Washington Privatize Liquor Distribution, Initiative 1100 (2010)

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The Washington Privatize Liquor Distribution, also known as Initiative 1100 and the Costco Initiative, was on the November 2, 2010 ballot in Washington as an Initiative to the People, where it was defeated. The measure would have closed state liquor stores and authorized sale, distribution, and importation by private parties.

On Wednesday, June 23, supporters filed about 396,000 signatures with the Washington Secretary of State. The secretary of state certified the measure, following a 3 percent random sample check, on July 12, 2010.

Aftermath

• According to a December 2010 report, Rep. Gary Alexander and Sen. Tim Sheldon planned to reintroduce legislation to reform the Liquor Control Board. Alexander favors making Washington's system more like that Oregon's. In other words, liquor stores would be made private and would be under contract with the state. Sheldon, on the other hand, proposes closing state liquor stores and the state distribution center. Franchise agreements would then be auctioned to the highest bidder.

• On May 21, 2011 a bill to privatize the state's wholesale liquor distribution system was approved by the Senate following a 31-14 vote. If approved by the House, the bill would require the office of Financial Management to seek proposals from companies interested in taking over the state's distribution system.

Election results

Washington Initiative 1100 (2010)
Result		Votes	Percentage
d No		1,348,213	53.43%
Yes		1,175,302	46.57%

Election results via: Washington Secretary of State (dead link).

Text of measure

The ballot title read:

“

Statement of Subject: Initiative Measure No. 1100 concerns liquor (beer, wine and spirits). Concise Description:This measure would close state liquor stores; authorize sale, distribution, and importation of spirits by private parties; and repeal certain requirements that govern the business operations of beer and wine distributers and producers. Should this measure be enacted into law? Yes [ ] No [ ]

”

Summary

According to the description prepared by the Washington Secretary of State:

This measure would direct the liquor control board to close all state liquor stores; terminate contracts with private stores selling liquor; and authorize the state to issue licenses that allow spirits (hard liquor) to be sold, distributed, and imported by private parties. It would repeal uniform pricing and certain other requirements governing business operations for distributors and producers of beer and wine. Stores that held contracts to sell spirits could convert to liquor retailer licenses.

Support

The proposed measure was filed by Modernize Washington and Washington Citizens for Liquor Reform. Initiative supporters said it would not affect bars and restaurants and would generate an additional $100 million over the next five years through licensing fees and sales taxes. Charla Neuman, spokeswoman for Washingtonians for Liquor Reform, said the initiative wouldn't necessarily make liquor cheaper but would "create more jobs and lots of private business opportunities. It certainly makes shopping more convenient."

Supporters of both I-1105 and I-1100 argued that the proposals would allow for lower prices, greater convenience, in addition to cutting government costs.

Arguments

• Costco Wholesale Corporation announced on May 24, 2010, that it supported the proposed initiative. "We serve our members in many states and around the world by selling them spirits, beer and wine at competitive prices. We should be able to do so in Washington State too, and other retailers should be able to similarly serve their customers. We are excited that Washington voters will be able to have a direct voice in determining these important policies," said Jim Sinegal, chief executive officer of Costco. According to reports, Costco planned to aid in signature gathering at its Costco warehouses and provide financial assistance.
  • According to reports about three years earlier Costco challenged the current state liquor system in court but failed.

• In late May 2010 the Northwest Grocery Association, which represented major chains including QFC and Safeway, announced its support for the proposed initiative. The association cited a report by the state auditor that revealed that privatizing liquor distribution and sales would increase state revenue by approximately $86.8 million between 2012 and 2016.

Contributions

• In June 2010 Costco Wholesale contributed an estimated $350,000 to Modernize Washington in support of Initiative 1100. According to reports, between May 27 and June 9, the company contributed a total of $535,000 to supporters.

• According to August 2010 reports, supporters of I-1100 raised a total of $1.2 million.

• Wal-Mart donated $40,000 to the campaign effort, according to early September 2010 reports.

Below is a chart that outlines major cash contributions to the campaign in support of I-1100:.

