Comparing What Costco's Liquor Initiative Promises to What It Actually Delivers
On November 8, voters will be asked to change the way liquor is sold in Washington State. If approved, Initiative 1183 would close and sell off state-run liquor stores and allow large grocery stores to sell liquor beginning on June 1, 2012. In the most heavily funded political fight in the state this year—with a total of $9 million in spending expected over the next month—the opposing campaigns have very different messages about what the initiative would actually do.
The yes campaign, backed by Costco, promotes I-1183 as a cash cow for the state budget. The campaign says state revenue from additional taxes would rise while liquor prices would drop. All the while, we're told, consumption will remain flat.
But the no campaign, Protect Our Communities, says people will drink more, drive drunk more, and witness a decline in spending on public safety. Oddly, this campaign is funded by the liquor industry.
Let's examine what this convoluted initiative really does, step by step.
HOW LIQUOR WOULD BE TAXED AND SOLD: Currently, the Washington State Liquor Control Board retains all rights to distributing and retailing hard liquor. If this initiative passes, 166 state-run liquor stores would close (163 family-run contract stores could remain open) and grocery stores with at least 10,000 square feet—about 1,400 of them—will begin stocking liquor. There may be more stores: I-1183 says the state “shall not deny” a liquor license to smaller stores if there is no other liquor retailer in a “trade area,” but it doesn’t define the size of a trade area. “It seems that that could mean that’s any place where there’s business activity,” says liquor board spokesman Brian Smith. Protect Our Communities says that could add another 929 convenience stores. Based on this new explosion of availability, the state’s Office of Financial Management estimates that Washington residents will be buying 8 percent more liquor in 2012 (as opposed to the 3 percent growth forecast under the state’s current system).
WOULD LIQUOR REALLY COST LESS? The price for a bottle of liquor would either remain unchanged or increase by up to 20 percent if this measure passes, according to estimates from the state’s Office of Financial Management, which accounts for taxes and markup at several stages between the distiller and drinker. But there is a silver lining: The initiative would generate between $216 to $253 million in new state revenue over a period of six years and between $186 million to $227 million for municipalities. However, the state’s figures are purely speculative—and there’s no better estimate. “The initiative will lead to lower liquor prices,” declared Kathryn Stenger for the Yes on 1183 Coalition when meeting with The Stranger. Asked repeatedly to back up that claim, Stenger never provided information.
PUBLIC OPINION: Public support for Costco’s liquor privatization scheme appears to be dropping. An Elway Poll found that only 50 percent of voters supported the measure in August—considered weak footing for an initiative—and that number dropped to 46 percent when the firm conducted another poll in September. Voters opposing the measure said they supported state control, were concerned about minors purchasing alcohol, and thought liquor would be more available.
WHO’S BUYING THE ADS: Two opposing donors have contributed more than 90 percent of the money to this fight. Costco and its “coalition” stand to profit handsomely from new rules that would allow only big retailers to manage their own distribution (such as grocery and retail giants that already have national distribution networks) and sell generic liquors (as Costco already does in California). Meanwhile, the motivations of the Wine & Spirits Wholesalers of America (WSWA)—which distributes more than 70 percent of all wine and liquor sold in the nation—are slightly less obvious. WSWA’s members would be required to pay a 10 percent tax on distribution over the first two years the law takes effect. Perhaps more threatening to the group: It would allow wineries to sell directly to retail stores and restaurants, cutting out distributors entirely.