Know your laws: Discounting alcoholic beverages in Pennsylvania

No such thing as a free lunch, people. And don’t even get us started on free pints.

Happy hours, daily drink specials and promotions are popular incentives used by retail licensees to attract business, remain competitive and satisfy their customers’ expectations. In implementing these practices, however, licensees should remain vigilant of the various rules and regulations that govern these discounting mechanisms.

In general, the Pennsylvania Liquor Code prohibits providing anything of value as an inducement to purchase alcohol. An exception allows manufacturers and licensees to provide advertising novelties of nominal value, which currently is interpreted as $15 each, wholesale cost, or less.

Additionally, in each business day, retail licensees may have two specific discount promotions: a daily drink special and a happy hour. With regard to daily drink specials, licensees are permitted to offer one specific type of alcoholic beverage at a discounted price all day or for a portion of the day. A specific type of alcoholic beverage means either a specific registered brand of malt or brewed beverages, a type of wine, a type of distilled spirits or a mixed drink. All daily drink specials must end by midnight, as there can be no discounting of alcoholic beverages between midnight and 2 a.m.

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For happy hours, licensees are permitted to discount any or all alcoholic beverages for a period of time not to exceed four consecutive hours or nonconsecutive hours per day and a maximum of 14 hours per week. During this time, the price of alcoholic beverages may not change. Like daily drink specials, the happy hour cannot extend beyond midnight.

Many licensees like to offer additional promotions, such as “Mug Clubs,” in order to attract and maintain their most loyal customers. Although Mug Clubs are permitted, licensees must be sure to follow the rules and regulations described above regarding discounting alcoholic beverages. The underlying rule that licensees must always keep in mind is that, through such promotions, there can be no inducement to purchase alcoholic beverages. As such, licensees cannot sell alcoholic beverages to Club Members at special discounted prices separate and apart from the prices charged to the general public and cannot offer to provide any free drinks in exchange for an individual’s purchase into a membership.

This friendly legal reminder was provided by Kimberly A. Selemba. She practices in the Litigation; Injunction; Transportation, Distribution and Logistics, Food & Beverage Groups for McNees Wallace & Nurick — a full-service law firm based in central Pennsylvania with more than 130 attorneys representing corporations, associations, institutions and individuals.