Contributor	Amount
Costco Wholeslale	$3,549,300
Safeway	$609,410
Fred Meyer (OR)	$207,000
NW Grocers Association (OR)	$190,000
Wal-Mart Stores	$40,000

Opposition

Opponents of I-1105 and I-1100 argued that state and local governments would lose millions of dollars in liquor tax revenue should voters approve the proposed measures. Additionally, they argued that the measures could lead to an increase in minors illegally buying alcohol and more drunk driving incidents.

Almost immediately following the April 2010 filing of the proposed initiative, an opposition to the effort formed. According to reports the opposition campaign - Keep Our Kids Safe - consistd of United Food and Commercial Workers Union, the State Council of Firefighters and the Church Council of Greater Seattle. United Food and Commercial Workers Union Local 21 represented liquor store clerks and assistant managers. Opponents argued that the state's current regulations helpped "keep liquor out of the hands of minors and also return a good profit to the state."

Arguments

• Despite support by larger grocers, small grocers said they opposed the proposed measure. Washington Food Industry Association president and chief executive Jan Gee said they worried about the consequences of removing so many controls. "This initiative doesn't just privatize liquor; it deregulates it beyond what any other state has done," said Gee. The association represented independent grocers.

• Wine & Spirits Wholesalers of America (dead link) President Craig Wolf said the proposed measure was "not about privatization, it's about deregulation." Deregulation, said Wolf, would remove the checks on selling spirits and could lead to problems in the state. "They want to use their power to dictate terms. The retailers use market power to bully suppliers. Costco is not about a free market," added Wolf.

• John Guadnola, executive director of the Washington Beer and Wine Wholesalers Association said, "We think they're terrible public policy. Whether or not you believe in privatization, this is a horrendous way to do it." In response to arguments that they were afraid of losing part of the market share, Guadnola said they would be willing to compete with sellers but were concerned the proposed measures may eliminate regulations on hard liquor.

• Washington Governor Chris Gregoire was opposed to both I-1100 and I-1105. "Right now, to do what is being proposed by those initiatives would deplete our coffers by about $300 million dollars… so I'm a no vote on both of them. I can't afford the loss of revenue. Do I think that we should reform liquor? Yes. And I would expect the legislature to pick up where the voters left off and still do something important in that area. But at this point in time I just have to go with what I've seen are just heartwrenching cuts to human lives, and I just can't afford to say yes and lose $300 million," she said.

• The Vancouver City Council voted to oppose both I-1100 and I-1105 on October 11, 2010. The resolution passed with 4 in favor and 2 opposed. The city of Vancouver estimated that if I-1100 was approved the city would lose $1.2 million a year. If I-1105 was approved, city officials estimated a loss of $2 million per year.

Contributions

In late August 2010 the Washington Beer and Wine Wholesalers Association and the National Beer Wholesalers Association each contributed $1 million to Protect Our Communities a coalition in opposition to both I-1100 and I-1105.

Below is a chart that outlines major cash contributions to the campaign in opposition of I-1100:.

Contributor	Amount
National Beer Wholesalers Association (VA)	$2,400,000
Beer Institute (DC)	$2,400,000
Washington Beer and Wine Wholesalers Association PAC	$1,675,000
UFCW Local 21-Seattle Area	$550,000
Drive Committee (DC)	$75,000

Reports and analyses

OFM impact report

On August 11, 2010, the Office of Financial Management (OFM) released a financial impact report should Initiative 1100 or Initiative 1105 be approved by voters on November 2. Contrary to an earlier report by the state auditor, the OFM predicted that the state could lose hundreds of millions of dollars. Specifically, the report estimated that I-1100 would reduce state revenues up to $277 million over the next five years and I-1105 could reduce revenues by $730 million. However, the OFM also reported that both measures could increase liquor sales by about 5 percent.

Supporters of the initiatives argued that the OFM's report does not account for additional revenues paid by increased liquor sales.

The OFM's report on the fiscal impacts of I-1100 can be read here.

