Tag: liquor privatization

Did Liquor Privatization Increase DUIs and Alcohol Related Arrests?

No. Based on the latest numbers, the alcohol infused Armageddon that we were warned about if voters approved I-1183 ending the state’s nearly 80 year old-liquor monopoly was more of a scare tactic than based on the actual experience of the 33 states across the country with private liquor sales.

Here is data provided by the Washington State Patrol:


Does that mean we should rejoice at the still high number of alcohol related arrests and accidents? No, but maybe, just maybe, Washingtonians are a little more responsible than opponents of I-1183 gave them credit for.

Here are the most recent compliance check numbers provided by the Washington State Liquor Control Board.

While the potential public safety problems of liquor sales privatization appear to have been oversold, the amount of revenue generated from private liquor sales was undersold.

Here are the updated state liquor tax collections according to the Department of Revenue.

Give then fact liquor tax revenues are exceeding expectations and remembering the state’s notorious ranking for the highest liquor taxes in the country, lawmakers should revisit what the appropriate level of liquor taxes and fees should be.


[Reposted with permission from the Washington Policy Center blog; featured image used under license from depositphotos.com, credit: Ron Harvey]

Liquor Board Considering More Alterations to Voter-Approved Privatization Law

Last November, Washington voters approved Initiative 1183 by an overwhelming margin, moving the state away of a Prohibition-era liquor control regime and toward a free-market system that still retained important enforcement authority for the government.

Four months later, the Liquor Control Board—and the soon-to-be ex-beneficiaries of the closed economy for spirits it roosted over—are still having trouble accepting the public’s decision.

Almost as soon as the results from last year’s election were certified, unions representing workers affected by the legislation filed lawsuits challenging the measure, though motions to postpone implementation of 1183 were rejected.

Then, Democrats in the State Legislature built what can best be described as a legislative smart bomb, a bill explicitly designed to exclude 1183’s largest sponsor—locally-based warehouse retail giant Costco—from selling liquor under the law it helped to pass.

The legislative effort to drastically alter a voter-approved law became an embarrassment for the three Democrat sponsors of the bill when media attention generated a backlash and was quietly pulled after the effort to pass same-sex marriage took center stage.

Most recently, the Liquor Control Board is using its rule making authority to tinker with a crucial feature in 1183 that makes it legal for restaurants to buy liquor directly from retailers or distillers, cutting out distributors and wholesalers.

In a post Tuesday, Washington Restaurant Association government affairs manager Julia Clark explained the change the Board currently under consideration:

Initiative 1183 privatizes the sale and distribution of liquor and creates competition for the first time for restaurateurs, by allowing them to purchase from distillers, from retailers and direct from distillers. The initiative’s only restriction is that sales between retailers and restaurants must be in 24 liters per sale, and the retailer must retain records documenting the purchase. There are no limitations on the number of sales that can occur, but the Liquor Control Board is considering amending the initiative to further restrict the number of sales through rule.

Ironically, any rule restricting distillers’ ability (including Washington State’s burgeoning craft spirits industry) to sell direct could, in effect, perpetuate a system of artificial barriers to new spirits makers in a market dominated by out-of-state mega-distillers. It could also stop a new wave of interest in locally-produced spirits before it can really get going by making it marginally harder for restaurateurs to showcase the work of small distillers.

The in-state cottage industry for the high-class hooch is a potential niche for those restaurants and retailers already catering to customers with specialized tastes. The same customers who demand a wide selection of local wines at their supermarket may also seek out stores stocking a selection of spirits from quality local producers.

According to an LCB representative, the Board did not open up the issue during a meeting held Wednesday, but the proposal to eliminate distiller sales could have be discussed during a public hearing as soon as April 11.


Democrats in Legislature Introduce Bill To Prohibit Costco From Selling Liquor Under Law Company Helped Pass

A trio of Democrats in the Washington State Legislature have introduced a bill that appears to be designed to strip Costco of the legal right to sell liquor under voter-approved Initiative 1183 when the new state law privatizing liquor sales and distribution is fully implemented in early summer of this year.

