The Washington State Alcohol Experiement Begins

ExperimentFriday, June 1 is the beginning of something very novel yet very old: a free market in liquor in Washington State.

On Friday private businesses will be charged with retailing whiskey, gin, tequila, scotch and all other spirits in Washington State, an activity controlled exclusively by state government since the 1930's. What's very old act of a private company such as a liquor store or grocery store selling spirits to the public. What's novel is that it is happening in what has been a "control state".

After Friday, only seven states will remain in the business of retailing liquor. And some of those, including Pennsylvania, are also considering getting out of this business and giving it over to the free market. As a result, the "Washington Experience" the will be watched very closely by many people.

There will be measurements made, studies conducted, early conclusions drawn, and reviews of the studies, measurements and conclusions written. The results of all these will be used as fodder in other legislative battles over privatizing liquor sales in other states and in litigation across the country that speaks to fair and unfair market conditions surrounding alcohol sales.

Will drunk driving arrests increase or decrease? Will more or fewer minors drink? Will minors drink at an earlier age? Will income for people working in and around spirit sales increase or decrease? Will state alcohol revenues increase or decrease? Will the choice of liquor increase or decrease for consumers? Will spirit sales rise or fall? 

All these questions and others will asked and answered over the years and many other states will be watching the experience and reading the subsequent reports that are issued.

But the change coming to Washington State is more than simply getting the government out of the business of retailing liquor. Starting June 1, producers of liquor can sell directly to retailers and restaurants, a HUGE improvement for both producers and sellers of spirits. Additionally, producers may now offer discounts to retailers or restaurants that buy in volume. And also beginning June 1, retailers may "centrally warehouse" there inventory. This means they can buy in larger quantities, store it off site from the retail outlet and not have to pay a wholesaler to make frequent deliveries to their store.

All of this is good in my mind, However, one aspect of the changes that are coming to Washington State that I believe MUST be changed is the requirement that a store selling spirits be 10,000 square feet or more in size. This requirement was originally placed in the bill to stop QuickMarts and gas stations from selling spirits. But, the provision also prevents independent, small, specialty wine stores from stocking spirits. This provision must change. It's simply unfair and without merit.

One things is clear. Washington State may be privatizing its spirit sales on Friday, but it isn't "deregulating" the spirit trade. In fact, numerous rules and regulations remain in place assuring that sales of spirits are carefully monitored and the state will still be paid enormous fees and taxes based on the sale of spirits, beer and wine.

All eyes interested in how consumers interact with alcohol are trained on Washington State. Because it is a vanguard in the slow move toward rational alcohol regulations, it will be watched very carefully. And there will be consequences.

5 Responses

  1. Alex - May 29, 2012

    Hello this is Alex from the wine forum Washington State has also got approved for another AVA American Vinaculture area in the Colmbia Valley region were it’s cool climate produces grapes high in tannin and acid. Washington State is number two behind California in wine production.

  2. GED Online - May 30, 2012

    Words can’t say how much I appreciate what you’ve mentioned here… Thanks a lot for this info.

  3. PaulG - May 30, 2012

    Tom, I hope you will keep a close watch on what goes on in Washington. For the near term, there will be price gouging, by both wholesalers and the state itself. A super high premium tax is being charged for the first three years; then it will gradually come down. A lot of noise is being made about how consumers screwed themselves and voted for higher prices. Baloney. They voted to get the damn state out of a business it had no business being in. They are willing to put up with (some) higher prices in exchange for vastly superior selection, and the ability to buy booze, wine and food all in the same place. You are quite right – the little wine shops got screwed, but the Legislature can fix that by amending the law (which is still being challenged in the courts by the way). If the Legislature had had the cajones to pass a better-designed bill on their own, a lot of this mess would have been avoided. But politicians are wimps, and they would keep the old rules in place for another century if it were up to them.

  4. Catie - May 30, 2012

    Yup, speaking to a little wine shop that got screwed. But I have also lost all my distributors who use to visit me, telling me about the post-offs I could take advantage of, taste thru new wine samples, and get some customer service. Now I have to chase down the distributors, leave an order on the phone, hoping I make their ever changing weekly deadlines in time to get some stock. Then there is new pricing and me not getting the usual prices I typically get because I will not buy a couple of pallets of one wine like Costco does. It is effecting the way I do business and now I am trying to work around the spirits biz which I am not allowed to sell. I was all for getting the state out of the liquor biz, but this bill was not the one to vote for – – so I didn’t.

  5. Mary - May 30, 2012

    You might want to check your spelling before you post …

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