Budget and Policy Center

The Washington State Budget and Policy Center released an analysis of the several Washington 2010 initiatives, including I-1100 and I-1105. According to the study, the impact of I-1100 to the state's general fund over a 5-year period is estimated at between $115 million and $123 million. The measures, according to the study, could "impose long-term social costs associated with heightened consumption of hard liquor and other alcoholic beverages."

The report can be read here.

Media editorial positions

Main article: Endorsements of Washington ballot measures, 2010

Support

• The Seattle Times supported the proposed measure. In an editorial the board said, "I-1100 replaces all the revenue the liquor monopoly earns for the state and will lower prices besides. Privatization can do this because it is eliminating not only the monopoly power of the state but the associated state jobs and rules that benefit a handful of privileged private wholesalers...I-1100, backed by Costco, is a clean break with the monopoly system. It is the one in the interests of consumers, and that would truly help create a government for the 21st century."

• The Stranger supported the proposed initiative. The editorial board wrote, "I-1100 would allow private businesses to buy licenses at $1,000 a pop to sell liquor starting in June of next year. It would cut out the state's markup on booze (which accounts for half the cost of liquor) while keeping existing state taxes in place. Retailers could buy directly from liquor manufacturers instead of having to buy through a distributor, which is why Costco and Safeway are throwing money behind this initiative (they become wholesalers, essentially). Restaurants and nightlife folk have also endorsed I-1100, because it creates the most flexibility for their businesses."

• The Yakima Herald-Republic supported I-1100. "At least one of these (I-1100 and I-1105) needs to pass; we are not confident that the Legislature would come forth with a better plan should both initiatives fail; instead, the status likely would remain quo. I-1100 is not the best of both worlds, but it is the better of two options. We offer a qualified -- and right now heavily taxed -- toast to Initiative 1100," said the editorial board.

• The Bellevue Reporter supported I-1100 but opposes I-1105. In an editorial, the board said, "I-1100 would let retailers buy directly from manufactures. This is where I-1100 and I-1105 differ. I-1105 would keep the middle-men in liquor sales – the distributors – in place, along with the costs they add to the price. Some argue that distributors help the state's small wineries get their wines in stores...The state doesn't need an expensive distribution system to protect what amounts to a alcohol cartel. And it doesn't need to be in the retail sales of alcohol at all. Vote "Yes" on I-1100 and "No" on I-1105."

• The Kitsap Sun supported the measure. "...our board favors I-1100, which would not require “middle man” distributors between liquor manufacturers and businesses. It also may provide for better enforcement of under-age restrictions and other laws by the state Liquor Control Board. And do not vote for both initiatives; if both are approved, they’d go to the Legislature and the courts. Vote “yes” on 1100 and “no” on 1105," said the board.

Opposition

• The Seattle Post-Intelligencer was opposed to I-1100 and I-1105. In an editorial, the board said, "Washington's cumbersome state liquor monopoly is overdue for reform...But the peoples' representatives -- our Washington State Legislature -- ought to do the job. Hence, seattlepi.com recommends that voters reject Initiatives 1100 and 1105, liquor privatization measures on the November ballot. The public interest, and public coffers, stand to lose if "reform" takes the form of an initiative or initiatives placed on the ballot and promoted by special interests that stand to make (many) bucks."

• The Pacific Northwest Inlander is opposed to I-1100 and I-1105. In an editorial, the board said, "To begin with, common sense tells us that expanding the availability of liquor could cause more problems related to alcohol abuse. That alone is a good reason to question the wisdom of these measures. The state has a duty to regulate certain, potentially dangerous businesses. But additionally, by putting the state out of the liquor sales business, as initiatives 1100 and 1105 would do, we would be punching a hole in our state budget to the tune of hundreds of millions of dollars...As with other ballot initiatives this season, I-1100 and I-1105 are really about massive corporations attempting to pry open new profit centers."

• Publicola opposed I-1100 and I-1105. "Both of these privatization measures are written to favor big businesses at the expense of consumers, public safety, and basic state services. If voters really feel we need more liquor stores open longer hours, they should put pressure on the legislature to reform our current system. But they should reject both of these poorly written, ill-timed proposals," said the editorial board.

