A bill that would end the Pennsylvania Liquor Control Board’s ability to negotiate and set prices on packaged wine and spirits will get a vote this month in the state House Liquor Control Committee.
State Rep. Jeff Pyle, the Ford City Republican who serves as the majority chairman on the committee, made that announcement after a hearing on House Bill 1512 featuring PLCB representatives and industry stakeholders this week in Harrisburg.
State Rep. Jesse Topper, the bill’s sponsor, said in the hearing that he’s concerned about the overall effects the practice of flexible pricing, which the state Legislature approved three years ago, has had on the market in Pennsylvania.
“Flexible pricing was to allow the PLCB to more effectively negotiate with liquor suppliers, and to provide more revenue to the Commonwealth, all while lowering the prices of some products for consumers,” said Topper, a Bedford Republican. "I have not been convinced this change has led to lower prices for consumers."
Witness testimony Tuesday touched on several topics, including the PLCB’s relationships with suppliers and concerns regarding possible international trade law violations. On the latter, a group of international trade associations wrote to Gov. Tom Wolf and state officials last month questioning the state’s flexible pricing law.
PLCB Chairman Tim Holden addressed that claim in his remarks to the committee, saying the practice is legal. However, he added that the board would meet with the United States Trade Representative and the National Alcohol Beverage Control Association on the topic.
“Let us affirm that the PLCB does not engage in preferential treatment of any supplier or country of origin,” he added.
Suppliers, though, still questioned the board’s tactics, saying they now receive little, if any, notice on pricing changes.
Since transitioning to the new pricing model, the PLCB has been able to generate more money for the state’s general fund. The board generated $100 million in 2016 when it had to go by a rigid universal markup model. A year later with flexible pricing, the general fund received $216.7 million.
David Ozgo, the chief economist for the Distilled Spirits Council of the United States, told committee members that a state-run organization only has the right to charge a fee that reasonably covers its administrative costs.
“Any amount above that is a tax,” he said.
Some lawmakers also questioned whether consumers were truly benefiting from the model, especially if revenues have increased substantially. State Rep. David Delloso, a Ridley Park Democrat, noted that some of the increased revenue comes from the state’s ability to now negotiate lower wholesale prices with suppliers.
One board member also countered that the state-run liquor stores are competitive with stores in neighboring states and provide value for all stakeholders.
“The decisions we make as a board, they have to be market driven,” PLCB Board Member Mary Isenhour told the committee “Or else we wouldn’t be doing as well as we would be, and we would be out of business.”