Liquor privatization measure passes, what's next?



Posted on November 9, 2011 at 8:09 AM

Washington voters have approved I-1183 to privatize liquor sales. Here's a look at what happens next.

When will state liquor stores close?

The initiative requires the Liquor Control Board to close 164 state liquor stores by June 1, 2012.  This affects about 800 full- and part-time state employees at liquor stores.  The 159 state-contracted liquor stores may apply for licenses and compete if they choose.

What happens next?

Under the initiative, private distributors and retailers can get licenses to distribute hard liquor.  Distributors can start selling spirits on March 1, 2012 and private retailers such as Costco and Safeway would begin selling June 1, 2012.

Will I see liquor sold at mini-marts?

The initiative is written to apply to stores greater than 10,000 square feet (the size of a small grocery store or Trader Joe's).  However, it does say that smaller retailers may get a license to sell liquor if there is not a store bigger than 10,000 square feet in the "trade area."  It will be up to the state Liquor Control Board to define what a "trade area" is.

Will liquor prices go up or down?

This is unclear and depends on the markup distributors and retailers put on liquor in a competitive environment. The state currently marks up liquor 52%.  Under the initiative, the state would charge licensing fees equivalent to 27% initially.  It remains to be seen whether distributors and retailers will make up the difference with their markup, or whether market competition will mean smaller markups.

Will this mean more or less money for the state and local governments?

The Office of Financial Management estimates that beginning in 2013, the state will see a bump in revenue of roughly $50-$60 million, depending on consumption and markup by private retailers.  That bump drops to about $35 million in 2015, because licensing fees to distributors are reduced after the first two years.  Local governments would see a similar bump.

What about wine?

The initiative eliminates the requirement that distributors and manufacturers of wine sell at a uniform price.  Retailers will also be allowed to accept delivery of wine at their stores or their own warehouses.  Costco argues this will allow it to purchase directly with some manufacturers and reduce prices to consumers.