Polls

See also: Polls, 2010 ballot measures

• During May 3 – May 23, 2010 The Washington Poll conducted a poll of approximately 1,252 registered voters. Of the polled voters, about 52% said they supported the private liquor store initiative, while 37% said they were opposed and 8% said they were undecided. According to the poll there was a margin of error of approximately +/- 2.8%.

• A July 7-8, 2010 poll by SurveyUSA/KING5 revealed that an estimated 65% of polled voters "trust state-run liquor stores to sell liquor responsibly," while 56% said they trusted private corporations. The survey did not directly ask about proposed initiatives I-1100 or related initiative I-1105. According to reports, the poll had a 3.4 percent to 3.4 percent margin of error, depending on the question.

• A September 9-12, 2010 poll of 500 likely voters by Elway Poll revealed that 45% supported the proposed measure, while 34% were opposed and 21% were undecided.

• A September 30-October 3, 2010 poll of 639 likely voters by Survey USA revealed that 52% supported the proposed measure, while 29% were opposed and 19% were undecided. The poll was sponsored by KING-TV Seattle. The margin of error was +/- 4 percentage points.

• An October 7-10, 2010 poll of 400 likely voters by Elway showed that 42% supported the proposed measure, while 44% opposed it and 14% were undecided.

• An October 4-14, 2010 poll of 500 likely voters by The Washington Poll showed that 47% supported the proposed measure, while 49% opposed it and 1% were undecided. The margin of error was +/- 4.3 percentage points.

• An October 24-27, 2010 poll of 504 likely voters by SurveyUSA (dead link) showed that 48% supported the proposed measure, while 40% opposed it and 12% were undecided. The margin of error was +/- 4.4 percentage points.

Legend      Position is ahead and at or over 50%     Position is ahead or tied, but under 50%

Date of Poll	Pollster	In favor	Opposed	Undecided	Number polled
May 3-23, 2010	The Washington Poll	52%	37%	8%	1,252
Sept. 9-12, 2010	The Elway Poll	45%	34%	21%	500
October 7-10, 2010	The Elway Poll	42%	44%	14%	400
October 4-14, 2010	The Washington Poll	47%	49%	1%	500
October 24-27, 2010	SurveyUSA	48%	40%	12%	504

Legal action

Challenge against I-1105

See also: Washington Revise State Liquor Laws, Initiative 1105

On June 1 supporters of I-1100 filed a ballot title and summary challenge against a competing measure - Washington Revise State Liquor Laws, Initiative 1105. According to the filed challenge the ballot language is too vague. I-1100 supporters pointed to the fact that the language did not reflect that in addition to privatizing state liquor stores the language did not specify that I-1105 would repeal the existing alcohol tax and require the legislature to create a new tax. Charla Neuman, spokeswoman for I-1105, said the other side was "just playing games" by filing a challenge on the last day they were allowed to.

Additionally, the complaint went on to argue that the ballot title, written by the attorney general, did not explain what "qualified" meant when explaining that the liquor control board would have to license "qualified private parties" to sell and distribute liquor. Another complaint pointed to the lack of the phrase "hard liquor" in the description. I-1100 argued that both proposed initiatives should include the phrase "hard liquor." If changed, both initiatives would be "put on the same playing field."

The challenge was heard on June 9.

Court ruling

The case was heard by Judge Thomas McPhee on June 9. Judge McPhee agreed that the term "hard liquor" should appear in both I-1105's and I-1100's ballot language. However, the judge rejected all other complaints by I-1100 supporters. Shortly following the judge's ruling, I-1105 supporters said they planned to print new petitions with the changes immediately.

Similar measures

I-1105

See also: Washington Revise State Liquor Laws, Initiative 1105 (2010)

In addition to I-1100 another initiative was also proposed relating to privatizing state liquor stores. However, unlike I-1100, I-1105 priced liquor licenses based on the volume of liquor sold. I-1100, on the other hand, did not include price controls.

