Did Washington Voters Reform Wine Regulations?…Maybe

Did Washington State voters throw off the shackles of its antiquated three tier system or did they choose to remain tied to post-Prohibition era state stores and a three tier distribution system for liquor and regulations that put distributors in charge over all others?

Answer: We don't know yet.

Initiative 1100 in Washington State would get the State out of the business of selling spirits at state-run stores and put that job in the hands of the private sector. In addition, the initiative would remove many prohibitions on how producers interact with retailers and restaurants.

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WITH BETWEEN 60% AND 70% OF THE VOTES COUNTED SO FAR, INITIATIVE 1100 IS LOSING BY A 2% MARGIN.

Washington State's vote-by-mail program makes it notoriously slow in counting all the votes. However, in order for Initiative 1100 to prevail, there will have to be a very strong showing in the populous areas of the Seattle metropolitan area and the counties surrounding Puget Sound, where Initiative 1100 saw most of its support.

Opponents of Initiative 1100 found great support among voters in Washington's "Bible Belt" of conservatives in Eastern and Southeastern Washington where conservatism is the ruling ideology. In those regions of the state, voters overwhelmingly rejected the notion of free market economics for alcohol and instead gave into the notion that the more restrictions on alcohol, the better.

While these particular voters are incorrect in their assessment of the impact of reform of the alcohol regulatory system and while their ideology and fatih likely blinds them to the reality that a vote against 1100 is a vote for Soviet-Style economic practices, they may in fact win the day.

In order for Initiative 1100 to win it will have to see remaining, uncounted mail-in votes break in its favor in significantly greater proportion than they did on election day.

Initiative 1100 is supported financially primarily by large retailers who, under WA State's system remain hostages to wholesalers, from whom the law requires they purchase spirits for their stores. Costco, Safeway, Walmart and others primarily financed the YES on 1100 campaign in order to bring lower prices to WA consumers by being able to negotiate lower pricing with suppliers of beer and wine and to purchase product on credit, among other options that the rest of the free market condones.

Opposition was, predictable, led by beer and wine and spirit wholesaler middlemen from across the country primarily who feared losing their place in the middle and who, predictably, were unable to voice the primary reason for their opposition to Initiative 1100: They would have to actually earn the business of retailers and suppliers rather than be granted the business by the state. Put another way, if Initiative 1100 passes in Washington and if the movement to reform the system spreads to other states, wholesalers will have to work for a living.

It could be days before we know the final fate of Initiative 1100. I remain hopeful for its passage and will closely be watching returns. However, right now the money is on a very close defeat for commonsense.


6 Responses

  1. Steve Bogdon - November 3, 2010

    Almost all of the small Washington wineries that I saw surveyed opposed 1100, which was one major factor for my “no” vote. There was also a good argument that the initiative failed to address the consequences of lost revenue, which is one of my pet peeves of the initiative process, i.e., a lack of accountability to these other consequences and then a lack of support for the legislative process to deal with the consequences. For example, in Washington, an initiative passed to require voter approval or 2/3 legislative vote on new taxes and fees, which is responsible for California’s budget mess; another passed to eliminate the “candy” tax; and another was defeated which would have established an income tax applicable only to very high income earners. In these three initiatives, the state lost tax revenue, a potential source of additional revenue was not passed, and it will now be impossible to pass tax increases for almost all purposes.

  2. James McCann - November 3, 2010

    Tom,
    It’s ironic that so many in the “free the grapes” crowd balk when it comes to getting government out of the alcohol business. While I am always sympathetic to the small winery owner, how are they any different from the wholesaler who wants state protection?
    In PA, where we have a state monopoly and no shipping, we just elected a governor who is going to try (again) to privatize our system. There will be the usual “neo-prohibitionists” who line up against him, but there will be a disappointing number of wine drinkers, wine bloggers, etc… who will join them.
    While shipping battles are certainly important, how about letting us just have a nice wine shop in our neighborhood? It would be a nice start.

  3. Tom Wark - November 3, 2010

    Wait James…Are you saying the PA state stores aren’t nice??? 🙂
    I think Free the Grapes doesn’t come out hard on privatizaton because their mission is quite focused on direct shipping.
    However, despite what apparently happened in WA state, my guess is that consumers will happily support private stores in PA if the proposal takes account of 1) access, 2) revenue and 3) regulating minor access to alcohol.
    Finally, I don’t think asking for the option to ship direct into a state is the equivalent of asking for “state protection” in the way that distributors tend to receive it via being a state mandated middleman.
    Thanks for commenting.
    Tom….

  4. James McCann - November 3, 2010

    Tom, I purposely didn’t capitalize “free the grapes” so as to mean wine people in general and not the organization.
    To clarify my comment about wineries, which was not clear, I was speaking specifically about WA wineries who are against 1100, and do not want to face the open market in terms of discounting, terms, etc…
    The great thing about PA privatization is that almost all of the profits from our state system are derived from taxes, which should rise under a free enterprise system, since the current system has many PA wine lovers crossing the borders to buy wine. In terms of access, that is up to the market to decide. I can tell you that in a very large state, we currently have 620 stores, which would most likely triple or quadruple in a private system.
    I’ve got my fingers crossed for 1100, but it’s not looking good.

  5. Thomas Pellechia - November 4, 2010

    While I agree with the goal of Initiative 1100, I agree with Steve that referendum intiatives are a big problem because they hardly ever have attached to them the means either for funding or making up for lost funding that they often cause. It’s generally a nice way to run a government, but its built-in problem makes it stupid in practice.

  6. PaulG - November 4, 2010

    Tom, though I desperately wanted to support 1100, I ultimately came out against it (reasons detailed in depth on my blog posts). To summarize… most wineries opposed it. It didn’t just de-regulate, it completely unregulated, by clear cutting the current system and replacing it with… well… nothing specific. The Wild West. Yes, that’s a free market, but questions such as how will the state make up the $$ shortfall were not even summarily addressed. A thorough and thoughtful revision of the system, that takes the state out of the distribution loop, is what I believe most voters would support. But neither of the two initiatives that were proposed was able to clearly define how that would happen. And yes, eastern WA is a sort of Bible Belt, but it’s also where all the vineyards and most of the wineries reside. We do have some drinkers over here!


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