Saturday, August 7, 2010

The Rough Road to Modernizing Washington's Liquor Laws

We're just not the same as the other 49 states - Washington is an enigma. Our current liquor laws maintain the post-Prohibition era statutory scheme set up in 1933, but the industries it regulates have evolved far beyond what that scheme was aimed at regulating in 1933. Initiative 1105 on the Washington ballot this November would maintain part of that scheme, but the legions of small craft wineries and breweries in the state would fare better than under its competing ballot initiative, I-1100.

Washington has what is referred to as the three-tier system, implemented after the repeal of Prohibition (the 21st Amendment), that essentially requires that wine and beer retailers purchase alcohol from distributors (hard liquor is sold only by the state in its liquor stores), and the state fixes the price. I-1105 would retain the distributor system and the fixed price requirement, but would eliminate state-run liquor stores, allowing private retailers to sell hard liquor. Maintaining the price control requirement would continue to protect the small wine and beer makers and would not give big box stores the advantage of buying wholesale at volume discounts, thereby making the retail price lower.

While Washingtonians don't need the protection of the state controlling where they purchase their liquor, the burgeoning craft wine and beer industry here doesn't need the added financial stress of competing with Costco, Kroger brand stores (QFC, Fred Meyer), or other big box retailers. I-1100 would definitely give the big box stores the heavy advantage in being able to purchase and sell wine, beer and liquor at a significant discount, which would probably lead to the doors closing on many smaller manufacturers of beer, wine, and liquor (Washington recently allowed distilleries to operate in the state - a 2008 state law gives hard alcohol makers some of the same rights to serve and sell as their brewing and fermenting counterparts).

Maybe the reason other states don't have the innovative wine and beer industry that Washington does is because Costco and others competed them out of the market. I-1105 would keep the level playing field.


  1. Interesting - I-1105 is a compromise. Maybe I-1100 would help both by lowering costs for the bulk sales, while then also leaving more budget for variety and tasty alternative choices in the smaller crafters.

  2. For my small winery the prospect of having to compete with the big guys who can afford to do quantity discounts is scary as is not getting paid at delivery of the wine and having to spend more time keeping track of people who owe us money. But the scariest part of the initiative if I understand correctly is that restaurants and wine shop would be able to charge us to carry our wines as we could have to pay for shelf space and restaurant list placements. It would definitely be the end of the WA small wineries as we know them, no other sate has legislation as extreme as the one proposed.

  3. There must be a better way to close state liquor stores than passing new legislation that also puts small-crafters into a tailspin. Maybe neither one of the initiatives are the way to do it. And all parties should be at the table when discussing reforms.

  4. As an attorney and owner of a small winery, I fully support Initiative 1100 and despise 1105. 1100 would take the state out of the alcohol business and eliminate restrictions on competition that hurt small wineries. 1105 just replaces the current state spirits monopoly with a middleman distributor monopoly and does nothing to help breweries or wineries. The free market is the only truly level playing field. Any over-reaching by Costco or anyone else under 1100 is already illegal under the federal wine laws, state and federal antitrust laws and consumer protection laws. A few established wineries may want to keep the so called "protections" of the current system, but wine, beer and spirits consumers should all vote yes on 1100 and no on 1105. Check out our website for more information: