Last week, Costco filed an initiative that would close the state’s approximately 315 liquor stores while making 1,500 grocery retail outlets eligible to sell hard liquor. It’s the retail giant’s third attempt at privatization in the last year, thereby confirming fears of concerned parents, labor unions, lawmakers, and teetotalers: Costco has the money and the determination to privatize Washington’s archaic state-run system, even if it means pushing bills and initiatives at every opportunity until it succeeds through sheer voter fatigue.
“We’re committed to the idea that these prohibition-era limitations on liquor and wine need to be corrected, so that’s what we intend to do,” says Joel Benoliel, a senior vice president with Costco. If Initiative 1183 passes, you’ll no longer have to trudge into stores reminiscent of East Berlin by 6:00 p.m. to buy your liquor—you can pick it up with the rest of your groceries, like adults ought to. When questioned about polling in January that found that most people were satisfied with the number of liquor stores and the level of service “as is,” Benoliel said only, “We’re very confident that this initiative will pass.” He wouldn’t disclose Costco’s latest polling on the issue.
But where Benoliel is confident, others may be dubious, considering voters rejected Costco’s last privatization attempt, Initiative 1100, less than a year ago. However, Costco seems to have learned from its mistakes—this latest attempt contains several key changes to appease critics.
First, this year’s initiative attempts to assuage fears of more underage drinking and drunk driving. Last year’s measure would have allowed any store that sells wine or beer to sell hard liquor. A deluge of ads—funded by the beer lobby and the union employees who work in the state’s stores—portrayed teenagers buying liquor at gas stations and driving away. This year, to counter that sort of messaging, the initiative mandates that the stores have a minimum of 10,000 square feet (with a grandfather clause for existing stores in rural areas that don’t have large box retailers), limiting the total number of liquor outlets and keeping liquor off gas station shelves. The initiative would also double the penalties stores would face when caught selling booze to minors.
The initiative also attempts to appease the mighty beer distributors—including the conglomerates behind Budweiser—which pumped $8 million into funding the aforementioned ads. The beer lobby’s biggest concerns were losing the rights to distribute beer in Washington and losing grocery shelf space to liquor.
The current iteration resolves the beer lobby’s biggest concern by retaining the state’s existing distribution system (while making distributors pay between 5 and 10 percent of their gross spirits revenues to the state) and allowing state wineries and distilleries to deal directly with retailers.
No word yet on whether or not these tactics are working—beer and wine groups haven’t formally weighed in on the initiative.
Last, opponents attacked the failed initiative for costing the state $200 million in annual taxes, so this initiative retains that revenue and requires liquor retailers to pay 17 percent tax on gross spirits sales. The state won’t tabulate the latest initiative’s fiscal impacts until this summer, but some say it will produce more money than the state currently makes off liquor sales. “We believe that this initiative could generate up to $200 million in revenue, simply by the auctioning off of [liquor retail and distribution] licenses during the first two years,” says Mark Funk, a consultant for the Washington Restaurant Association, which represents 13,000 restaurants in the state. The WRA co-filed I-1183 with Costco and the Northwest Grocery Association.
But these conciliations haven’t appeased all of Costco’s critics.
“You’re still looking at about a fivefold increase in the number of stores,” says Jim Cooper, the executive director of the WA Association for Substance Abuse and Violence Prevention. “I don’t think that increasing the number of hard liquor outlets is going to be good for anybody, regardless of the [amount] of money put toward public safety or enforcement.”
Which is why state lawmakers, public safety advocates, and union groups are fighting Costco’s initiative. On May 24, legislators pushed through a last-minute bill (SB 5942) that could block I-1183 from privatizing one leg of the state-run system—liquor distribution—before voters can weigh in on the initiative. That bill would start a four-month bidding competition to buy the state’s distribution monopoly.
Political consultant Sandeep Kaushik, who helped draft the measure on behalf of the Washington Beverage Company, says, “Costco wants their initiative to be the only thing out there.”
Initiative backers must gather 241,153 valid signatures by July 8 in order to qualify for the November 8 ballot, and Governor Chris Gregoire needs to sign SB 5942 before the state can open up the bidding process and ultimately select a bid.
