantages. Thus, only minimal reforms are necessary. Strict state control alcohol system ensures absolute regulation and market balance of the sales. Also, the quota system allows an equitable distribution of stores per population, therefore creating a balance of demand and supply of the commodity. However, the monopoly of the PLCB makes the alcohol industry to price manipulation to suit the interest of the agency. An alternative system would be a hybrid system based on public-private partnership and control of the Board. Membership would be through appointments from all stakeholders including manufacturers, distributors and consumers to ensure a sense of balance.