On Thursday, State Reps. Sam Hunt (D-22), Sherry Appleton (D-Poulsbo), and John McCoy (D-Tulalip) sponsored House Bill 2426 under the title “Prohibiting the issuance of spirits retail licenses to certain membership organizations.”

What companies would be prohibited from selling liquor under the state’s new privatized system, enacted by voters by nearly an 18-point margin of approval? At this early stage, what constitutes a “membership organization” is not clearly defined in the bill, but there are enough breadcrumbs in the current text to make an educated guess. From HB 2426:

[B]uying in bulk and in supersized packaging, a pattern of activity that is promoted and encouraged by membership organizations, increases abusive consumption. In order to protect the public interest, advance public safety, and prevent abusive consumption of spirits, the Washington state liquor control board is explicitly prohibited from issuing spirits retail licenses to certain membership organizations.

The only way legislators could have been any more coy in painting the target of the bill would have been to define membership organizations to include all places selling a hot dog and soda combo for an absurdly low price.

Costco is the largest membership organization in Washington State that would qualify to sell liquor under 1183. Costco also provided a record-breaking amount of money to the campaign to pass the initiative; wine and spirits wholesalers, alcohol distributors, and an assortment of public and private-sector unions combined to finance the unsuccessful campaign to defeat the measure.

The tell-tale ignorance of market economics that leads to the bill’s inference that efficient purchasing amounts to “abusive consumption” and the drafters’ confusion about the incentives motivating consumers provide clues to HB 2426’s point of inspiration. (Individual buyers are encouraged by price – not the opportunity for wanton binge behavior – to buy in bulk.)

Are those ideologically-loaded hacks at Costco’s business model the latest visible edge of an axe the losing side of the 1183 debate is swinging with vehement spite and malicious intent? Not so surprising, the money trails leading to the campaign against 1183 and the campaign funds of HB 2426’s sponsors share a large list of common contributors. According to reports filed with the State Public Disclosure Commission for election cycles between 2000 and 2010, many of the contributors to Protect Our Communities – the group who fought a losing battle to defeat 1183 – also show up on PDC records for Hunt, McCoy, and Appleton.

During last year’s battle over 1183, Protect Our Communities received $820,000 from the Washington Beer and Wine Wholesalers to try and stop liquor privatization and the disruption of a comfortable single-buyer marketplace. Since 2000, McCoy has received $1,700 from the WBWW; Hunt took $2,470 from the group.

The United Food and Commercial Workers union gave $619,000 to the No on 1183 campaign, and in the last 10 years the UFCW has given $2,475 to Hunt and $1,300 to McCoy.

Although a junior investor in the effort to defeat 1183, the Teamsters – who, along with the UFCW, also filed a lawsuit last December challenging 1183’s constitutionality – have also been generous in supporting the legislators pushing HB 2426 forward. Since 2000, Teamsters organizations have dropped $2,975 into McCoy’s hands, gave $5,475 to Hunt, and Appleton raked in $6,500 of Teamsters money.

Last year, the State Office of Financial Management estimated conservatively that 1183 would create at least $400 million in additional revenue for state and local governments during the first six years of implementation.


Workers Try to Keep Their Jobs by Suing to Stop Liquor Privatization | Guest Op-Ed

It’s not surprising that a couple of lawsuits have been filed to stop the loss of state jobs for workers employed in state liquor stores.  Two unions are suing in King County to prevent the breakup of the state liquor sales system that voters approved last month with the passage of Initiative 1183. Someone who leases space for a state liquor store has filed a second complaint in Cowlitz County.

There have been numerous lawsuits over the years that have tried to stop voter- approved measures from being implemented.  The arguments are always the same, that the initiative covers more than one topic and therefore does not pass the requirements for initiative law making.

The public’s reaction to the news of the lawsuits has been fairly angry. The news drew a significant number of comments all having the same tone. The initiative won approval by a large public margin indicating that voters are ready for privatizing liquor. Most are saying that the voters are educated and knew what they wanted.

Attorney Michael Reitz, general counsel for the Olympia-based think tank, The Freedom Foundation, doubts the legal challenges will carry much weight in court. Complainants, he writes, face “a tough, uphill battle” in making their case.  He said the courts have ruled that the burden of proof is on the complainants in legal challenges like we have seen in reaction to the voters’ approval of 1183.

