Act 39

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By now you are aware that Pennsylvania has enacted new amendments to the Liquor Code when Act 39 of 2016 was signed into law on June 8, 2016. As of August 8, 2016 Act 39 amending the Liquor Code is in effect. House Bill No.1690 is now known as Act 39 of 2016. Act 39 has significant changes affecting all licensees.

One aim of the law is to change the manner in the way the Commonwealth of Pennsylvania and its licensees sell alcoholic beverages to the general public, while still protecting the health, welfare, peace and morals of the citizens of the Commonwealth of Pennsylvania. This was always the purpose of the Liquor Code.

While the changes do not abolish restrictions on Pennsylvania licensees, the overall purpose of the law apparently is to provide licensees with greater flexibility and opportunity for sales in a changing marketplace. However, there are new regulations to be understood.

One interesting amendment that has received some attention is the fact that licensed restaurants and hotels will be charged heavily for storing their license in safekeeping. Act 39 reduces the safekeeping period from three to two consecutive years for the following licensees: restaurants, eating place retail dispensers, hotels, importing distributors, and distributors. [47 P.S. § 4-474.1(b), (c)].

Previously a license could be held in safekeeping for a period of three years, now holding terms are two years. The safekeeping fee has now been increased in first through fourth counties to $10,000.00 from $5,000.00 and for fifth through eighth counties the safekeeping fee has increased from $2,500.00 to $5,000.00 for the first additional safekeeping year past the initial 2 year safekeeping.

With Act 39 for each year past the first safekeeping extension year those fees are doubled $10,000.00 to $20,000.00 and $5,000.00 to $10,000.00. For each additional year those fees are again doubled, so the $20,000.00 paid in year four becomes $40,000.00. The doubling of the safekeeping fees continues for each additional safekeeping extension year applied for.

Obviously, the intent of this provision is to force licensees to either use the license or sell it to someone that will.
No safekeeping fees apply if the licensee can provide evidence that it was unable to use the license because of events beyond the licensee’s control, fire, flood, or failure to obtain an occupancy permit from the municipality. Licensees must still pay the fees where the business simply fails.

If you have any questions about the changes to the law please contact us at (412) 692-1031 or laura@sofrankoadvisors.com. We would love the opportunity to help you with any questions you might have.

The PLCB Office of Chief Counsel has issued an excellent summary of Act 39 which is available online from the PLCB website at www.lcb.state.pa.us

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