Liquor Privatization Initiatives Part 2: I-1100 and I-1105

Yesterday, schmudget featured a description of Washington’s current, state-run liquor control system.  Today’s post examines two initiatives to appear on the November 2010 ballot – Initiatives 1100 and 1105 – that would privatize this system, allowing hard liquor to be sold in grocery stores, convenience stores, and other retail outlets.

I-1100 vs. I-1105

Table 1 highlights the different ways in which I-1100 and I-1105 would alter the current liquor control system in Washington State. As the table shows, both measures would privatize the wholesale and retail sale of hard liquor in Washington. This means that the state Liquor Control Board (LCB) would be required to shut down all state liquor stores and the distribution center. Instead, private wholesalers and retailers — which could include grocery stores, convenience stores, and other types of retail establishments — would be allowed to distribute and sell hard liquor to consumers, as they are currently allowed to do with beer and wine. 

A prime beneficiary of I-1100 would be large or “big box” retailers that are able to buy and sell large quantities of retail goods at heavily discounted rates. The measure would effectively eliminate the three-tier system by repealing the uniform price requirement, the prohibition against bulk discounts, and other provisions of state law governing the sales of alcoholic beverages. As a result, big box retailers would be able to sell hard liquor, beer, and wine to consumers at lower prices compared to their smaller competitors.

Initiative 1105, on the other hand, would advantage beverage distribution companies. Rather than dismantling the three-tier system, the measure would expand it to include sales of hard liquor.  The measure would retain the uniform price requirement and the prohibition against bulk discounts for purchases of beer and wine (bulk discounts on hard liquor would be allowed). As result, retail prices of alcoholic beverages would likely be higher and more uniform under I-1105 relative to what they would be under I-1100.

Tomorrow’s post will discuss potential long-term costs associated with increased consumption of hard liquor, along with the uncertain impact these measures would have on overall state resources.

For more information on I-1100 and I-1105 read the latest Budget & Policy Center policy brief, “2010 Initiatives Could Impact Public Services.”