According to Reitz, it’s permissible for an initiative (or legislation) to contain multiple changes to law as long as they are related to the bill title. The author of the ballot title, he notes, was the State Attorney General’s Office.

In an analysis he issued about the lawsuits, Reitz wrote: “There’s no constitutional violation for having ‘too much stuff’ in a bill.  It’s a single subject rule, not a single impact rule. Initiative drafters aren’t required to be fortune tellers.”

We’ll have to wait and see what the courts decide. Meanwhile, the state has begun emergency rulemaking to begin the transition from public to private sale of liquor in the state by June of next year.

The Washington Retail Association supported I-1183 because studies showed it would boost revenues to state and local governments by about $443.2 million between 2012 and 2017, add convenience for shoppers and give retailers the chance to grow revenues. Our state’s liquor sales network had become obsolete, especially during these troubled times for an economy struggling to overcome the worse economic downturn in our lifetimes.

While the unions might think they can win in court, I don’t think they can win public approval.  As these types of issues come up and unions force their viewpoints on voters through various sit ins, walk outs, and lawsuits, it’s a wonder that anyone is sympathetic. Unless you get money from them in some way, unions are not a popular political group. They are simply bullies using their wealth to fund these actions.


Jan Teague is President and CEO of the Washington Retail Association, which represents 2800 storefronts across the state. Named a “Woman of Influence” by the South Sound Business Examiner, she is a Board member of the Association of Washington Business, a member of the Coalition of Washington Business Organizations and was 2010 President of the State Council of Retail Associations.


[First published at Washington State Wire and reprinted with permission; feature photo credit: sillygwailo]


Unions Sue to Negate Liquor Privatization Law: Sour Grapes and a Case of Whine | Op-Ed

The news Tuesday that two unions representing several hundred state liquor store workers have filed suit to stop voter-approved liquor privatization Initiative 1183 from going into effect is a sad but typical development in an otherwise positive development in state politics.

Let me start by making full disclosure – I worked as paid member of the Yes on 1183 campaign staff. As a private citizen, however, my support for the idea of removing the state from the business side of the hard alcohol preceded my work on the ballot measure. The status quo meant that virtually the only stages of the liquor business in which the state did not participate were distilling and serving, but everything between the distillery door and the bartender’s pour was the domain of the Washington State Liquor Control Board.

Despite the need to remove the state government from its antiquated role in the liquor trade – a position juggling the task of policing liquor while managing and operating a cartel-like system of retailing and distributing liquor – our successful campaign upset a few apple carts, most notably those of the unions and their workers.

As Washington’s fiscal future appears destined to produce more junctions at which union apple carts will present roadblocks to changes that benefit taxpayers, this recent decision to challenge the overwhelming will of the people by litigating to negate our choice to privatize liquor sales sends a clear message about their real priorities.

The joint news release by the United Food and Commercial Workers Local 21 and the Teamsters Local 174 regarding the lawsuit claims 1183 violates Washington’s rule requiring initiative measures to address only a single issue. According to the unions:

“While it is not illegal for a private company to pay for an initiative and spend almost unlimited money to get it passed, it is illegal for them to abuse the system by loading the initiative with too many changes to the law. The reason for the single rule clause in the Constitution is to prohibit this very thing.”

There are, of course, elements of truth in the release. The single subject rule is intended to curb the ability of the people to enact sprawling, byzantine omnibus legislation that obfuscates its true purpose behind a veneer of popular causes. (That right is jealously reserved by the Legislature and the Congress.) But as 1183 clearly dealt with a single subject – the manner in which liquor is to be sold – there seems to be very little merit to the unions’ primary claim. As such, the suit smacks of the sort of nuisance litigation ordinarily confined to unscrupulous product liability and malpractice tort actions.

Instead of recognizing that the once fertile field of taxpayer-subsidized union jobs has been harvested too aggressively, instead of devoting union resources to job training and transition support to members displaced by 1183, their choice is to place landmines along the path to privatization that almost 59% of voters approved to become the law of Washington State.

