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I-1100 and I-1105: Local impact of Washington state liquor initiatives
In November, voters will decide whether to privatize liquor sales in Washington.
Initiatives 1100 and 1105, if passed, will transfer the sale of spirits from the state's Liquor Control Board to retailers currently selling beer and wine. The board would be cast in the role of issuing liquor licenses, oversight of enforcement of alcohol laws and collection of liquor taxes. There are pros and cons to passing the measures.
In Federal Way, for instance, consumers would have broader access to spirits under either initiative. The number of retailers selling liquor will increase from three to more than 50. On the flip side, if both measures passed, the city would lose roughly $651,000 in revenue each year, city manager Brian Wilson said.
Retailers could begin selling hard alcohol on June 1, 2011. State liquor stores would be shut down by Dec. 31, 2011. The existing state taxes on liquor will remain. But revenue generated from the mark-up of spirits will go to the retailer, not the state.
Initiative co-author Stefan Sharkansky supports the initiative "as a citizen who is looking to craft good public policy for the state of Washington," he said.
The Yes to 1100 (Modernize Washington) campaign claims the initiative will allow for greater enforcement of alcohol laws by the state's Liquor Control Board and provide consumers convenience and fair prices.
• I-1100 will force the state to shift its focus from alcohol sales to enforcement, said Sharkansky. Only retailers that currently sell beer or wine, and hold a responsible record of not selling to minors, will be awarded a sales license at a cost of $1,000 to the retailer.
• The initiative will put a stop to price gouging. The state's Liquor Control Board marks up the price of alcohol by 51.9 percent. Private sector competition will drive prices down.
The initiative will allow retailers to sell spirits off their shelves, but also market to restaurants, bars and other liquor stores. Costco, the Washington Restaurant Association, the Northwest Grocery Association and the Association of Washington Business, among others, support the initiative.
Costco Wholesale Corp. has contributed more than $3.4 million, of the total $6.16 million raised by the campaign, according to the Washington State Public Disclosure Commission (PDC).
Opposing I-1100, the Protect Our Communities campaign says the initiative is too risky. It will take much needed money from the state and local municipalities, and overwhelmingly increase the presence of hard alcohol in Washington's communities.
• The Office of Financial Management estimates that over five fiscal years, total state revenues would decrease $76 million to $85 million and revenues dispersed to local municipalities would decrease an estimated $180 million to $192 million.
• Campaign supporters worry the initiative will increase teens' access to spirits. The measure will put liquor into an additional 3,300-plus retail stores, including convenience and gas stations, supporters say. This increases the chances that minors will be able to illegally purchase or steal spirits, said John Guadnola, executive director of the Washington Beer and Wine Wholesalers Association.
"There will be an explosion of stores," Guadnola said. "Consumption will go up and problems will go up."
The "no" campaign is funded through significant money from several beer and wine distributors, among others. The Washington Beer and Wine Wholesalers Association has contributed roughly $2 million of the $8.8 million raised to oppose I-1100 and I-1105, according to the PDC.
I-1100: Big business
Costco representatives say they support the measure because it benefits consumers.
"It is a matter of principle," said Joel Benoliel, a senior vice president at Costco, in an Oct. 19 National Public Radio article titled "Costco Battles For Cheaper Booze In Wash. State."
"Part of what we are known for is being pro-consumer, and when we identify places where they are being gouged, we think it's incumbent on us to stand up for our consumers," Benoliel said.
Initiative 1100 favors corporate giants like Costco, said Tiffany Adamowksi, Federal Way's 99 Bottles co-owner. It allows corporations to buy spirits in bulk on credit and act as distributors. Existing distributors of liquor, beer and wine may have to raise their prices to compete. That mark-up could be passed on to small retailers like 99 Bottles, whose niche is specialty beers.
99 Bottles is looking at its business plan and seeing what changes will be made if I-1100 passes, Adamowski said. The store may have to decrease its beer stock and replace it with some liquor to remain viable, she said. If distributors increase their prices, 99 Bottles may have to follow.
"There are so many things that are unknown and going to be shaky," Adamowski said.
The state Liquor Control Board will oversee licensing of liquor retailers and distributors. The board will cease operating all liquor stores and sell inventory and assets of those stores, including the state's liquor distribution center, by April 1, 2012.
The initiative will repeal existing liquor taxes and put the Liquor Control Board and Legislature in charge of reforming liquor sales laws. The reformed sales laws will impose a per-liter tax rate that must generate $100 million dollars more than current laws over a five-year period.
Licensed retailers may start selling Nov. 1, 2011. Like I-1100, this initiative will increase the number of retailers selling spirits. Licenses will only be issued to stores already selling beer and wine.
Retail licensees will pay the Liquor Control Board 6 percent of their gross annual hard alcohol sales for a five-year period. Additionally, retailers will pay an annual license fee, to be determined by the Liquor Control Board. The revenue will be placed in the state's general fund.
Licensed distributors may start selling spirits Oct. 1, 2011. They can sell to persons licensed to sell, or they may export the product. Liquor manufacturers and distributors will be held to the same laws applicable to beer and wine manufacturers and distributors. However, distributors may offer quantity discounts.
Distributor licensees, for a period of five years, will pay the Liquor Control Board 1 percent of their gross annual sales. They too will pay an annual license fee to be determined by the liquor board. All funds collected will be placed in the state's general fund.
I-1105: Campaign standpoints
Supporters say the measure will successfully privatize the liquor sales business while simultaneously bringing in more revenue for the state.
"We, as a state, don't do a very good job of operating the business," said Bob Stevens of the Washington Citizens for Liquor Reform campaign.
The campaign is financed by alcohol wholesalers and distributors Young's Market Company LLC, which contributed just shy of $1.5 million, and Odom Southern Holdings LLC, which pitched in just shy of $1.3 million, according to the PDC.
The Protect Our Communities campaign also opposes I-1105, on the grounds that it will decrease state and local revenues and increase teens' access to liquor. According to the Office of Financial Management, total state revenues would decrease an estimated $486 million to $520 million and total revenues going to local municipalities would decrease an estimated $205 million to $210 million over five fiscal years if I-1105 passed.
Learn more online
Yes to 1100:www.yesto1100.com
Washington Citizens for Liquor Reform: http://liquorreform.org
Protect Our Communities: www.protectourcommunities.com
Washington State Public Disclosure Commission: www.pdc.wa.gov
Washington State Liquor Control Board: http://liq.wa.gov
Office of Financial Management: www.ofm.wa.gov