Even for people who agree with Costco’s ambitions, this year’s compromises come with a downside (last year, The Stranger endorsed I-1100, saying that the state has no business running a liquor retail monopoly). By cutting out small retailers, which some people feared could sell alcohol to teens, this new initiative would hand the liquor business squarely to the giant grocers with over 10,000 square feet like Safeway, QFC, and—of course—Costco. Not only does that mean they would hold the profits alone, it also means people who want to buy hard liquor would find it only in large supermarkets. And in some neighborhoods and cities, those big grocers are as few and far between as liquor stores are now. 
Dear Editors –
Thank you for having someone other than Goldy write this story. That is all.
Sincerely,
Stranger Readers
Any privatization method needs to have some sort of exemption for specialty retailers. QFC and Costco aren’t going to be interested in having a large specialty section devoted to Bourbon, Scotch, or Rum. That’s the biggest problem with the state run stores. Their is not a store I can go to with employees who know anything about Bourbon and stock a large selection.
The law needs some sort of exception for stores below a certain size that are specialty alcohol stores. I don’t know how you decide that, but possibly stores that get 90-95% of their sales from alcohol.
@2: That’s my major issue with this initiative as well. I have daydreams about opening a bourbon only store in Georgetown.
“We’re committed to the idea that these prohibition-era limitations on liquor and wine need to be corrected…” says Joel Benoliel, a senior vice president with Costco.
What “prohibition-era limitation” is there on wine?
@1, I must second your thanks. Goldy should be barred from ever writing about this subject ever again.
It’ll be hilarious if this initiative gets voted down as well.
The only two points that matter:
1) “‘You’re still looking at about a fivefold increase in the number of stores,’ says Jim Cooper, the executive director of the WA Association for Substance Abuse and Violence Prevention. ‘I don’t think that increasing the number of hard liquor outlets is going to be good for anybody, regardless of the [amount] of money put toward public safety or enforcement.'”
2)”By cutting out small retailers, which some people feared could sell alcohol to teens, this new initiative would hand the liquor business squarely to the giant grocers with over 10,000 square feet like Safeway, QFC, and—of course—Costco. Not only does that mean they would hold the profits alone, it also means people who want to buy hard liquor would find it only in large supermarkets. And in some neighborhoods and cities, those big grocers are as few and far between as liquor stores are now.”
Two points –
1) The 10,000 square foot provision would allow retailers like Metropolitan Market and Thriftway to sell liquor. I don’t consider these “large” grocery stores, and clearly they’re going to have a better selection – like they already do for beer and wine.
2) There is a piece in this that allows for folks to buy existing liquor stores. Those would be great for a speciality store to take over and sell the better stuff.
I have to say, there was nothing wrong with Goldy’s coverage, you angry alcoholics. Previous initiatives would have significantly reduced state revenue or greatly increased alcohol consumption, with pretty reliably-bad results. This new initiative is a lot better on that point, specifically.
@10,
Goldy’s coverage post-initiatives has been histrionic and irrational. He doesn’t give a shit about maintaining revenue; he only cares about protecting the masses from The Demon Liquor.
Now if Costco would back up marijuana distribution…
OK. I can’t be arsed to read up and consider defending his old positions. I probably am quite a bit closer to Goldy than you on the benefits/detriments of alcohol. Basically, I haven’t seen many situations where more booze would improve things: parties, shows, back-yards, etc. There is plenty. It can be had, if you want it. I’ve definitely been annoyed by the hours and selection of the WSLCB, but never deterred. OTOH, I hear a lot of things about drunk driving, drunken fighting, liver disease, and alcohol-induced dementia.
This is the kind of thing I’m thinking about when I think about alcohol taxes/pricing:
http : // http://www.aphru.ac.nz / hot / hall2.htm
Basically, the top 10% of drinkers are drinking about as much as everyone else combined. And availability/pricing is likely to affect their behavior more because of that. Please do not tell me that 5-10 drinks per day, every day, is something we can improve by increasing that number. If it’s really an awesome thing, those folks will find a way to budget for it.