Instead of accepting the potential stopgap that 1183’s $400 million in additional revenue over 6 years will mean for agencies forced to make cuts to staff or reductions in service after the latest round of budget cuts is agreed to, unions have circled the wagons to preserve what some estimate to be 700 jobs. In economic terms, this creates what is called an opportunity cost – the loss that comes from taking one action and forgoing another – and rarely is the cost so easy to quantify as in the case of 1183. Simple division does the job. $400 million divided by 700 jobs equals an opportunity cost to the taxpayer of $571,428 for each job the unions aim to save with their legal action. Amortized annually, that comes to $95,238 per job per year.

Are Washington taxpayers concerned enough about saving the state liquor system to forgo $95,000 per year in forecasted revenue? It is a question the unions simply do not want voters to spend much time thinking about, which is why they have opted to plead their case in a less publicly accountable venue – the court system.


[photo credit: redtype]

Voters Repeal Washington State’s Liquor Monopoly

It may have taken nearly 80 years but Washington’s liquor monopoly has finally been repealed by voters. By a somewhat surprising margin, voters across the state are approving I-1183 60-40%.

Ending the state’s liquor monopoly has been a long time goal of the Washington Policy Center. It is exciting to see voters embrace the idea of focusing government efforts on strict enforcement of the public health, safety and drinking-age laws related to liquor sales, while leaving the business of distributing, pricing and selling liquor products to the competitive marketplace.

Washingtonians are also approving SJR 8206 to enhance the state’s rainy-day savings account. The measure is passing by a margin of 67-33%.

In January Washington Policy Center recommended that state leaders take additional steps to ensure that once the economy begins to improve, the state secures adequate reserves to help smooth out the ups and downs of revenue collections. The governor’s Budget Transformation Committee (on which WPC served) made a similar recommendation, saying the legislature should “enhance the Rainy Day Fund” and “include a mechanism to ensure extraordinary and unsustainable [revenue] growth is saved, rather than spent.”

By adopting SJR 8206 voters agreed and have taken an important step to getting the state off the boom-and-bust budget roller coaster.

Here are WPC’s summaries of these ballot measures:


[Reprinted from the Washington Policy Center blog; photo credit: Nelson Minar]


Putting the 1183 Ads Under the Microscope

With proponents and opponents of I-1183 (to end the state liquor monopoly) shattering state campaign contribution records for a ballot measure, the airwaves are about to see a binge of ads for and against the proposal. Hopefully future ads will fare better in truthfulness than some of those run to date.

The Seattle Times has done a good job of separating fact and fiction from the current ads. Here is a sampling of their findings:

The claim: The campaign against Initiative 1183, which would privatize the state’s liquor business, is running a television spot that says the initiative has “giant loopholes deregulating our liquor laws, allowing almost 1,000 gas stations and minimarts to sell hard liquor in every community across Washington, where police stings prove they sell to one out of four minors.” A Seattle Times analysis judges the ad to be mostly false.

What we found: Mostly False
Stings by the Washington State Liquor Control Board show that almost one in four minors who try to buy alcohol from private establishments, such as restaurants, grocery stores and convenience stores, gets away with it. So that part of the claim is true.

But there’s considerable doubt about whether almost 1,000 gas stations and minimarts would sell liquor if voters approve I-1183 in next month’s general election. The number could just as easily be zero. That part of the claim is mostly false, and given that the information about minors is attached to it, the ad’s overall assertion becomes mostly false.

The claim: A television spot for Initiative 1183, a measure backed by Costco Wholesale that would privatize the state liquor system, says it would “bring more competitive prices to consumers.”

What we found: Mostly True

To borrow an idea from Bill Clinton, it depends on what you mean by “competitive.”

I-1183 would get the state out of the liquor business and open it up to stores measuring at least 10,000 square feet, with exceptions for underserved areas and existing state stores. Currently, 328 state-run and -licensed stores sell liquor; the state estimates that number would jump to 1,428 if I-1183 is approved by voters in November.

So, liquor would be available in more places. No one disputes that.

The question is whether “more competitive prices” means consumers paying less for booze. The I-1183 campaign says they would, although it has not said that explicitly in ads.

