Pop-up gardens take advantage of LCB loophole

Posted: July 18, 2014

WANT TO open a bar in Pennsylvania and avoid the standard six-figure price tag for a liquor license? The Pennsylvania Liquor Control Board, through its extraordinarily lenient interpretation of the state liquor code, lets you do it for as little as $500.

All it takes is a one-page application with none of the lengthy red tape and criminal background checks applicants normally face.

The discount license is an unforeseen product of a 2012 liquor code amendment crafted by the Legislature to make it easier for licensees to cater one-day private events.

But thanks to the PLCB's curious reading of it, the amendment can be exploited to open a full-time bar with little regulatory oversight.

That's what's happening on South Street near 15th, home of the Pennsylvania Horticultural Society's popular, fourth annual Pop Up Garden. It will be open up to 10 hours a day, seven days a week, through the summer.

It's also happening on Eakins Oval on the Benjamin Franklin Parkway, where the Fairmount Park Conservancy yesterday opened a summer beer garden for five hours, four days a week.

Clearly, pop-up beer gardens have been good for the city.

PHS's 2013 Pop Up on South Broad Street, for example, drew an estimated 28,000 visitors in five months and won an international landscape-design award.

But the gardens' licensing is raising eyebrows among both competing bar owners and the chairman of the Pennsylvania House Liquor Control Committee because it underscores the PLCB's uneven oversight of state liquor laws.

And a PLCB attorney acknowledged that there's "potential for abuse" with the liquor-code amendment.

Piggybacking permits

PHS itself is not licensed to sell alcohol. Instead, the garden - opened on a vacant lot owned by record producer/land developer Kenny Gamble - is licensed through the PLCB's Off-Premises Catering Permit.

[Disclosure: I've used this permit in the past to host private beer tastings.]

Under liquor code amendments in Act 116 of 2012, the state allowed restaurants with liquor licenses to buy a permit for $500 a year to cater up to 50 events annually at nonlicensed locations.

Events can last up to five hours and are intended for "an identifiable group of people, not the general public . . . "

So, how can the PHS Pop Up Garden open for anyone to enjoy beer, wine and tropical cocktails from 2 p.m. to midnight for the remainder of the summer?

A PHS spokesman said the nonprofit had nothing to do with the garden's licensing. He said that the society hired an event-promotions company, Mole Street, which partnered with three bars (Time and Vintage, in Center City; and Garage, in South Philly) owned by restaurateur Jason Evenchik.

Those bars - all licensed by the PLCB - obtained the catering permits.

Despite creating obvious regulatory headaches (including the tracking of alcohol sales and taxes), the PLCB's licensing division allowed the bars to piggyback the catering permits: Multiple permits were issued for separate days at the same site.

So far, the bureau has authorized 110 piggybacked catering permits for the beer garden.

Jeff Lawrence, PLCB assistant director of licensing, said that, on some days, the garden will operate under one permit for the first five hours, then a second permit for the next five.

While piggybacking is not forbidden under the law, it's clearly a lenient interpretation by an agency known for its restrictive decision-making.

A 'desire to attend'

Even with extended hours, how can the beer garden open to everyone?

That comes courtesy of yet more PLCB leniency. In a remarkably crafted interpretation of Act 116, Stacy Kriedeman, the bureau's director of external affairs, told me in an email:

"The requirement that a catered function be for an identifiable group of people rather than the general public can be met if the party requesting the function can articulate some criteria to determine who is part of the invited group . . . [such as] an actual guest list, ticket holders, persons specifically invited, members and guests of a specific group or groups and persons who have indicated a desire to attend the event."

You'll find this language nowhere in the actual law.

Read it again, because the gold is in the last phrase: The doors are open to anyone who has "indicated a desire to attend the event."

Kriedeman said event organizers could ensure that by manning entrance points to confirm "that access is being requested."

Thus, before entering the PHS Pop Up Garden, visitors are handed free membership cards good for admission "during public hours."

"Public hours" for an event that is not open to the "general public?"

After you're done laughing, ask yourself this: What's to prevent anyone from opening an unlicensed bar by deploying multiple Off-Premises Catering Permits?

I've done the math, and it appears that you could get a full-time bar up and running for no more than $10,000 in permits. Cheesy membership cards would cost you another $100.

That's a far cry from the going price of a full liquor license, about $85,000 in the city and up to $200,000 in the suburbs, depending on availability.

The PLCB's interpretation of Act 116 caught the chairman of the House Liquor Control Committee off guard.

The permit, said state Rep. John Taylor, R-Phila., who helped craft its language, "was never designed to allow you to operate as a business. It was designed to allow restaurants and caterers to operate off-site, not set up a permanent operation."

Legal absurdities

Even if the bureau's approval of the garden was the right thing to do, it illustrates the absurdity of the state's liquor-licensing law.

The inflated price for full liquor licenses is a reflection of their artificial scarcity under a state statute that limits their number in each municipality, presumably for the welfare of the community.

Yet, the PHS Pop Up Garden is an outstanding example of land reuse that should be encouraged by our government. It is a vibrant, youthful Center City attraction, educates the public on inner-city gardening, costs little and brings in new tax dollars.

But while the PLCB's lenient interpretation may have been good for the city, under the state's antiquated liquor laws it is plainly unfair to businesses forced to purchase a full liquor license.

"I can't imagine that, if you're a licensee in the surrounding area, you'd appreciate a new business opening up next door with an off-premises permit," said John Longacre, president of the Philadelphia Licensed Beverage Association.

"The LCB makes us purchase liquor licenses and now they're aiming to devalue them," he said. "I don't think it's very fair, but I don't think the LCB is concerned with that."

PLCB executive deputy chief counsel Rod Diaz maintained that the rules would not allow a business to open a new location without a full liquor license.

But he acknowledged: "There's that potential for abuse there, I agree with you. We're kind of stuck with the statute."

Taylor countered that the PLCB's lenient interpretation was intended to embarrass the Legislature for tinkering with the state alcohol code.

"It's like they're saying, 'See what you guys did?' " Taylor said. "In our view, it's a complete misinterpretation of the bill."

He said that the committee will likely take up a review of the amendment when it reconvenes this autumn.


"Joe Sixpack" is written by Don Russell. For more on the beer scene, sign up for his weekly email update at joesixpack.net. Email: joesixpack@phillynews.com.

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