A little drinking is a fine thing. I’m drinking a beer right now, I’ve come home from the liquor store with boxes on a few occasions. Tinkering around the margins is a reasonable thing to do at this point. We don’t have prohibition-style gangsters/poor-quality alcohol/a black market, which is the important bit. I don’t need state stores to still exist, but I don’t see a huge problem with them either, so I have a high bar for these initiatives. Also, I heard Kirkland™ brand liquor is effing foul. Like, kinda crap even for mixing.
Also, more importantly than Goldy *not* writing an article: Cienna: great work; as always, a pleasure. Factual and lucid.
I hope this passes. I’m from Seattle but live in Chicago and am moving back this June. Chicagoans will know about Binny’s, a retail liquor store with outlets ranging in size from supermarket-ish to toys r us massive. Remember that special aged dark Guatemalen rum you had that one night at zig zag? They have it, and the two other marks that distillery makes and zig zag doesn’t have. Into weird rare Kentucky bourbon? You will die before you drink your way through every one of the options they have. Into ancient cognac that costs your whole paycheck? It’s there as well, along with all the standard stuff. This is not even starting on the massive wine and beer range. Now on to the staff: everyone working at Binny’s is a wine and/or booze geek, and probably also an alcoholic. These guys will tell you about all the best cocktail bars, while comparing and contrasting their range of calvados. Yes, an actual *range* of calvados.
Nearly, not every, time I go into a WS liquor store, I am struck by the poor selection, meager shelf space, and indifference of the staff. “Do you have Zacapa?” … “Huh? What’s that? Is that tequila?” You get the picture.
Needless to say, after living in Seattle all my life, walking into a Binny’s was a bit of a jaw dropper.
Binny’s is what you get when Chicago has free enterprise in the retail liquor business, and Seattle might come up with something different… perhaps more locally sourced product? Perhaps more obscure options? More of a foodie angle? Imagine the possibilities!
I am so glad that the state legislature is for the small businessperson, as long as they have 10,000 square feet of retail space.
Yes, grocery stores ought to be able to sell liquor. No, they shouldn’t have to have over 10,000 feet of space to do it.
Profiteer Sandeep Kaushik needs to keep collecting fees from Big Labor.
Can we change Costco’s initiative so that it’s not just liquor, but ALL products can only be sold in 10,000 square foot retail shops?
‘Cause these giant corporations like Costco need all the help they can get.
(And it just wouldn’t be Free Market Capitalism if we didn’t give the big guys a little extra advantage.)
Another monumentally toxic initiative launched at usby a major corporation to ensure that basically, the only place you have to buy liquor is from mega-whatever, scrubbed by peons, operated by hired guns, owned by Wall Street.
What more evidence do you need that the Washington State initiative system is a corporate tool? How about doing exactly the opposite of what Costco wants for a change?
Instead… Require that in order to sell liquor, 75% (or 51 or 60 or 55, whatever) of your inventory has to be liquor and exist at one location. Be a big store. Be a small store. Be urban. Be rural. But be a locally owned independent liquor store, not yet another multi-national big box.
Then let the mom & pops all fight it out in the market on level ground.
Better for them. Better for consumers. Better for communities. Bad for Costco.
What’s not to like.
Don’t fall for this crap.
The 10,000 square foot clause is so conveniently self-serving. Fuck you and your 34 varieties of vodka, Costco.
No one else here thinks it’s stupid you can’t buy Alize at 10pm on a Friday night?
Or Captain Morgan’s at noon on Sunday?
Really?
I’m not saying Costco’s solution is THE ONE, but looking at ean’s comment above, look how it could be SO much better! There’s got to be a better solution than the one we have…the state DOES have a monopoly, and that’s wrong. The state doesn’t even have a monopoly on gambling, so what gives?
Didn’t voters already reject liquor privatization? Why is Costco shoving this down our throats? It can feel that way when voters make a decision and the legislature overturns the decision, as has consistently been the example with $30 car tabs. So, if the voters said no, and another initiative comes out a year later, isn’t it just big business shoving their agenda down our throats? I don’t think it’s quite the same thing. There are big differences between the legislative process and the initiative process. The initiative must be written, signatures collected and voted by all the people, without the chance to modify it, once it makes the ballot. In legislative bills, rarely does the first draft make it all the way to the floor for a vote without some compromise and modification.
