Both liquor initiatives take control from state

Washington voters may think they’re seeing double this fall when they scan the Nov. 2 ballot. Two separate initiatives ask them to do something the state has studied for years but failed to enact: end state control of liquor sales and distribution.

The ballot titles of Initiatives 1100 and 1105 may seem nearly identical, and both measures would close state-run stores where customers now must go to buy liquor. In general, retailers who sell beer and wine could start selling gin, vodka, tequila and bourbon if they obtained a license from the state.

But the two proposals change the state’s post-Prohibition laws for things that happen before the consumer buys that bottle.

Those differences could spell large profits for different players in the liquor business, which helps explain why more than $12 million has been contributed so far to various campaigns to pass or sink one or both measures. The measures pit large national retail chains against large beer distribution operations, with labor unions and public health advocates wading into the fight.

Right now, the state controls the wholesale purchase, distribution and retail sales of liquor and has since the 1930s when the U.S. Constitution was amended to repeal Prohibition. Like 12 other states, Washington has monopoly control over the distribution and sale of liquor from the time it leaves the distillery to the time it winds up in a consumer’s hands.

“I think the system may be a little archaic,” Jim van Loben Sels, general manager of Arbor Crest Winery, said Thursday. But he doesn’t support either initiative, contending that even though the system could use some changes, it’s working pretty well for the Spokane-based winery.

Arbor Crest is a midsized winery – in the top 25 of the state’s 750 wineries, but nowhere near the size of a giant like Chateau Ste. Michelle, van Loben Sels said. The biggest wineries may support a change because they produce enough wine to offer large volume discounts, while the smallest wineries may see a chance to distribute their product themselves.

Midsized wineries like Arbor Crest fear they’ll be crowded off the shelves in some stores that make room for liquor, or be forced to pay for shelf space at supermarket chains.

Initiative 1100 is sometimes called the Costco initiative because the discount retail giant bankrolled the signature-gathering campaign and remains its biggest donor. It gets rid of the state’s warehouse and distribution system and allows large retailers to buy directly from distilleries, essentially setting up their own distribution system. That would allow volume discounts, and could lead to cheaper prices, at least in those stores.

Restaurant chains might also be able to make volume deals with microbreweries, wineries or distilleries for their product.

Initiative 1105 is sometimes called the distributors’ initiative because a pair of large national beer, wine and liquor distributors bankrolled that signature campaign. It replaces the state’s monopoly distribution system with private distributors, so even the large retailers would have to go through distributors to get their supplies.

In taking the state out of the liquor business, both proposals eliminate the state’s markup on booze. State and local revenues would go down by at least $250 million over the next five years for I-1100 and by at least $690 million over five years for I-1105, according to the state Office of Financial Management.

But those estimates have been disputed; I-1105 supporters note that it doesn’t count revenue from things like the sale of the state’s inventory and liquor warehouse.

I-1100 essentially keeps the state’s liquor tax structure in place, while I-1105 repeals the taxes and orders the state Liquor Control Board to recommend to the Legislature a new system that raises about $100 million more over 5 years.

Some groups are opposing both initiatives. Unions, particularly those representing state workers who currently staff state stores, are urging a vote against both, as are some public health and law enforcement groups.

“They both allow easier access to alcohol around the clock,” said Sharon Ness, a nurse and member of the United Food and Commercial Workers, who helped write the statement against I-1105 in the voters pamphlet. “We see enough of the problems with alcohol and the diseases it causes.”

Much of the funding for the campaign opposing both initiatives comes from national beer distributors.

There are some who feel that both will either pass or fail because they are so close in the voters’ minds. Some polls are beginning to show more support for I-1100, and several business groups, including the National Federation of Independent Business and the Association of Washington Business, are backing I-1100 and opposing I-1105.