Costco-backed liquor privatization effort rejected

Voters have rejected a Costco-backed measure that would have gotten Washington state out of the business of selling hard alcohol, delivering a double rebuke to competing efforts to privatize liquor sales in the state.

With about two-thirds of the expected vote counted by Wednesday, Initiative 1100 was losing by more than 73,000 votes, with 52 percent of voters rejecting it. Voters in Tuesday's election had already rejected a competing liquor privatization measure, Initiative 1105.

Both I-1100 and I-1105 would have abolished the state's current monopoly on liquor distribution and sales in favor of private businesses. But I-1100 would have gone further, dismantling the current distribution model and allowing retailers like Costco to buy beer, wine and spirits directly from manufacturers instead of going through distributors.

I-1100 would have also eliminated price controls and other regulations that exist within the current three-tier system of producers, distributors and retailers - such as bans against volume discounts and paying on credit - that exist for beer and wine distribution and sales. I-1105 would have kept in place state laws that protect beer and wine distributors. It would have maintained prohibitions on bulk discounts for beer and wine, but would have allowed them for sales of hard liquor.

"Voters looked at both of these initiatives and what they saw were two deeply flawed measures that would have compromised public safety, cost us state jobs and undermined the quality of life in our community," said Sandeep Kaushik, a spokesman for the No on I-1100/1105 campaign.

I-1100 spokesman Ashley Bach said that while the campaign wasn't officially conceding, "we recognize the numbers aren't with us right now."

"It's tough to win an election when you're outspent by several million dollars and your opponent is funded by multinational beer conglomerates," he said.

The I-1100 campaign battle had mainly been between big box stores like Costco and distributors who don't want to disrupt the current system. It was a big-money fight with lots of out-of-state donations from groups like the Washington, D.C.-based Beer Institute and dozens of state distributor groups giving money to the opposition campaign, which spent $8.8 million. The "yes" campaign spent nearly $6 million, with more than $4.8 million coming from Issaquah-based Costco in money and in-kind contributions.

A coalition of several groups opposed both initiatives, including unions, the Washington state Council of Firefighters, and several craft breweries and wineries, citing concerns ranging from public safety to the potential effect on state and city budgets. I-1100 would have removed the liquor markup imposed by the state, and I-1105 would have removed the markup and all additional liquor taxes.

Washington is among 18 so-called "control" or "monopoly" states that exercise broad powers over wholesale distribution of hard liquor. Of those states, 12 - including Washington - are also involved in retail alcohol sales through either state-run liquor stores, outlets operated by private contractors, or both.

While the liquor privatization debate hasn't been able to gain traction in Washington state until this year's dueling initiative measures, the state Legislature has already made several changes to the three-tier system over the years, including allowing brewers and wineries to sell directly to consumers, and allowing retailers to buy directly from wineries and brewers.

Bach said that regardless of I-1100's outcome, state officials can't ignore that nearly 400,000 voters signed petitions to get it on the ballot, and that 48 percent supported its passage.

"We're confident this will send a strong message that liquor reform is something the public wants," he said.