While I don’t like 1183 as much as I liked 1100, I believe 1183 is a fair compromise. Just as legislative bills require multiple drafts before a vote can be called, not every initiative is voter-ready as drafted, as I believe was the case with 1100. 1183 is the second draft of 1100, as it addresses the concerns of the opposition parties from the last election. It keeps the distributor model for beer companies. It keeps the profit portion of the state’s 51% markup, guaranteeing no reduction in money to the state treasury (whereas 1100 was a little more uncertain whether revenue would go up or down). It removes the ubiquity clause, limiting stores to either specialty shops or grocers with more than 10,000 square feet. But it keeps everything voters liked about 1100: private stores with better selection, a state focus on enforcement versus sales, convenience for restaurants and bars, and it rids the state of $350,000,000 in operating expenese.
It’s also important, however, to understand why voters rejected 1100. I believe there are four reasons: temperance, unions, confusion, and perfectionists. Some opposed 1100 because they oppose alcohol in general and felt any change would be worse for the temperance movement. Others voted no because they want to protect public sector union jobs. Those two classes of voters likely won’t change their minds on 1183. That is their belief and I can accept that. But I belive they are a minority opinion statewide. It is my opinion that 1100 lost voters in the latter two groups. Various surveys have shown that a significant number of voters fell into the last two categories of “no” voters, at least enough to have overturned the 2010 results. The confused voters didn’t take the time to read the initatives or failed to understand the differences between 1100 and 1105 and therefore voted no on both issues. Most of these folks accepted the premise of the “No” campaign, which was actually leveraged against the 1005 strawman initiative. The perfectionist voters maybe liked the idea of 1100, but felt it reflected too much change, was too drastic, and potentially irreversable in a bad way. The perfectionists wanted the benefits of 1100 without the risk it presented to statewide revenues or total ubiquity.
1183 was written to satisfy the concerns of the perfectionist voters and the lack of a competing initiative causing confusion should give Washington voters a much cleaner environment with which to make a decision. If 1183 is rejected, the temperance-union alliance will have proven to be the majority in the state and it would seem appropriate that Costco take their ideas to Oregon instead of trying a third time. If 1183 passes, it says that Washington voters are ready to move beyond the blue laws introduced after prohibition which really have little to do with our current socio-economic reality.
I’m not sure this initiative is what Costco really wants. Costco sponsored 1100, which didn’t have restrictions (for example, retailers of any size could sell liquor). That means Costco compromised when additional criteria was added in 1183.
If Costco sells liquor, I’ll pay less for it than I do now (that’s how Costco works). They pay their workers pretty well, their exec’s don’t get super-high salaries or other compensation, and the margins they post are modest. That means the profit goes to employees, or back into the business in other ways. So I don’t see Costco as the bad guy here – seems to me they’re the kind of company we want!
Why the rants agains Costco? Costco sponsored 1100, which didn’t have restrictions (for example, retailers of any size could sell liquor). So Costco compromised when additional criteria was added in 1183.
If Costco sells liquor, I’ll pay less for it than I do now (that’s how Costco works). They pay their workers pretty well, their exec’s don’t get super-high salaries or other compensation, and the margins they post are modest. That means the profit goes to employees salaries, or back into the business in other ways. So I don’t see Costco as the bad guy here – seems to me they’re the kind of company we want!
@22. You CAN buy Captain Morgan’s at noon on a Sunday, at any of the stores that currently have Sunday hours. As far as buying Alize at 10pm, would it kill you to have to get there at 9:59, a minute before the store closes? As of July 1st, liquor stores have expanded and standardized hours of operation. Perhaps you missed that. And if you want to talk about inconvenient hours, have you ever tried to go to Costco on a Sunday? Fuck that.
I’m not saying that our current setup is ideal, because it isn’t, but the fact is that the state HAS heard us, and went so far as to (shock!) make a change in hours to make it more convenient. Until I see a liquor initiative that doesn’t completely fuck over small business, state revenue, and current state employees, I will be voting no.
On a related note, when are people going to get over this teenage sense of entitlement bullshit? “Oh, I can’t buy liquor when and where I want!” Big fucking deal. Plan ahead, and quit whining. You’re a fucking adult now. Act like one.