Update on the House Liquor Control Committee Hearing on HB 1644

Aug 28, 2019 | News

Addi­son, PA: MBDA Third Vice President Arun Patel testifies at a House Liquor Control Committee hearing on HB 1644.
With roughly a dozen fellow beer distributors in attendance, MBDA Third Vice President Arun Patel testified to lawmakers on Tuesday about the impact HB 1644 would have on law enforcement, consumers and locally owned distributors.

Held by the House Liquor Control Committee, the hearing focused on a HB 1644, sponsored by Rep. Matt Dowling that would allow Big Box stores like Wal-Mart to operate an R license like a Distributor for a $25,000 fee. This proposal would include the following:

The sale of unlimited numbers of 15 packs and smaller packages.The sale of unlimited quantities of wine.Elimination of tables and chairs. Option to not serve alcoholic beverages on premises.Unlimited product placement and registers throughout a store.

Testifiers at the hearing include Rod Diaz Chief Counsel for the Pennsylvania Liquor Control Board, Wendell Young of the United Food and Commercial Workers Local 1776, Arun Patel Third Vice President of MBDA and Mick Owens from the Pennsylvania Restaurant and Lodge Association.

Arun pointed out that HB 1644 would hurt consumer convenience by quickly reducing the selections that are available in the marketplace, primarily through distributors. Distributors by far offer the best selection of beer in any local marketplace. As the market shifts away from distributors, who compete among themselves and with other segments of the industry, to big box, grocery and chain convenience stores, the product mix will shrink to selling a few fast-moving products. Thus, “consumer convenience” will decline. 

The committee was particularly interested in Arun’s efforts in dealing with “fake IDs”. He brought along 8 that he had confiscated during the previous weekend and he noted that they all “scanned”.  He spoke on how specialty retailers, such as distributors, are especially diligent in not selling to minors. 

Wendell Young IV, president of UFCW Local 1776, said HB 1644 would create in the grocery store a “logistical nightmare for enforcement”, allowing “minors to have easier access to the product and creating a simpler way to shoplift or consume alcohol products in the store.” He noted that it creates a “real strain on retail grocery employees who will now have an added level of responsibility”.

He concluded by saying “HB 1644 is another case of giving advantages to large, multi-state, wealthy retailers over small mom-and-pop businesses.” He added that “for beer distributors and other family-owned businesses in Pennsylvania’s alcohol market, HB 1644 is another piece of legislation that leaves them behind and puts them at a competitive disadvantage.”
Mike Owens of Mick’s All American Pub, spoke in defense of a portion of the bill to allow beer sales of more than 192 ounces in a single transaction, but without any additional fees. He explained that this would make it convenient to serve late night customers who want to buy a lot of beer.  Oddly, the pub does not advertise the availability of takeout beer on its web site. He recommended higher fees based on store size – $25,000 to $100,000.

Owens complained how business was hurt by Act 166 of 2016 “to allow distributors to sell malt and brewed beverages in any size and there was no extra cost associated with the privilege.” A member of the panel, with experience in beer marketing, pointed out that it was grocery stores – not distributors selling singles, 6’s and 12’s – that created a negative impact on the market for takeout beer, whether served by an R or a D licensee.

Arun Patel reminded the panel that Act 166 was brought about because of MBDA’s reaction to Act 39, which allowed restaurants to sell wine to go. The General Assembly intended Act 166 to level the playing field (see box).  
Act 39 of 2016, which was opposed by both MBDA and UFCW Local 1776, created the “wine expanded permit”. In addition to the Food Merchants Association, its advocates included the Restaurant Association, and its passage was heralded by them saying, it was a “monumental first step” in improving the system.

Today, the vast majority of the 1000 plus expanded wine permits are held by grocery and convenience stores. Most true restaurants and taverns find them too expensive and cumbersome because of the limited 8% discount.

If you would like to watch the full House Liquor Control Committee hearing please click here!

Our thanks are extended to Arun Patel for testifying, our MBDA members who attended, and to all of you for contacting your legislators to let them know the detrimental impact that HB 1644 would have on your business.