Pennsylvania’s liquor license market can feel like a dead end: limited inventory, quota restrictions, and prices that don’t match your startup budget. If you’re trying to open a bar, restaurant, event venue, bottle shop, or hybrid concept, alcohol sales may be the difference between “profitable” and “not viable.”
That’s where Act 39 of 2016 can become a practical bridge strategy.
Under Act 39, Pennsylvania limited distilleries gained expanded privileges—including the ability to operate additional PLCB-approved locations (often called “satellite locations”). For some business owners, the right partnership with a PA manufacturer can unlock legal alcohol sales before they buy (or transfer) a traditional retail liquor license.
This article explains how the strategy works, who it fits, what you can (and can’t) sell, and how to evaluate it quickly.
What Is Pennsylvania Act 39 (2016)?
Act 39 (2016) is part of Pennsylvania’s broader modernization of alcohol laws. Among other updates, Act 39 expanded privileges for distilleries and limited distilleries, including how they can sell and where they can operate.
Why Act 39 Matters When PA Liquor Licenses Are Too Expensive
For many operators, the problem isn’t demand—it’s access:
- Retail liquor licenses (like restaurant “R” licenses) are limited by the quota system
- Inventory can be scarce in certain counties/municipalities
- When licenses do appear, prices can be high—sometimes high enough to stall a launch
Act 39 doesn’t replace a retail liquor license. But it can create a workable pivot: sell alcohol through a manufacturer-based model while you pursue a better long-term solution.
The Act 39 “Manufacturing Pivot” Explained
The core strategy is simple:
Partner with a Pennsylvania limited distillery that operates one of its PLCB-approved additional locations at (or within) your business.
Instead of you buying a traditional retail liquor license right now, your concept is structured around the privileges available to the manufacturer.
What Is a “Limited Distillery License” in Pennsylvania?
A limited distillery license generally allows a producer to manufacture spirits up to a specified annual production cap and sell those spirits to the public under PLCB rules.
This matters because limited distilleries can typically:
- Sell their own bottled spirits at approved locations
- Provide tastings/serve drinks under applicable rules
- Operate additional board-approved locations (satellites) beyond the main production premises
What Is a PLCB-Approved Additional Location (Satellite Location)?
A satellite location is an additional place—separate from the main distillery—where the distillery can legally conduct certain sales and service activities under PLCB approval.
For a business owner, that can look like:
- A co-branded cocktail room inside your venue
- A “Pennsylvania spirits” tasting bar inside a restaurant concept
- A distillery-run beverage area that allows legal on-premise alcohol service (subject to restrictions)
Pros and Cons of Using a Limited Distillery Satellite Location
This approach can be powerful—but only if the tradeoffs fit your business model.
Benefits of the Act 39 Limited Distillery Partnership Strategy
- Launch sooner without waiting on retail license inventory
- Reduce upfront capital compared to purchasing an expensive quota license
- Create a compelling “local-first” identity built around Pennsylvania-made spirits
- Use the bridge period to validate location demand and revenue before committing to a major license purchase
- Build momentum while you continue searching for a long-term license solution
Key Limitations (The Tradeoffs You Must Accept)
- You’re largely limited to Pennsylvania-made products (or what the law allows the manufacturer to sell)
- You need a real operating agreement with a current manufacturer
- You will likely share revenue and/or profit with the manufacturing partner
- You can’t treat it like “your license”—the manufacturer must maintain control and compliance
- Your menu and brand flexibility may be constrained by the model
If your concept depends on a broad national backbar, distributor catalog freedom, or full alcohol revenue ownership, this strategy may not fit.
What You Can Sell Under an Act 39 Limited Distillery Model
Most successful versions of this strategy are built around clarity: what the manufacturer can legally sell and serve becomes the foundation of your beverage program.
The Core Offering: The Distillery’s Spirits
In most partnerships, the “anchor” is:
- Cocktails featuring the partner distillery’s spirits
- Bottled spirit sales where permitted under PLCB rules
- Tastings/tours where applicable
Adding Beer, Wine, or Cider (PA-Made Focus)
Pennsylvania law has expanded privileges for certain manufacturer license holders to sell limited amounts of other Pennsylvania-manufactured products for on-premises consumption, subject to conditions and annual caps.
