By a 2 to 1 vote, the Pennsylvania Liquor Control Board voted to require restaurant licensees to offer both beer and wine for on-premises single-serve consumption at the same time they are marketing these beverages for carry-out.

On Friday, September 11th, they published Advisory Notice 24 setting forth their interpretation of the Liquor Code and related court cases (most notably, a previous lawsuit brought by MBDA against Sheetz).

While R licensees are not required to sell all types of alcohol at all times, they must sell beer and wine for on-premises consumption at the same time they offer these beverages for takeout. In addition, the amount “offered for on-premises can be minimal so long as it is at least one standard size drink per customer per day”. This they define as 12 ounces of beer or four of wine.

Since food merchants have begun selling beer, they have made it clear they only want to sell for carry-out. Many R-based grocery and convenience stores created barriers so they would not have to sell for on-premises consumption. Their goal is simply to convert an R license into a takeout license. Some purposely do not offer beer in any quantity less than seven single cans, wine or spirits.

PLCB Chairman Tim Holden made the motion at the July 31 meeting. Mary Isenhour supported it and Mike Negra voted against. Mr. Negra’s opposition was expected since, earlier this year, he attempted to convince the Board that R licensees should be permitted to abandon on-premises sales – the policy position now being sought by Wal-Mart and other big box holders of an R. He was unsuccessful at that time.

Chief Counsel Rodrigo Diaz noted to the Board that the State Supreme Court had ruled (in the suit brought by the MBDA against Sheetz) that eating place licensees (E) must sell both for on-premises and off-premises. As to R licensees, he called this a “grey area” in the law. An ambiguity, of course, makes this kind of interpretation at this time perfectly appropriate for the Board.  Generally speaking, our courts support such interpretations by the agency that is designated to enforce the law, such as the LCB.

The MBDA believes the legal precedents are clear and the Board’s interpretation is the only one actually supported by case law. The Supreme Court said, in requiring Sheetz with an E to sell beer on-premises,“Interpreting Section 102 as permitting retail dispensers to sell beer solely for takeout, without such purchases being incident to the general sale of beer for consumption on the premises, affords the retail dispenser the benefits of a distributor license, without imposing the accompanying restrictions, i.e., it can act as a distributor by solely offering beer for carry-out purchase, yet not be burdened with the restriction of selling beer only by the case.”

The court added, “such interpretation infringes upon the market niche legislatively carved for the distributor”.In the Sheetz case, the court declined to afford administrative deference to the PLCB’s interpretation of the Code allowing only carry-out for two reasons:
“First, as pronounced herein, the PLCB’s construction of ‘retail dispenser’ is contrary to the clear legislative scheme regarding beer distribution. … Secondly, as MBDA cogently notes, there is nothing in the record indicating that the PLCB had considered and decided this issue at a point prior to the instant litigation.”

Unlike the PLCB at that time, this board is adopting a position consistent with the clear legislative plan regarding retail alcohol sales and, further, it is not being done at a point prior to any known litigation.In a later case brought by the MBDA, the Supreme Court commented that in the matter involving the E license Sheetz had “attempted to exploit a statutory ambiguity to upset the long-established paradigm for the sale of beer in Pennsylvania….”

This decision by the PLCB is consistent with the clear legislative plan regard retail alcohol sales in the Commonwealth. This policy statement obviously reverses any private opinions issued by the Board stating that “R licensees are not legally required to have on-premises consumption.”

Most importantly, this decision recognizes the market niche created for distributors under the Liquor Code and reinforces the case law MBDA fought to develop over the past 15 years.