Monopolizing Success

Is it time to wave the white flag on liquor privatization? After all, the Pennsylvania Liquor Control Board (PLCB) reported record revenue and transfers to the state’s General Fund this past fiscal year. Why would lawmakers bother privatizing the state stores given their enormous success?

Okay, that question is admittedly tongue-in-cheek, and for those readers who have followed our work on liquor store privatization, you know the PLCB has been anything but successful. But does the PLCB deserve a little credit for its record year? Maybe, if it weren’t a monopoly.

The PLCB is the only game in town, which is the main reason for its “success.” If you want to buy or sell wine and spirits in Pennsylvania, you must go through the PLCB. (Note: There are a few exceptions, such as limited wineries.) In fact, it’s against the law to bring booze from other states back to Pennsylvania, but that hasn’t stopped residents from seeking better deals in privately-owned stores. Imagine if the PLCB had to compete with private stores here in Pennsylvania. It’s doubtful we would hear about record sales and revenue. 

Unfortunately, this kind of private competition isn’t an option in our state. And those that don’t live near a border state are stuck with the PLCB. So take the agency’s record year with a grain of salt. Their “success” is not the product of satisfying consumer demands, but rather the result of a government-granted privilege dating back to the Prohibition Era (or error, if you prefer).

Opponents of privatization claim that the state benefits from the revenue government-controlled liquor stores bring to the state. And it’s true that the PLCB does transfer some of its “net income” or “profits” to the state, which was also a record high in 2013-2014. But the PLCB is about as profitable as the IRS. Its “profits” are nothing more than taxes paid by consumers in the form of higher wine and spirits prices. But even with its monopoly status, the PLCB is facing some financial challenges.

These challenges drew statewide media coverage last month when the agency floated the idea of increasing the price of its products as a way to make up for a projected 20% loss in its net income in future years. The agency is on track to transfer fewer dollars to state government due to its increasing costs, putting to rest the idea that the agency is an asset for the state.

The PLCB wants to tout their new record, but the only record Pennsylvania consumers care about is the record number of years that we continue to live and shop with complete government control of wine and liquor sales.