Advertising

Originally published November 8, 2011 at 9:16 PM | Page modified November 9, 2011 at 8:29 AM

Voters kick state out of liquor business

Next June, consumers in Washington state will be able to buy hard liquor at grocery and warehouse stores, including Costco.

Seattle Times business reporter

quotes Finally prohibition is ending in WA state. Read more
quotes Thank You! Costco. Read more
quotes That's too bad. The stores won't get a dime of my money for alcohol. Increased access... Read more

advertising

Beginning June 1, grocery stores in Washington will begin selling liquor.

That's the result of a $22.7 million voter campaign that Costco Wholesale led to kick the state out of the liquor business and allow private retailers to sell spirits instead.

Of the ballots tallied Tuesday night, about 60 percent favored Initiative 1183.

Beginning next June, liquor sales will shift from the state to grocery and warehouse stores, including Costco. It means more than 900 state employees will lose their jobs, most of them workers at state-run liquor stores.

The state budgeting office figures the number of outlets selling liquor will jump from 328 to 1,428. It also expects the change to generate an average of $80 million more in annual revenue for the state and local governments over the next six years.

Some liquor prices are expected to drop, although not as low as in California, because Washington will keep its high liquor taxes.

The campaign was a battle of corporate interests, with Costco contributing the vast majority of the money for the pro-1183 campaign.

"We are very pleased and grateful to all of the coalition members across the state," said Joel Benoliel, Costco's chief legal officer.

The coalition against I-1183 was financed mostly by wine and liquor distributors, who fear that liquor and wine deregulation in the measure will spread to other states.

Early on, the No campaign focused on the safety implications of the measure and was winning in phone surveys. Its lead diminished as the campaign turned to speculation about how many gas stations and minimarts might sell liquor, and to Costco.

In a statement, the opposition coalition said it remains concerned about the public-safety consequences and hopes the measure's supporters will make good on promises of extra revenue for law enforcement.

Distributors particularly dislike that I-1183 allows retailers to buy liquor directly from distilleries. Since Prohibition ended, states have required retailers to go through distributors for liquor, and experts say Washington now might be the only state to tear down that law.

Small wineries, craft distilleries and neighborhood grocery-store owners also worry about how they will compete in a market that favors large players. I-1183 allows stores measuring at least 10,000 square feet to sell liquor, and makes it legal for retailers to get volume discounts on liquor and wine, and to warehouse those products themselves rather than using distributors.

Issaquah-based Costco donated $22.5 million to the campaign for I-1183, making it the largest single donor to a voter initiative in state history. Only $18.5 million was spent, and campaign leaders said the $4 million difference will be returned, presumably to Costco.

I-1183 was a scaled-back version of a voter measure Costco backed in the 2010 election, which voters resoundingly rejected. That measure would have allowed minimarts and gas stations to sell liquor, deregulated beer distribution and meant lost revenues for the state and local governments — all issues Costco revised in I-1183.

In the coming weeks and months, the state Liquor Control Board will wind down its liquor business, including selling its inventory and Seattle distribution center, and auctioning off state-run liquor stores.

About half of the 328 stores that sell liquor in Washington are state-run, and they will stop selling liquor by June 1. The other half are owned by contractors, who can continue operating but must buy the existing inventory from the state. That averages $125,000, and some say they cannot afford it.

Meanwhile, the liquor board will begin issuing licenses to qualified liquor distributors and retailers, and on June 1 privately owned stores will begin selling liquor in Washington.

Tom Geiger, communication director for the union representing more than 700 workers in state-run liquor stores, said he thought the results raised questions about democracy itself.

"If a private company decides to spend tens of millions of dollars to pass a new law, to buy an election, can they do it?" Geiger asked. The results in this case, he said, suggest they can.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com

Seattle Times reporters Craig Welch and Susan Kelleher contributed to this report.

News where, when and how you want it

Email Icon




Advertising