Two initiatives seek to privatize liquor sales

As the state budget faces yet another tough fiscal year, there has been a general push toward scaling government back...

By Isaac Bonnell

In Washington, the state government has controlled the sale of liquor since Prohibition was repealed in 1933, but two initiatives going before voters in November seek to change that.

Initiative 1100 and Initiative 1105 both want to get the state out of the business of distributing and selling liquor, but the measures are different in how far they open the door for privatization.

Currently, the state has a three-tiered control system, meaning it oversees the manufacture, distribution and sale of liquor. Manufacturers must purchase a permit from the Liquor Control Board and go through licensed distributors, who then supply the 315 various liquor stores, a majority of which are operated by the state.

As the state budget faces yet another tough fiscal year, there has been a general push toward scaling government back to its essential services — which some feel does not include controlling liquor sales.

“First off, the state of Washington has for 75 years been living under Prohibition-era laws,” said Ashley Bach,spokesperson for the Yes to 1100 campaign. “What 1100 does is modernize the liquor laws for the way we live today.”

Both initiatives propose to close state liquor stores and allow beer and wine sellers to also sell liquor. The initiatives would also force the state to sell its 250,000-square-foot distribution center in Seattle, which could bring in $27.8 million in one-time revenue for the state, according to the Office of Financial Management.

Initiative 1100 would do away with the three-tiered system, allowing retailers to purchase directly from producers, thus bypassing distributors, and get volume discounts. It would keep in place the state taxes on liquor and set a $1,000 flat annual liquor permit fee with a one-time $2,000 application fee.

By removing the state from distribution and sales, “this would allow the Liquor Control Board to focus more on enforcement,” Bach said.

Initiative 1105 would keep part of the three-tier system intact, namely the distribution model. Also, the price of a liquor permit would be adjusted to a percentage of gross liquor sales, rather than the flat fee proposed in I-1100.

I-1105 also proposes to repeal the state liquor tax and recommends that the legislature craft a simpler way of taxing liquor by the liter, campaign spokesperson Charla Neuman said.

Liquor sales bring in about $320 million in annual revenue for the state, according to a recent state auditor’s report. That revenue comes from a 51.9 percent markup of liquor prices and additional state taxes. Altogether, Washington has the highest liquor tax in the nation, at $25.73 per gallon.

One fact that the report also pointed out, however, was that state revenue from liquor sales is higher in monopoly states like Washington than in states with privatized liquor sales.

Liquor initiatives at a glance
Sources: Washington Secretary of State, Public Disclosure Commission

I-1100: This measure would close state liquor stores; authorize sale, distribution, and importation of spirits by private parties; and repeal certain requirements that govern the business operations of beer and wine distributors and producers. The campaign has raised more than $1.2 million, with Costco being the largest donor at $807,200.

I-1105: This measure would close all state liquor stores and license private parties to sell or distribute spirits. It would revise laws concerning regulation, taxation and government revenues from distribution and sale of spirits. The campaign has raised more than $2.2 million from two beverage distributors: Young’s Market Company and the Odom Corporation.


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2 thoughts on “Two initiatives seek to privatize liquor sales

  1. The state government is going broke due to decreased tax revenues, and is cutting essential services to the handicapped and elderly as a result. Will privatizing liquor sales mean that the state will not recieve the tax revenue from liquor sales? Much as I hate to pay taxes, I also hate to see the poor, elderly and handicapped going without food and medical care so we can have our booze cheap.

  2. I would think that the privatization of liquor sales could have little effect State revenue. I can’t imagine that the State would eliminate liquor taxation all together. Beer and wine sales are currently privatized and still taxed by the State. If anything, it seems that the State could eliminate the cost of leasing retail space, paying employees (salaries, benefits, insurance, etc…), and distribution.
    Has anyone come up with solid numbers on the effect privatization will actually have? Could the State simply raise it’s liquor tax (not that I personally agree with that) to cover it’s current revenue generated by the 51.9% retail markup.

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