Note: I will be speaking on Weekday on KUOW 94.9 FM today at 9am about globalization of the wine industry and Q13 at 5:30pm about the Seattle Metropolitan Top 100 list. Tune in!
Initiative 1183 is brought to you by the same folks who brought you Initiative 1100 one year ago. It is, in some respects, a greatly simplified and streamlined version of 1100. The concise description of the initiative reads as follows:
This measure would close state liquor stores and sell their assets; license private parties to sell and distribute spirits; set license fees based on sales; regulate licensees; and change regulation of wine distribution. Should this measure be enacted into law?
The summary states:
This measure would close state liquor stores and sell their assets including the liquor distribution center. The state would license private parties to distribute spirits and to sell spirits in retail stores meeting certain criteria, subject to specified training and compliance requirements. The measure establishes licensing fees for sale and distribution of spirits based on the licensee’s sales revenues. It would change some wine distribution laws and allow non-uniform wholesale pricing for wine and spirits.
Unlike its predecessor, 1100, the meat of what this initiative does is actually contained in the concise description and summary. It is, however, notable that “change regulation of wine distribution” and “change some wine distribution laws” both have nothing whatsoever to do with liquor privatization and are vague.
Drilling into the specifics, Initiative 1183:
1. Removes the government from the liquor sale, distribution, and promotion business and auctions off existing state owned stores and facilities. This process must be completed by June 1, 2012.
2. Allows private distributors of alcohol to be licensed if they meet requirements set by the Liquor Control Board (LCB)
3. Allows retailers to sell liquor if they meet requirements set by the LCB
4. Requires retailers to have 10,000 square feet of retail space within a single structure to obtain a liquor license
5. Creates a new set of fees to generate revenue, specifically: requires private distributors to pay 10% of their gross spirits revenues to the state in the first two years, 5% in subsequent years; requires private retailers who sell liquor to pay 17% of gross spirits revenues to the state; charges retailers and distributors nominal licensing fees
6. Adds some supposed safety provisions, including community input on retailer licensing, increasing fines for selling to minors, and increasing training and supervision for employees selling spirits. Note that it does not add any additional resources for the LCB despite the increase in retailers.
Here’s where the wine-related changes come in:
7. Allows wine distributors and wineries to offer volume discounts which is currently prohibited. Interestingly it specifically mentions that this would not be allowed for beer as presumably they didn’t want to take on two powerful lobbies at once.
8. Allows both retailers and restaurants to distribute wine to their own stores from a central warehouse which is currently prohibited.
While Initiative 1183 gains its inspiration from last fall’s Initiative 1100, there are a great many differences between the two with 1183 proposing less radical change. In contrast to last fall’s Initiative 1100, Initiative 1183:
A. Is revenue positive according to the Office of Financial Management (read the Impact State, which opens a .pdf, here) and the Washington Research Council. The initiative accomplishes this by creating additional fees. Without additional legislation, 1100 would have caused massive financial losses at the state and local levels. As a consequence, however, liquor prices could potentially go up rather than down.
B. Maintains distribution of liquor revenues to local governments as well as new revenue for local public safety programs. Without additional legislation, 1100 would have eliminated these revenues.
C. Makes it less likely that gas stations and convenience stores will be able to sell liquor by requiring 10,000 feet of retail floor space. 1100 would have allowed convenience stores and gas stations to sell liquor. However, exceptions in the initiative to the 10,000 square foot requirement are currently generating discussion. Note that the number of stores that sell liquor will still substantially increase, with 4 to 5-fold the number many have been citing.
D. Keeps in place numerous wine related laws that would have been removed by Initiative 1100 (see a series of posts on 1100 here), including removing Cash on Delivery, preventing payment for shelf space, and others.
Promotional material for the initiative has also stated that it allows wine distributors and wineries to sell directly to retail stores and restaurants if they choose. Note that this is already the law and, as best I can tell, there is no language in the initiative that reinforces the existing law.
Read the full Initiative here (Note: Opens .pdf).
So where are the chips falling on Initiative 1183? Costco is once again the main supporter of the initiative. Other supporters are the Northwest Grocery Association, the Washington Restaurant Association, the Washington Retail Association, and Safeway. Against is the group Protect Our Communities, which should really be named ‘Protect Our Jobs’ with most of the money coming from Wine and Spirits Wholesalers of America. Once again, expect a continuing barrage of commercials in the spirit of Reefer Madness about the damaging effects of liquor privatization on your community. Of course the pro groups could just as easily be called ‘Line our Pocketbooks’ as this is all about money.
According to the Seattle Times, voters were split 50 percent in support, 38 percent opposed, and 12 percent undecided in a poll released on August 23rd.
As we get closer to the election, I will give additional details on the wine-specific changes proposed in this initiative as well as my own position.