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CONTRIBUTORS

OP-ED: PLCB has failed to make Pa.'s liquor monopoly a success

Shauna Boscaccy
Volstead Partners
A pedestrian walks past a boarded up Wine and Spirits store in Philadelphia, Friday, March 20, 2020. Pennsylvania Gov. Tom Wolf directed all "non-life-sustaining" businesses to close their physical locations late Thursday and said state government would begin to enforce the edict starting early Saturday. (AP Photo/Matt Rourke)

For years, protecting the over 3,000 full-time employees of the retail arm of the Pennsylvania Liquor Control Board was one of the loudest calls in opposition to privatization.

Its call was, and is, valid — these employees have faithfully served the commonwealth for 10, 20, 30-plus years and they make a family-sustaining wage, including almost $1 of benefits for every $1 they are paid. These employees deserve to be taken into account when conversations involving ending the state sale of liquor is discussed.

As of Friday, April 10, those employees everyone fought so hard to protect have ceased getting paid, all because Gov. Tom Wolf made an incomprehensible decision to shutter our state store system.

His reasoning is lacking — protection of workers and the public? They could do curbside pickup and have little to no interaction with customers. Higher demand will lead to overcrowding in stores? Across the nation, retailers are limiting hours and also the number of patrons in a store in a given time. Instead of duplicating these commonsense tactics, and keeping a workforce paid, he permitted the PLCB to reopen Pennsylvania’s e-commerce website, which has proven an absolute failure for Pennsylvania consumers and further embarrassment for the PLCB.

More:Pennsylvania to start curbside pickup at liquor stores

More:Pennsylvania to use liquor stores for online fulfillment

The PLCB has always been great at spinning — spinning their failures, spinning their inflated profit numbers (the collection of sales taxes isn’t profit). Now, with everyone stuck at home, and people fleeing to neighboring states in a health crisis, the PLCB’s inability to serve Pennsylvania consumers has never been more obvious.

As privatization legislation is introduced, many will scream about the valuable asset we will be turning over to private businesses. Let me be clear, we actually don’t own anything — Pennsylvania leases the retail stores and we pay three private businesses (one based in Ohio) to hold our liquor in bailment prior to shipping it to the stores. What exactly does Pennsylvania own? The monopoly — the monopoly is the asset.

In 2019, sales of wine and spirits in Pennsylvania were almost $2 billion, yet our monopoly’s profit was only $191 million. Inherently, monopolies are profit maximizers. Clearly, Pennsylvania’s bureaucracy has failed to maximize this asset, or dare I say, they simply don’t care to. Maybe this isn’t their fault, after all, our Liquor Code and system was built by a governor who sought to “discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible." Gov. Wolf has definitely decided to follow that edict in the past month.

In 2016, the state legislature made strides to modernize an outdated Liquor Code, including modernization requests the PLCB itself asked for to assist in propping up its failing monopoly. Many of those components fell short of estimates, and some of them haven’t even been implemented. Take the Customer Relations Management Program, which permitted the PLCB to offer incentives to Pennsylvania consumers. No surprise, given the current circumstances, the program has not been implemented. One excuse for not being able to implement a program to benefit Pennsylvania consumers? It wasn’t important enough, as the PLCB was using all its resources to update and upgrade e-commerce. 

In 2019, the PLCB spent $4 million on technological upgrades and expansion of the e-commerce warehouse from 4,500 to 30,000 square feet to make online sales more profitable and workable. How many Pennsylvanians have actually been successful in accessing the website and receiving an order? Very few. In the last two weeks, 3.16 million active users tried to access the site 22.87 million times. On average, the website is processing 1,800 transactions a day — 1,800 transactions a day for a population of 13 million.

One thing is clear — our administration, the PLCB, and the union that represents its workers have been given the opportunity to make this monopoly a success, and they have failed. They have failed the consumers of Pennsylvania and they have failed the workers on the front line of the retail stores. All because our governor made a unilateral decision to make 2020 the new 1920 in Pennsylvania. Thanks, Gov. Wolf, for finally privatizing our state stores.

— Shauna Boscaccy, is an attorney with Volstead Partners, which describes itself as providing "trusted legal experience for clients navigating Pennsylvania’s complex liquor laws."