Privatizing liquor
2:14 pm
Thu July 5, 2012

The surprising places you might find liquor in Washington

Liquor in a hardware store? Mini’s at the checkout stand? Mega-stores around the corner?

Woman on the street: “My parents actually needed a gift for a friend of ours, and they were able to buy it at a convenience store – like a nice bottle of liquor. I think it’s convenient!”

Now that Washington State is out of the liquor sales business, bottles of booze are showing up in some unexpected places.

You can find bottles of spirits at your neighborhood drugstore, hardware store, the new mega liquor store in Tacoma ... basically in just about any kind of store that can claim 10,000 square feet.

“This is a new world that we’re living in. It’s a privatized system. Those are businesses making business decisions and if they see an opportunity to maximize their profits, they’re going to make those business decisions.”  Brian Smith, Communications Director for the Washington State Liquor Control Board.

There are now roughly 1,500 private retailers across the state, up from 329 state liquor outlets before privatization.

  • Readers: Where has liquor shown up for sale that surprised you? (Comment below and share your photo!)

If the store can claim 10,000 square feet, that includes areas in addition to the retail floor like store room and office space, it can get a liquor license. That’s a total space about the size of a baseball diamond or a quarter of an acre.

And, once they have the license they can sell any size bottle they want, in any quantity, including minis.

It may seem like it’s popping up in all kinds of unusual places, but the initiative, mostly financed by Costco and major grocers is now a state law and was prescriptive.  Ads for the initiative may have touted Costco and Safeway and similar stores, but as long as a store has 10,000 feet, it's eligible for license.

Mega-stores move in

In addition to booze showing up all over, the new law has also spawned new mega competition for retailers, especially big-box retailers like Costco.

In a story last week, The Seattle Times pointed out that these mega-booze stores are unlike anything Washington has ever seen.

“Two major liquor retailers — one calling itself "Costco's worst nightmare" — opened their first Washington stores this week, bringing more competition and lower prices on some products.

“The arrival of BevMo! and Total Wine & More comes less than a month after Washington liquor customers experienced sticker shock at grocery stores, which started selling spirits June 1 under the state's new liquor-privatization law.”

The way the state is handling the new law – Initiative 1183 – has also surprised businesses enough to spawn a lawsuit.

The Associated Press reported last month that supporters of the initiative that privatized liquor sales in Washington filed the suit claiming state regulators circumvented the measure by arbitrarily restricting wholesale distribution and the pricing of wine and spirits. The complaints center on rules imposed by the Washington Liquor Control Board over retail sales to restaurants and distributors’ deliveries, among other things.

Below is the liquor board’s response to the suit:

The Liquor Control Board (Board) is reviewing the lawsuit filed against it by the plaintiffs: Costco, NW Grocery Associations and the Washington Restaurant Association. The plaintiffs were key authors and the primary financial supporters of Initiative 1183.

The plaintiffs’ media message is one-sided and inaccurate.

The Board is confident in the rules drafted to implement I-1183. The Board’s rulemaking was based on its own interpretation, with advice and counsel of its assigned Sr. Assistant Attorney General. It was fully vetted as the soundest legal interpretation.

The plaintiffs allege in the lawsuit itself that the Board made the rules this way because it didn’t like Initiative 1183 or that the Board’s rules make the cost of liquor so high. This is not true.

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 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. A Frequently Asked Questions (FAQ) fact sheet on liquor prices is available on the Board website.

The Board rule-making process was open, transparent and extended over several months. The Board and staff took extraordinary steps in order to be inclusive of all impacted parties, including the plaintiffs.

Unfortunately, there are many different financial relationships that are impacted by I-1183. What benefits one entity is likely to negatively impact others.

More information about Initiative 1183 as well as an audio clip of the February 22, 2012, public hearing is available on the LCB website at www.liq.wa.gov.