Voters reject 1 liquor privatization effort, 2nd trails


by Associated Press

Posted on November 2, 2010 at 11:01 PM

Updated Tuesday, Nov 2 at 11:41 PM

OLYMPIA, Wash. - Voters rejected one of two competing proposals that get Washington state out of the business of selling hard alcohol, and the other measure, backed by Costco, was trailing in early returns Tuesday night.

With about 60 percent of the vote counted, Initiative 1100 was losing by 52 percent, while Initiative 1105 was rejected by 63 percent of voters.

Andy Grow, a spokesman for the No on 1100/1105 campaign, said that he was "cautiously optimistic" about the numbers but wouldn't declare complete victory just yet.

"It's just a lot of votes still out there," Grow said, noting that half the vote was still out in populous King County, where I-1100 was leading.

Both I-1100 and I-1105 would abolish the state's current monopoly on liquor distribution and sales in favor of private businesses.

But I-1100 goes further, allowing retailers -- like Costco, the measure's main backer -- to buy beer, wine and spirits directly from manufacturers instead of going through distributors. It also eliminates price controls and other regulations, such as bans against volume discounts and paying on credit, that exist for beer and wine distribution and sales.

I-1105 would have kept in place state laws that protect beer and wine distributors, and would also have kept in place prohibitions on bulk discounts for beer and wine but would have allowed them for sales of hard liquor.

The I-1100 campaign battle had mainly been between Costco and other big box stores, and distributors who don't want to disrupt the current system. It's been a big-money battle with lots of out-of-state donations from groups like the Washington, D.C.-based Beer Institute and dozens of state distributor groups giving money to the opposition campaign, which spent $8.8 million on the "no" campaign. The "yes" campaign has spent nearly $6 million, with more than $4.8 million coming from Issaquah-based Costco in money and in-kind contributions.

A coalition of several groups have opposed both initiatives, including unions, the Washington state Council of Firefighters, and several craft breweries and wineries, citing concerns ranging from public safety to the potential effect on state and city budgets. I-1100 removes the liquor markup imposed by the state, and I-1105 would have removed the markup and all additional liquor taxes.

Washington is among 18 so-called "control" or "monopoly" states that exercise broad powers over wholesale distribution of hard liquor. Of those states, 12 -- including Washington -- are also involved in retail alcohol sales through either state-run liquor stores, outlets operated by private contractors, or both.

While the liquor privatization debate hasn't been able to gain traction in Washington state until this year's initiative measures, the state Legislature has already made several changes to the three-tier system over the years, including allowing brewers and wineries to sell directly to consumers, and allowing retailers to buy directly from wineries and brewers.

Charla Neuman, spokeswoman for the "Yes on I-1105" campaign said that the loss of at least one initiative should not indicate there isn't support for the idea.

"I do think the majority of Washingtonians still want privatized liquor sales, but both initiatives were outspent by millions of dollars by big beer," she said. "There's still strong feelings that Washington state has no business in being in the liquor business."