If both measures were approved by voters, according to attorneys in the state's Elections Division and the Attorney General's office, the question would go to the Washington Legislature and the courts. With a two-thirds vote, the legislature, could find a way to adopt the two laws or adopt one and reject the other. However, both measures would remove the state from the liquor business and allow retailers to sell "hard alcohol."

Path to the ballot

Box of I-1100 signatures. Photo credit: Washington Secretary of State

See also: Washington signature requirements and 2010 ballot measure petition signature costs

On Wednesday, June 23, supporters filed about 396,000 signatures with the Washington Secretary of State. It was the first petition signature filing of the 2010 ballot initiative season in the State of Washington.

A random sample check of the signatures was scheduled to begin on July 6. In order to qualify for the November ballot, supporters were required to submit a minimum of 241,153 valid signatures by July 2, 2010. In mid-June, supporters said they collected "an adequate number of signatures." Sharon Gilpin, a political consultant who proposed the initiative, said at that time that she intended to collect as many as 300,000 signatures to ensure a "cushion."

Signature validity count

Initiative 1100 qualified for the 3 percent random sample check after filing an estimated 396,000 signatures. According to the Washington Secretary of State's office the sample check found that of the 12,124 signatures sampled, 10,835 or 89% were accepted, while 1,289 or 11% were found to be invalid.

The measure was certified for the 2010 ballot by Secretary of State Sam Reed on July 12, 2010.

See also

• 2010 ballot measures
• Washington 2010 ballot measures
• Alcohol on the State of Washington ballot

Related measure

• Washington Revise State Liquor Laws, Initiative 1105 (2010)

Article

• Initiative petition deadlines arrive in Oregon and Washington
• "Costco Initiative" first to file signatures in Washington
• Washington liquor initiative challenges similar liquor initiative

External links

Suggest a link

• I-1099 Full text
• I-1100 Full text
• 2010 Election Voters Guide (dead link)

Campaign links

• Modernize Washington (supporters)

Additional reading

• The Daily News,"Voters brace for liquor battle," September 25, 2010
• The Olympian,"Spirits industry splits on ballot," September 5, 2010
• The Spokesman Review,"Money pours into initiative campaigns," September 5, 2010
• The News Tribune,"Ballot will shape state budget," August 30, 2010
• Associated Press,"Costco sees opportunity in Wash. booze initiative," August 26, 2010
• The Seattle Times,"Liquor initiatives stir up old dispute," August 21, 2010
• Washington Secretary of State's: From Our Corner,"Here’s your quick guide to WA ballot measures," August 10, 2010
• The Seattle Post-Intelligencer,"Costco has a big stake in the liquor game," August 8, 2010
• The Daily Herald,"5 Washington state ballot measures could end up in court," July 18, 2010
• KPLU 88.5,"$8.2M Spent So Far To Get Initiatives On Wash. Ballot," July 15, 2010
• Supermarket News,"Costco Collects Signatures for Initiative 1100," June 18, 2010
• Wall Street Journal,"Costco Would Scotch Old Washington State Liquor Laws," June 18, 2010
• Inlander,"Taking Initiative," June 16, 2010
• The News Tribune,"Initiatives: Many are filed, but few are sane," June 1, 2010
• The Spokesman-Review,"New initiatives would privatize liquor sales, outlaw martial arts weapons," May 6, 2010
• Washington Secretary of State: From Our Corner,"Initiatives filed to privatize liquor sales," April 16, 2010

Local impact

• The News Tribune,"Liquor sales ballot measures worry local governments," September 22, 2010
• The Bellingham Herald,"Bellingham council member wants city to oppose liquor store measures," September 20, 2010
• The News Tribune,"Liquor initiatives could cost Pasco $1M each year," September 15, 2010
• Whidbey News Times,"Mix of liquor initiatives add to Island County's budget woes," September 8, 2010

Editorials

• The Seattle Times,"The state of Washington should get out of the liquor business," April 1, 2011
• The Daily Evergreen,"Privatized liquor sales will benefit Washington," accessed September 21, 2010
• PTLeader.com,"Editorial: The perplexing case of two liquor initiatives," September 15, 2010