Deregulation or Modernization?

I-1100 in Washington would deregulate the sale of spirits in the state, and would also impact the sales of beer and wine indirectly. But it would also modernize the law which was written for a less mature society coming out of the Great Depression and the horrors of Prohibition-era bootlegging and underground sales of alcohol. So it's a bit of both.

Deregulation is rarely a good thing if you care about things like competition, creativity and entrepreneurial innovation, and discouraging monopolies. Deregulation in other industries has almost always led to monopolies, or a small number of huge corporations controlling an industry leaving little room for competition from smaller companies. Large corporations find that they have difficulty competing with the originality and the innovation of smaller companies so they buy them out and snuff out the competition, while also snuffing out innovation. Americans seem to heartily embrace smaller companies and innovation, but Americans also like to buy things cheaply when they go to the store. Deregulation, which leads to control by large corporations, can also lead to large corporations being able to offer products at a cheaper price. Hmm, a conundrum. To regulate or not to regulate.

Right now, because the state controls the flow of the alcohol industry, there is a ban against volume discounts. I-1100 would repeal this ban. Companies like Costco would be able to negotiate volume discounts from suppliers, buy directly from the supplier, not a distributor (now a requirement), and pass on the discount to its customers. Sounds like a bargain, no? However, companies such as small breweries and wineries would also be pressured to sell at a discount, which would likely hurt the profits of small, innovative companies. Make no mistake, Costco does have the buying power to control the market price - it simply isn't a level playing field.

Yet Costco buys direct from vendors in many other states that don't have the bans against volume discounts and other restrictions found in Washington state law, and life seems to flow along ok in that regard. Many other states allow all forms of intoxicating liquor to be sold by private retailers, but one thing many other states and regions don't have is a burgeoning craft wine and beer industry, like we have here in the Pacific Northwest, especially in Washington. I-1105 is also being trotted around as the answer and would not be quite as sweeping as I-1100. More to come on this blog about I-1105 ~ Stay tuned.

Privatization of liquor sales would undoubtedly bring in more revenue to the state, something Washington badly needs. But is I-1100 the way to do it? Is it too broad and far-reaching?