In practice, many concepts build a curated list of:
- PA beer
- PA wine
- PA cider
- Other PA spirits (where permitted)
Important: Some manufacturer privileges include restrictions like annual sales caps for “other manufacturers’ products” (for example, limits tied to a percentage of on-premises alcohol sales). These details matter and should be reviewed with counsel for your exact license type and setup.
What You Generally Can’t Do
In most cases, you should assume you cannot:
- Operate a full national-brand bar program like a traditional restaurant liquor license
- Treat the manufacturer license like a rental license
- Ignore compliance responsibilities because “it’s the partner’s license”
This model works best when it’s positioned intentionally—not as a workaround, but as a “Pennsylvania-made” experience.
Deal Structures: How Businesses Typically Set This Up
A clean structure protects both parties and reduces PLCB risk.
Common Partnership Models
- Defined Lease Area (Cleanest Compliance Lines):
The distillery leases a clearly defined area and operates alcohol sales there. - Revenue Share / Commission Model:
The manufacturer operates the alcohol program; you receive a negotiated share for hosting, staffing support, marketing, or bundled services. - Co-Branded Concept:
Your venue is built around the distillery brand (signature cocktails, bottle shop, merchandise, events).
Compliance Pitfalls to Avoid
This is where many “good ideas” fall apart.
Avoid structures that look like:
- You fully control pricing, purchasing, staffing, and operations while “using their license”
- The manufacturer is only on paper and not truly operating the privileges
- Recordkeeping and control are unclear
- The agreement doesn’t define liability, insurance, and operational responsibilities
The safest path is to treat this as a real partnership with real separation, documentation, and compliance support.
Is This the Right Liquor License Alternative for Your Business?
Use this quick checklist to decide if it’s worth exploring.
Best-Fit Concepts
- Restaurants that can win with a curated PA-made beverage identity
- Event venues that need legal alcohol service while pursuing a retail license
- New concepts testing demand before committing to a high-cost quota license
- Operators who want a “destination” feel (tastings, signature cocktails, local story)
Red Flags
- Your concept requires national spirits brands as the default
- Your margins only work if you keep 100% of alcohol revenue
- You’re looking for a quick shortcut rather than a true operating partnership
- You don’t have the time/resources to run a compliance-forward program
Step-by-Step: How to Execute an Act 39 Partnership the Right Way
1) Confirm Municipal Fit and Local Rules
Start by checking whether your target municipality creates any additional restrictions that could affect the operation.
2) Identify the Right Distillery Partner
Look for a partner who:
- Has products your customers will actually buy
- Treats the location as brand expansion (not a favor)
- Has strong compliance habits and operational maturity
- Can support training, menus, and consistent supply
3) Build the Beverage Program Around PA-Made Products
Your menu should make the constraint feel like a feature:
- Signature cocktails built around the partner’s spirits
- Curated PA beer/wine/cider selections where allowed
- Events, tastings, limited releases, seasonal menus
4) Structure the Agreement Correctly
Work with an experienced Pennsylvania liquor license attorney to define:
- Control and management responsibilities
- Lease boundaries (if applicable)
- Staffing and training expectations
- Pricing and revenue share terms
- Insurance, indemnification, and liability
- Termination clauses and transition plans
5) Treat It Like a Bridge Strategy (If That’s Your Goal)
Many owners use this model while they:
- Monitor license inventory in their area
- Negotiate for a transfer
- Wait for pricing to normalize
- Build cash flow to justify a longer-term purchase
Conclusion: A Smart Bridge When Retail Licenses Don’t Pencil Out
Act 39 (2016) created real opportunities for Pennsylvania manufacturers, and those opportunities can translate into a practical business strategy:
Partner with a limited distillery to legally sell PA-made alcohol now—while you pursue a long-term liquor license plan.
If your concept can win with a Pennsylvania-made beverage identity and you’re comfortable sharing economics with a manufacturer partner, this can be a strong way to generate revenue sooner and reduce upfront risk.
Call to Action
If you’re considering this strategy, Liquor License HQ can help you:
- evaluate feasibility by county/municipality
- compare this pivot to quota license purchase/transfer options
- build a long-term licensing plan while you operate