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Beer Law: The Big Battle Over Initiative 1100 & 1105

August 26, 2010 2 comments

Say goodbye to State stores? Maybe. New fights on the 1100/1105 front.

Well, its getting even more interesting. The battle over Washington State Initiatives 1100 & 1105 is heating up, more and more, each and every day.

In case you don’t know, Initiative 1100 was introduced back in June 2010 to privatize liquor sales in Washington and to deregulate much of the industry, allowing alcohol to be sold more freely. Initiative 1105 is very similar, but institutes price controls for liquor permits based upon the volume sold. There is much more on these initiatives here on Wikipedia, here on Beer Blotter, and here on Washington Beer Blog.

But recently, the government stuck its head in to the fight – providing a bounty of scary statistics. The Office of Financial Management purportedly performed a study, finding that the State stands to lose between $277 – 730 Million (depending on the measure that passes) if the Initiatives become law.

Opponents of the statistics say that the State is failing to run the numbers on the increase in alcohol taxes that will be raised by private sales of liquor. Furthermore, the State failed to measure the expected increase in alcohol sales in general, due to deregulation of the distribution and sales system.

But now, we have a purported beverage industry blogger bringing a fresh perspective to the Initiatives. Yes 1100–No 1105 is a blog written by an anonymous source, urging consumer to say Yes to 1100 and No to 1105. According to the blogger, the problem with 1105 is that its backed by enormous out of state distributors, hoping to gain a monopoly on the sale of alcohol.

The blogger has even pointed out that Young’s Columbia (one of the great beer distributors we have here in Washington) has contributed a hefty sum to the NO to 1100/1105 campaign put on by Washington Beer & Wine Wholesales PAC. This comes just after Young’s committed $1 Million to the campaign to pass 1105.

Apparently, its 1105 or nothing at all for the distributor. The blogger also has a sneaking suspicion that 1105 was a smokescreen to drag down 1100, all with the intention of supporting a NO campaign in the end. We will never know, and we aren’t speculating either way.

Here is the blogger’s short statement:

Washington State will vote on two liquor privatization initiatives this November– Initiative 1100 and Initiative 1105. I-1100 will provide a fair marketplace for consumers, while improving the Liquor Control Board’s ability to enforce important alcohol safety laws. I-1105 would only guarantee monopoly privileges to the large out-of-state wholesalers who put 1105 on the ballot, with no benefits for consumers and no improvements in public health and safety.

Anyways, we at Beer Blotter have vowed to stay out of the fight and reserve our opinions for vote day. But, we are committed to providing readers with all the resources they can grab, so that you can make an informed decision – come vote day.

Check out the Yes 1100 — No 1105 blog, as well as the vast assortment of other resources and make your own call. Leave comments below if you have something to say.

BreweryLaw.com: Modernize WA Shoots to End Washington Liquor Monopoly

Hi Ladies: If Modernize Washington gets their way, we'll see liquor on Seattle shelves soon

***This article was originally posted on BreweryLaw.com, a beer law blog published by Reiser Legal, our legal writers***

The recent initiative to privatize liquor sales in the State of Washington is picking up steam. Though this is not about beer, there are many in the beer industry who are probably interested in a major change in alcoholic beverage regulation in our fine state.

Initiative 1100 is the proposed legislation. The group behind this initiative is Modernize Washington, a Seattle based public interest group, providing not only the spirit behind the proposed law – but the statutory language itself.

A recent press release from Costco, showing support for the bill, puts the issue at the forefront of legislation challenges in Olympia. Of course companies like Costco, who has over 400 retail locations – all selling alcohol, stand to gain significantly from having access to liquor, for sale in their stores.

The proposed initiative would enable retail outlets like Costco to obtain licenses from the state of Washington, permitting it to sell liquor and permitting it to obtain liquor from almost any source – including the producers themselves.

Modernize Washington provides the following list of items that are at the heart of Initiative 1100. Take a gander for yourself:

  • Washington State’s Liquor Control Board [LCB] will no longer sell liquor.
  • LCB will end their current contracts with contract liquor stores.
  • Current operators in good standing of contract stores will receive licenses to continue in business as a private retailer, if they wish to continue operating.
  • LCB will no longer distribute spirits. The state distribution warehouse will be sold to generate money for the state.
  • A new distributor can be licensed and may buy from any licensed distillery and sell to licensed vendors just like beer and wine sellers.
  • Any store or distributor currently licensed to sell beer or wine, and in good standing, will be able to obtain a license to sell spirits, for an additional license fee.
  • Local jurisdictions throughout the State can determine how many outlets they will allow in their city via zoning regulations.
  • The state’s ‘mark-up’ on spirits is eliminated.
  • The existing tax on liquor will remain and it will be up to the Legislature to adjust the amount of tax.
  • The initiative mentions a 10% tax on purchases of spirits by restaurants. This is not a new tax or a tax increase. This is a technical update to current law, and merely requires private sellers to collect the existing tax which is now collected only by state stores.
  • Repeals the “Three-Tier System”, a set of Prohibition-era “blue laws” which grant monopoly privileges to middlemen, at the detriment of consumers.
  • Frees the LCB from the burden of enforcing outdated and unhelpful “blue laws”. The LCB will instead focus its mission on enforcement of licensing laws and education against under age drinking and general abuse of alcohol.
  • All license fees from the new licenses to sell spirits may only be used for enforcing liquor laws and educating the public against underage drinking and other abusive alcohol consumption.

One of the points that strikes me as impressive, is their attempt to undermine the historic “Three Tier” distribution system that has followed alcohol sales from the end of Prohibition. The system demands that alcohol funnel through three sparties – the producer, the distributor and the retailer.

Over the past decade or so, states have weakened their stance on preserving this archaic system by permitting exceptions for brewpubs and even small breweries who sell and distribute their own products.

Modernize Washington has a copy of Initiative 1100 on their website. Take a gander at Section 15 on Page 9-10 of the document. This is one of the sections that directly repeals the “Three-Tier” distribution system that craft brewers, winemakers and distillers have grown to despise. This Section allows distillers to sell their alcohol to consumers and distributors on their own – without a middle man.

I welcome any comments on your views of Initiative 1100. As the document is extensive, we will continue to discuss its impact – as we learn more behind the initiative’s intent and application.

Leave your comments below.

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