This was originally posted yesterday afternoon.
David Ammons, communications director for the Washington Secretary of State’s office (and veteran AP reporter in Olympia), once told me that unless you have tremendous grassroots support, it takes between $300,000 and $500,000 to take an initiative to the November ballot.
Modernize Washington, the campaign for Initiative 1100, which would virtually wipe clean the state’s role in liquor sales in Washington state, is all set thanks to Costco.
New campaign finance reports show that the wholesaler backed up its announced support for the initiative with a $350,000 check last Tuesday.
The Seattle Times had a good overview of why Costco supports this initiative last week, but the degree to which Costco would rule liquor sales in Washington if I-1100 passes cannot be overstated. In a bit of reverse-Socialism, the giant corporation would be the new state in the liquor business.
That’s because I-1100 goes further than any other move by a state in the U.S. to eliminate the state’s presence in liquor distribution and retail. Distributors could price liquor like they price any other product i.e. with volume discounts. Liquor would be treated like any other product. Like pop, apples, ranch dressing, you name it.
Typically–and this is the case in California–the state still has a degree of regulation of the three-tier system that takes liquor from the distillery to into someone’s mouth. For example, it can maintain a price markup to prevent discount wholesaling of liquor by private distributors, an opportunity that Costco has fought for legally in the past and would benefit tremendously from. A state price markup levels the playing field for small shops to some degree because it essentially standardizes the price at which distributors must sell a product.
The only presence Washington state would have if I-1100 is passed is a sales tax and volume tax of the goods sold and the ability to issue liquor licenses. Everything else related to price would be up to the retailer, and its common knowledge that when it comes to Mom and Pop stores, they can’t compete with Costco.
The other initiative to privatize liquor sales, I-1105, which appears to be all but dead after Costco bankrolled I-1100, which was once considered to be the off-Broadway liquor privatization initiative but is now taking center stage, does not repeal the state’s ability to control prices between the two tiers and requires retailers to pay the state a percentage of its liquor sales for the first five years. It’s unclear whether it would level the playing ground for small retailers to any degree, however.
