Privatization Vetoed in Pennsylvania, but Will Direct Shipping Survive?

What’s the Deal?

Pennsylvania is one of 19 ‘control states.’ (A ‘control state’ is a general term for any state that publicly controls a retail store, a wholesale store or, in states like PA, both). PA is also one of only eight states that do not allow direct-to-consumer shipping by US wineries. This combination of policies makes PA a little old-fashioned when we compare it to the progress other states have made in these same areas.

Legislators in Pennsylvania attempted to change both of these control structures during this year’s general session with two main bills:

  1. A liquor privatization bill (HB 466) aimed at moving retail and wholesale operations to the private sector
  2. A bill to legalize direct-to-consumer shipping bill (HB 189). (It’s important to note there are other bills alive, but we consider these two to be the most significant.)

The House and Senate both passed the privatization bill. However, Governor Wolf vetoed this bill, just as expected. There has been no final word on the DTC bill.

What’s the Background?

For the last several years, we’ve seen attempts to privatize the beverage alcohol industry in Pennsylvania. Though the governor was clear about his intention to veto this bill, it came closer to passing than ever before. This is because of the growing support for some form of progress in the Pennsylvania alcohol system.

Modernization now seems to be the compromise on which politicians will focus. (‘Modernization’ is another general term, referring in Pennsylvania to legislation that reflects what most states currently have: DTC shipping, liquor sales on Sundays, and more flexible pricing laws.) The DTC bill is a reflection of this movement, as it would free up some parts of the industry without being as dramatic of a change as the privatization bill. Governor Wolf mentioned his support toward modernization in his veto message:

“Modernization of our state liquor system would provide additional revenues to the Commonwealth and save important, family-sustaining jobs. We can support and bolster consumer convenience without selling an asset and risking higher prices and less selection for consumers. I am open to options for expanding the availability of wine and beer in more locations, including supermarkets.  I have also put other compromises on the table, including variable pricing, direct shipment of wine and expanding state store hours.”

What’s this mean for me?

The privatization bill is a goner, but the DTC bill could still pass. This would be significant for the industry since Pennsylvania is the last big state remaining that doesn’t allow direct shipping. (Technically, you can ship to state stores, but it’s cumbersome and very expensive.)  The bill was amended changing the taxes on shipped wine from 18% of the total sales to one dollar a gallon. This has been one of the sticking points in the past, so landing on a compromise is a good step in the right direction.

The outcome of the DTC bill is unclear, but our fingers are crossed.

2 Comments

  1. Kerry

    Is there an update on direct ship to PA?

    Reply
    • Rachel Bush - Marketing Coordinator

      Hi, Kerry! Thanks for the question.

      Unfortunately, we don’t have an update to share, yet. It’s unlikely anything will happen until Pennsylvania resolves the issue of control versus privatization and it’s unclear when this will happen. We’ll keep you posted, though!

      Reply

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