Initiative 1183 backers sue liquor control board, say new private sales rules are “anti-competitive”
A coalition of grocers and restaurant owners backing Initiative 1183 filed a lawsuit in Thurston County Superior Court June 22, challenging the rules the Washington State Liquor Control Board has adopted as it implements the voter-approved measure to privatize liquor sales throughout the state.
The coalition included the Washington Restaurant Association, the Northwest Grocery Association and Costco Wholesale Corp.
Costco was the major money contributor in the effort to pass the initiative, spending more than $22 million during the successful campaign.
The lawsuit asserts the liquor board is circumventing the language of the initiative by restricting wholesale distribution and pricing of wine and spirits, according to a statement released by the coalition.
The specific rules challenged in the lawsuit include the liquor board’s 24-liter per day restriction on sales of wine and spirits from retailers to restaurants, restrictions on delivery locations for spirits distributors, imposition of unauthorized fees on certain spirits manufacturers, and discrimination against foreign spirit producers’ ability to market products to retailers, according to the coalition.
“Thousands of small businesses throughout the state will be harmed by the LCB’s rules, which impede competition and transfer market power away from the consumer,” said Anthony Anton, Washington Restaurant Association president and CEO, in the statement. “We recognize how difficult this transition has been for the LCB and are hopeful they will reverse course and fix these erroneous rules.”
The liquor board said in a statement released late in the afternoon on June 22 that the coalition’s message was “one-sided and inaccurate.”
“As a public agency, the board was neutral throughout the campaign and implementation, and successfully defended the initiative in the Supreme Court against a constitutional challenge,” the board’s statement read. “The truth is that the price of liquor is higher because of 10 percent fees at distribution and 17 percent at retail that the plaintiffs themselves drafted and voters approved in 2011. The taxes are the exact same spirits and liter taxes customers have paid for many years.”
Washington state entered the world of privatized liquor retail this month with a mixed response from consumers. Higher prices and confusion over some grocery stores not factoring in taxes on their price tags has upset customers.
Opponents of privatized sales have also been alarmed at the increased availability and visibility of liquor retail outlets.
Fifty-nine percent of Washington voters approved the initiative last November.
Leaders of the grocery and restaurant coalition say the burden placed on state retailers makes it impossible for the new law to work.
“The rules adopted by the LCB directly conflict with what 59 percent of the voters adopted last November,” said Joe Gilliam, president of the Northwest Grocery Association, in a statement. “These anti-competitive rules must be changed in order for the market that the voters adopted to be allowed to develop.”