The pro-campaign is basically right. Some prices would fall, and maybe a lot of prices, given how heavily skewed the state would be toward large chains with big buying power.

The Seattle Times also did this compare and contrast of what a bottle of liquor might cost if I-1183 is adopted.

Here are some of the other critiques the paper has offered on the campaign to date:

Here are the editorials from across the state that have run to date:



Washington Policy Center has long recommended getting the state out of the liquor business and allowing the competitive private sale of liquor under regulation by the state. This change would allow state officials to shift their efforts from managing retail sales to exclusively enforcing the state’s liquor, public health and public safety laws.

Here are our Key Findings on I-1183:

  • I-1183 would effectively end the state’s 78-year-old monopoly on liquor sales.
  • The Office of Financial Management estimates I-1183 would increase state revenues by more than $200 million, and add $200 million (approximately) in local government revenues over the next six years.
  • I-1183 limits those outlets that can sell liquor to stores of 10,000 or more square feet, with limited exceptions.
  • If I-1183 is enacted, Washington would still rank among the top five states for restrictive access to liquor sales, moving from second to fifth most restrictive, and would be the most restrictive non-monopoly control state in the West.
  • I-1183 would repeal SB 5942 and the proposed leasing of the state’s liquor distribution warehouse to a single private provider, allowing for full competition in the liquor distribution market.

Initiative 1183 provides voters with another opportunity to decide whether state government should continue to have monopoly control over a retail business enterprise and a particular commercial commodity, or if it is time to end Washington’s 78-year-old liquor monopoly. Unlike last year’s Initiative 1100, Initiative 1183 restricts the size of retail stores that could apply for a liquor license. That means far fewer private liquor stores would be allowed to open under Initiative 1183 than would have been allowed under Initiative 1100.

Also, revenue estimates showed passage of Initiative 1100 would have resulted in a loss of revenue for state and local governments, while estimates show passage of Initiative 1183 would provide hundreds of millions of dollars in new revenues for state and local government to help fund public services.

Should voters again reject repealing the state’s liquor monopoly it is likely this reform idea will be dead for the foreseeable future and the state will continue with the liquor-control system largely as it was created in the 1930s. If Initiative 1183 is adopted, however, voters will have shown they embrace the idea of focusing government efforts on strict enforcement of the public health, safety and drinking-age laws related to liquor sales, while leaving the business of distributing, pricing and selling liquor products to the competitive marketplace.

A copy of our full analysis of I-1183 is available here.


[Reprinted from the Washington Policy Center blog; photo credit: BWJones]

Guest Op-Ed: Initiative 1183 Benefits Retailers and Consumers

The Washington Retail Association is proud to endorse a “yes” vote on Initiative 1183. By getting the state out of the liquor sales business, the initiative creates important new opportunities for retailers by allowing qualifying retail stores to sell liquor.

1183 is a responsible plan to end Washington’s outdated monopoly on liquor sales and distribution, and lets consumers buy liquor at licensed grocery and retail stores, just like consumers do in most other states.

Under 1183, licensed retail and grocery stores will add liquor to their other grocery offerings. This provides a new source of revenue for retailers and increases convenience for shoppers. 1183 also eliminates outdated restrictions on the wholesale distribution and pricing of wine, which means lower costs for consumers, wineries and restaurants.

It’s clear that 1183 is good for local businesses and Washington consumers. And, the facts show that 1183 is good for local communities and Washington taxpayers.

The Office of Financial Management estimates that 1183 will provide $186 million to $227 million in new revenues for local governments and $216 million to $253 million for the state government over six years. 1183 also dedicates a portion of these new revenues to local public safety programs to increase funding for local police, fire, and emergency services in communities across our state.

1183 increases revenues while reducing state government costs. Eliminating the costly state liquor store system will save Washington taxpayers nearly $100 million a year and focus the state Liquor Control Board on regulation and enforcement, which is a core function of government.  Selling liquor is not.

