A sip of history: Why does PA have state liquor stores?

By Randy LoBasso
Add Comment Add Comment | Comments: 14 | Posted Jul. 2, 2014

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Prohibition began on January 17, 1920, and for Yuengling Brewery, a Pennsylvania landmark that’d been open in Pottsville since 1829—it was first called Eagle Brewery; they’ve still got the eagle emblem on the bottle—that meant one thing: product diversity.

It was a problem faced by breweries, wineries and distilleries all over the U.S. at that time. What is a beer company supposed to do when their product is illegal?

How about “near beers?” That’s the original term for what’s essentially today called non-alcoholic beer. These were mass-marketed 0.5-percent alcoholic brews created during Prohibition, and were given weird names: Miller had “Vivo,” Pabst had “Pablo,” Anheuser-Busch had “Bevo,” Yuengling had “Juvo.”

By 1921, just a year into Prohibition, the U.S. had produced more than 300 million gallons of near beer, while, conceivably, everyone was trying to drink as much and as quickly as possible to feel what passed as a buzz.

But compared to other national brew-hemoths, Yuengling was a small fish. The company, then headed by Frank Yuengling, began a dairy business in 1920 to stay relevant during the dark age. So, Yuengling began churning ice cream to deal with the country’s failing experiment in banning alcohol for recreational use.

Thirteen years of this, of course. Then, in 1933, the 18th amendment was repealed—and Yuengling sent Franklin Roosevelt a truck of beer in appreciation.

Little did Pennsylvania beer lovers know that the nightmare was just beginning.

In most states,
the end of national Prohibition meant the reinstatement of the freedom to get punk in drublic—and, of course, to pay the requisite booze taxes to the government that go along with that. In Pennsylvania, it also meant the creation of the Liquor Control Board, an endlessly hated bureaucratic system intended right at the get-go to make drinking as hard as possible for the people who lived here. It mandated state ownership of liquor stores—and, for a time, weird-ass bar laws. It’s the sort of thing that’s put the Keystone State on just about every “Worst States to Drink In” list, and the fight to end the system has been so mired in union politics, it’ll probably be decades before Pennsylvania is no longer one of just two states where the government controls liquor wholesale. (The other, if you were curious, is Utah.)

But back to 1933: President Roosevelt must’ve been happy with his newly obtained free truck of beer, but Pennsylvania’s governor was not. Legend has it, Gov. Gifford Pinchot created the PLCB four days before alcohol sales became legal with one goal: “Discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible,” according to a 2005 book on the history of the Yuengling Brewing Company.

First, the governor’s plan had to be sold to the state legislature. To do so, Pinchot promised that the state store system—the only part of his plan to regulate alcohol that the legislature, and many newspapers, opposed—would yield $53 million over the next two years; that cash would be used for schools, unemployment and pensions. It was mostly supported after this, even though, as the Morning Call newspaper would put it, the plan was “socialistic in tendency.”

Pinchot was indeed a socialist Republican thinker (that wasn’t a contradiction in the 1920s and ’30s), often decried for thinking he could right wrongs with the flip of a legislative switch. And he was an ardent anti-booze crusader; in one instance, he threatened to “horsewhip” a state senator for spreading a rumor that his wife had been caught at a party with a cocktail. By the time his bill was signed, though, Pinchot was singing a happier tune. He congratulated his legislature, publicly noting they’d adopted “the best system of liquor control yet devised in America.”

The state would come to regret that decision.

Regulations placed on alcohol sales were all pretty annoying for the average consumer, but some were worse than others. For instance, as Pennsylvanians know all too well, you can only buy liquor and wine at state-owned stores, 30-can beer cases at distributors and six-packs at bars or grocery stores with a special restaurant license, with few exceptions. (For instance, you can get wine at wineries and cases of beer at breweries.)

For a long time, happy-hour specials at bars were restricted to a maximum of 14 hours per week, with no more than two hours per day—and those hours were not allowed to fall between 12am and 2am. Two-for-one specials on alcoholic beverages were, and are, strictly prohibited.

The state controls both the retail and wholesale of wine, and, in recent years, has decided to use this to its advantage, producing its own wines on the cheap to sell at its own stores. But before that could happen, the PLCB needed to amass its wealth of property around the state. On January 2, 1934, it did just that, opening 63 state stores and five warehouses.

Government ownership of the state stores created something of a progressive environment for its employees. In 1944, as whiskey distilleries around the state had converted into industrial alcohol to assist the war effort, the PLCB began employing women as clerks for the first time. And over time, as civil rights movements forced federal and local governments to act, the PLCB instituted strict standards for treating its employees, including LGBT protections after they were passed for state workers in the ’70s. (Store clerks are part of the United Food and Commercial Workers’ Union, as well, whose members earn higher wages than their counterparts often do at liquor retailers in other states.)

But problems arose as the PLCB added taxes and bureaucratic complications that today are looked at as overkill.

