Pressure Rises to End State's Monopoly on Liquor Stores
Shopping for hard alcohol in Washington's state-run liquor stores is a sanitized form of fun: the same brands and prices; bottles uniformly lining every shelf, their colorful labels muted by sad colorless walls and state employees in sad colorless uniforms. It feels less like stocking up for a party and more like asking for a government ration. Which is the point: The Washington State Liquor Control Board (WSLCB) was established in 1933, right after prohibition was repealed, for the dual mission of promoting public safety and generating state revenue through liquor sales. But critics argue the government's monopoly on liquor stores is failing on both fronts.
Those critics, including lawmakers in Olympia and bar owners across the state, say Washington residents should enjoy the luxury of buying tequila in the same store they buy chips and salsa—like in California and 15 other states.
"The bottom line is, the system isn't working," says state senator Tim Sheldon (D-35). Sheldon thinks the state should get out of the retail business, calling the existing model inefficient. He's not alone. As the state struggles to shore up a $2.6 billion budget shortfall, more lawmakers and taxpayers are considering creative ways to increase state revenue.
Indeed, the leading argument for getting the state out of the business largely comes down to money: In 2009, the state made $332.7 million in revenue from liquor sales; some estimates show privatization could increase that by $100 million annually. More conservatively, the state auditor reported in November the state could net $277 million more profit over five years by privatizing liquor sales.
Opponents, including the liquor board, argue that the revenue projections don't take into account the extra enforcement required for more stores and that loosening liquor laws will drive more kids to drink hard alcohol.
But to illustrate the inefficiency of the current system, Sheldon points out that the state-run distribution center in Seattle handles 15,000 to 20,000 cases of liquor a day. "That's it," he says. But a private liquor-distribution center located in Renton that serves all of Alaska, which has roughly the same population as Seattle, handles more than three times that quantity with fewer employees, he says. Washington is one of only nine states still controlling all hard-liquor retail through a state-run monopoly.
Under a bill Sheldon sponsored this year (SB 6204), Washington would follow the West Virginia model of auctioning off liquor-store licenses to the highest bidder—netting anywhere from $119,000 to $1.5 million per store in Washington, he says.
Another bill (SB 6840), sponsored by Senator Rodney Tom (D-48), follows the full privatization model of California. Tom says he estimates it would bring in "over $100 million in additional retailer revenue" per year.
The WSLCB dismisses both of these benefits, saying that if the state sold licenses, it would receive a $200 million bonanza for the initial contracts and then see very little revenue until they were reissued. Rick Garza, deputy administrative director of the WSLCB, speculates that Washington could see the number of retail outlets jump.
"I don't think the public would tolerate a store on every corner," says Garza.
Sheldon doesn't buy this argument: The liquor board is "gleeful to talk up hysteria about how privatization will mean a liquor store on every block, but it would be up to the liquor board to work with cities and counties for setting rules for where licenses would be granted." He says that in Seattle, this would mean added convenience—not liquor stores next to Boys & Girls Clubs.
The state justifies the institutional stores as safeguards that protect kids from liquor. Garza notes that the underage youth generally fail at buying liquor from state employees 95 percent of the time. "In the private sector, it's between 76 and 84 percent," he says.
Jim Cooper, vice president of the Washington Association for Substance Abuse and Violence Prevention, says that a survey of Washington youth shows 60 percent of 12th graders used alcohol in the last 30 days. "There's a direct correlation between better access to alcohol and youth drinking," he says.
But national evidence suggests that's not true. A 2006 study from the federal Substance Abuse & Mental Health Services Administration shows that Washington's youth have a 5 percent higher rate of alcohol use and binge drinking than their counterparts in California, which has some of the most lax controls on alcohol retailing in the country.
And the system here is onerous: All liquor in the state, of every brand and volume, is chosen by the control board and then shipped to a state-run distribution center in Seattle. From this distribution center, cases are trucked to the 315 state-run stores across Washington—161 of which are mom-and-pop contract stores operating in rural areas and the others completely staffed by state employees.
"The goal of the liquor board isn't to sell alcohol, even though that's their job," said one of several bar owners who refused to give their names. "Their goal is to do everything in their power to discourage the sale of alcohol."
Every business with a liquor license is assigned one liquor store from which it can buy products, according to existing regulations. That store is the only store guaranteed to do business with them (other stores are allowed to refuse them service and sometimes do). Which means that if a store is out of the gin a business wants, that business is shit-out-of-luck.
"It's frustrating waiting months for a special order I know is sitting in a warehouse less than five miles from my bar," another bar owner said.
Enforcement is another point of contention among bars and the WSLCB. The state bans liquor advertising, such as neon signs or even coasters with logos for hard alcohol. Current rules prohibit bands from drinking onstage while playing venues. Theaters are reprimanded for allowing people to drink in venues that are too dark, forcing the public to drink in lighted hallways instead.
Senator Sheldon says, "This monopoly has the same bullying tendencies as others, but they hide behind [the idea that] they are the protector of children, the promoter of what's right and good in America."
For its part, the liquor board insists it's open to new modes of operation, as long as they're cost-efficient and safe. On February 17, the board testifies to that effect at a hearing on a bill (HB 2846) sponsored by state representative Gary Alexander (R-20). The bill would open up liquor stores to private contract bids while closing some state-run stores, much like a pilot project for privatization.
"We're not against change as long as it's safe and effective," says Garza. "Our position is, let's try it and see."