Under 1183, a grocery or retail store must have at least 10,000 square feet of fully enclosed retail space in order to be eligible for a license to sell liquor.  The initiative prevents liquor sales at gas stations and small convenience stores.  It also ensures that local communities will have input before a liquor license is issued. Additionally, retail stores must demonstrate that they can effectively prevent sales to minors before being granted a liquor license.

Retailers are ready and willing to accept the responsibility of selling liquor. We’re already experienced in ensuring that only customers of legal age buy the beer and wine we sell. We are prepared to pay a percentage of liquor sales in annual license fees that will support law enforcement and other public safety programs throughout our state. We are set to comply with the additional training and supervisory responsibilities mandated by 1183. And, we know that 1183 doubles fines and license suspension penalties for selling liquor to minors.

Initiative 1183 clearly benefits taxpayers and consumers. It gets the state out of the liquor business and focuses more resources where they belong – on enforcing tougher liquor laws. It creates a competitive marketplace that will provide greater selection and savings for consumers while enhancing business opportunities for local retailers and wineries. And, it saves taxpayers money by eliminating the huge costs of the state’s outdated government liquor store system.

Support for a “yes” vote on 1183 continues to grow throughout our state. We are joined by a number of statewide organizations in endorsing 1183 including the Northwest Grocery Association, the Washington Restaurant Association and Family Wineries of Washington. These four groups alone represent more than 16,000 local businesses. YES on 1183 also has earned the support of law enforcement and public safety officials, civic leaders and consumers across our state.

These organizations, businesses and individuals all agree that YES on 1183 means less government waste, more competitive prices and more funds for vital public services – without raising taxes.

Please join us as a member of The YES on 1183 coalition. Joining online at YESon1183.com is an easy and important way to show your support.


Jan Teague is President and CEO of the Washington Retail Association, which represents 2800 storefronts across the state. Named a “Woman of Influence” by the South Sound Business Examiner, she is a Board member of the Association of Washington Business, a member of the Coalition of Washington Business Organizations and was 2010 President of the State Council of Retail Associations.


[photo credit: tclarkcreations]

Liquor “Emergency” and Performance Audit Fund Raid Stand

Over the past few weeks there was speculation as to whether Governor Gregoire would veto the emergency clause off of a liquor contract bill as well as veto the Legislature’s raid of the voter-approved dedicated performance audit fund. The answer is no – both actions stand as approved by the Legislature.

Here is video of the Governor explaining why she didn’t veto the emergency clause off of SB 5942:

When asked if she would rule out signing a contract before the voters have the opportunity to weigh in on the new liquor privatization initiative she said it was highly unlikely a contract could be approved before the election but she’s learned to “never say never.”

Here is video of those comments:

In an editorial today, the Seattle Times hopes she says never:

“The new law has an emergency clause, which falsely declares that leasing out the state’s wholesale liquor monopoly is ‘necessary for the immediate preservation of the public peace, health or safety’ or ‘support of the state government and its existing public institutions.’

But the state budget has already been passed, and the bill is not necessary for any of that. The false emergency clause was put on to forestall a citizen referendum and to allow the state to rush into a contract before the people can vote on a better plan.

That plan is Initiative 1183. It would continue liquor as a moneymaker for the state while getting the state out of the business of selling it. It is backed by the Washington Restaurant Association, the Northwest Grocery Association and Costco, and is likely to be on the ballot in November.

The people of Washington deserve a choice on the question of who sells liquor here. Gregoire’s administration should postpone any final commitment under the new law until after the November election, to see how the people vote on Initiative 1183.”

Another highly anticipated decision was whether she would follow the precedent sent in 2009 when she vetoed a $29 million raid of the dedicated performance audit account. While saying she disagrees with what the Legislature did this year by re-directing performance audit funds, she was not able to veto this action without vetoing the activities funded.

Here is video of her explanation about the lack of veto on the performance audit fund raid:

By allowing the Legislature to win this game of chicken, creative lawmakers now have the road map to access the formerly dedicated performance audit funds. Rather than use a fund transfer that is easy for a Governor to veto (as occurred in 2009), it is likely future legislative raids will take the form of this year’s re-appropriation of the “dedicated” funds to other agencies.


[photo credit: flickr]

[Reprinted from the Washington Policy Center blog.]

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