Pennsylvania's LCB (AKA: Liquor Gestapo) Beats Up on Suppliers and Customers

It would be easy to fill a book with how the Pennsylvania State Liquor Control Board, the state liquor monopoly that maintains its own set of jack-booted thugs which can arrest citizens and restaurant owners who purchase alcohol out of state -- if you meet me in person, remind me to tell you a story about this -- deprives PA residents of choice, quality and a free market competitive price environment to purchase wine and liquor. Such missives would absolutely include how in most PA state liquor stores, there is no division of labor (i.e., the entire staff runs out to offload a delivery truck) and there are no specialists who specialize in different grapes, wine regions, etc. But it also allows for potential miscalculations when it comes to inventory carrying costs, payment terms and VMI.

According to the above-linked post by Charles Dominick, the "Pennsylvania Liquor Control Board has altered its system such that their vendors will own the inventory in the PLCB's warehouses until such inventory is shipped to its retail stores ... Part of this savings is coming from the deferring of payment to suppliers, who are accustomed to getting paid within 30 days of delivery to the warehouse." Charles opines that while "inventory has carrying costs" and "reducing inventory reduces carrying costs ... won't suppliers, who factor their own cost of capital into pricing, increase their prices?"

I wonder if Charles is asking this rhetorically, but it almost doesn't matter because it's clear that such zero-sum sourcing and supplier management games in government-run monopoly markets benefits only one party at the expense of two others -- customers and suppliers. Customers will lose choice and suppliers are likely to get back at the state (e.g., through incorrect invoices) in one capacity or another. It's time for PA voters and politicians to put the PLCB out of its misery, but given the powerful union lobby, that's unlikely to happen anytime soon. So why not take matters into your own hands by voting with your feet and dealing with other merchants, and even vineyards directly. By carefully driving to New Jersey, New York, Delaware or other areas and/or by shipping higher-end wine to commercial addresses -- not that I would know either of these techniques and be very, very careful if you try it -- it's possible to challenge a system that is corrupt to the core. As the motto of my alma matter suggests: Leges Sine Moribus Vanae (laws without morals are useless).

It's time to let liquid darwinism run it's course with the Pennsylvania LCB ...

- Jason Busch

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