See, in 1936, the western Pennsylvania city of Johnstown flooded—again. The town was well known for its terrible dams and propensity to allow massive amounts of water to ruin the locals’ lives. So, when it was mired in floodwaters in 1936, it shouldn’t have come as much of a shock, considering the same thing had happened in 1889, 1894, 1907 and 1924. The difference this time: The open floodgates allowed tons of gallons of water to flow all the way to Pittsburgh, which spurred the Army Corps of Engineers to come into town, dredge the river and build a wall around it. (Which held pretty well—until 1977, when a thunderstorm put Johnstown under eight feet of water. Again.) Anyway, after the 1936 flood, the General Assembly imposed an emergency tax on the state: specifically, 10 percent on all wine and liquor sales to help pay for the flood damage.

This tax, easy to create and regulate since it was on a product the government already had full control over, was originally intended to be temporary. Once in effect, though: not so much. It was raised to 15 percent in 1963 and 18 percent in 1968; it remains 18 percent today and brings in about $200 million per year, which is put into the state general fund. That tax isn’t the sales tax you see on your receipt, either—it’s built into the price of the booze. Efforts to repeal it have been largely fruitless.

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Comments 1 - 14 of 14
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1. Anonymous said... on Jul 2, 2014 at 11:15AM

“Nothing new but a fascinating history lesson.

It's time to abolish the PLCB and let liquor and beer and wine be purchased anywhere.

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2. Anonymous said... on Jul 2, 2014 at 01:15PM

“Except for the dopey Johnstown tax, the overall pricing for products in the state stores, especially wines, compares favorably with that of surrounding states. The problem with the State Stores is selection: compared to stores in Delaware, Maryland, and New Jersey, they carry a limited number of products, and the only way you can get something that's not in their liquor list is to order a case of it. Granted, there are a few gourmet wine stores in the Philadelphia region that have a larger selection, but they're few and far between, and usually a long trip for most people. For that reason alone, I would like to see liquor sales privatized. Doing this would, hopefully, open up the world of booze significantly to Pennsyvanians.”

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3. Anonymous said... on Jul 2, 2014 at 02:11PM

“"In most states, the end of national Prohibition meant the reinstatement of the freedom to get punk in drublic..."


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4. Anonymous said... on Jul 2, 2014 at 03:54PM

“Privatizing the State Stores would not wreak havoc of the unionized workers at these stores as has been frequently stated. The new stores would need qualified workers and one would assume that the current unionized workers could qualify for many of the the available new jobs. The work rules and quality of the customer service would be different (much improved one hopes) and the selection of wines would be dramatically improved. One would hope that the Johnstown tax would disappear and the pricing would become competitive with other stores in other states.”

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5. SenorCovert said... on Jul 2, 2014 at 05:44PM

“Seems like someone missed the joke, in the "punk in drublic"...."I'm sorry you're not as think as you smart you are!"”

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6. Albert Brooks said... on Jul 2, 2014 at 11:14PM

“State stores do nothing except keep people employeed by the state store. We are not safer, we are not better served and we are not satisfied.”

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7. Anonymous said... on Jul 3, 2014 at 10:38AM

“Any government federal or state that owns a retail establishment will always be "stupid is as stupid does".”

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8. Anonymous said... on Jul 3, 2014 at 12:42PM

“I'd prefer the clean, safe looking state stores over the filthy dangerous ones in NJ any day. WBRE did an 'expose' story on prices and PA actually beat NJ, and NY. And besides, selling an asset is never a good thing.”

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9. Anonymous said... on Jul 3, 2014 at 01:49PM

“Yeah, people should never sell stock, cars, houses, buildings, land or even antiques. Selling assets is never a good thing.”

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10. Anonymous said... on Jul 8, 2014 at 10:25PM

“"General Assembly imposed an emergency tax on the state: specifically, 10 percent on all wine and liquor sales to help pay for the flood damage.
This tax, easy to create and regulate since it was on a product the government already had full control over, was originally intended to be temporary."

That is the problem with these new taxes that are being proposed and the ones implemented in the past. Once they get passed as being "temporary" you can forget about ever repealing them. Case in point, the "temporary" 7% state sales tax in Philadelphia. Not only was it never repealed, it has been raised to a "temporary" 8% sales tax. But I don't blame these politicians for thinking we are stupid because we keep sending them back election after election.

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11. Anonymous said... on Jul 9, 2014 at 08:22PM

“Also keep in mind that Pennsylvania is one of the worlds largest single purchasers as the state orders as a whole. Bulk sales equals price breaks yet the public does not see them.”

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12. Anonymous said... on Jul 15, 2014 at 03:23PM

“"filthy dangerous ones in NJ"??? Maybe if you stopped buying your MD 20 20 in Camden...”

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13. eazy L nyc said... on Jul 18, 2014 at 05:38PM

“NoFx represent”

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14. Michael Pajewski said... on Mar 21, 2015 at 04:14PM

“Keep them State owner. Its a goose that lays golden eggs year in and year out. Sell now and get a bundle of cash sounds great but when the cash is spent and gone the state stores will continue to make bundles of cash.
not to mention the middle class jobs of th specialists that work in the stores. Do you think as the wages drop the prices of wine and liquor will? Nope. Thr workers will get wage cuts and thats more money in the pocket of new owners.
States are always looking for increased funding. Sellng off money-Making assets is short sighted. Its great if theres no tomorrow. But there is. Its tying the hands of future generations to fix their money funding problems. Because they will always be there. The republicans wanna say "we fixed this" but in all honesty they want their cronies to have the golden goose. Dont be stupid. Dont privatize State stores.


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