Retailers who hope to make money by selling alcohol to Washington residents once the state gets out of liquor sales June 1 now are trying to change the rules of the game that led to privatization.
Initiative 1183, which was approved in November, succeeded where similar privatization efforts failed because of the way it was sold to voters. It reassured them – complete with fatherly testimonials by police and firefighters – that local public safety would be held harmless if I-1183 passed.
In fact, due to extra fees liquor retailers would pay under provisions of I-1183, local governments would get millions of dollars more than they were getting under state control of liquor. That extra money would help pay the cost of enforcing the effects of liquor sales at so many new outlets across the state.
Critics of I-1183 pointed out the obvious: If more fees were charged and more revenue would be raised, liquor prices would have to increase. Consumers hoping for cheap booze would be disappointed. In fact, the Office of Financial Management noted that the markup under I-1183 could go as high as 72 percent, compared to the 51.9 percent markup under state control.
Don’t worry, supporters countered. Market forces would work to make liquor prices competitive. Liquor store owners could warehouse their own product or form cooperatives to give them buying power to compete against such big players as supermarket chains, discount liquor giants and Costco – which heavily bankrolled I-1183.
Now the small retailers are figuring out that the initiative was weighted in favor of volume sellers, particularly ones like Costco that could sell their own brands.
Those who bid on former state-run stores and those operating existing contract stores now say that in order for them to be viable, they need the Legislature to remove or at least delay the 17 percent fee on all spirit sales revenue – the very fee that was a selling point for I-1183.
If that happens, the worst-case scenario presented by initiative opponents would come to pass: Scores of new outlets would be selling liquor virtually around the clock, undoubtedly increasing consumption and the threat of minors drinking, yet local governments would have less money to enforce liquor-sale rules and prosecute drunk drivers.
Voters were warned that privatization could lead to higher prices, and they still voted for I-1183 – in part because they believed that local public safety efforts would benefit. State lawmakers should allow the initiative to take effect the way it was sold to voters – higher prices and all.
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