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State sells rights to liquor stores for $30.7 million

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By Shannon Dininny
Associated Press
Kulbir Singh was in Seattle visiting friends in February when he heard the state might be privatizing the liquor sales it has tightly controlled since the end of Prohibition.
Two months later, the Indiana businessman was the winning bidder for nine Washington liquor stores, adding to a list of businesses he owns that include a hotel, gas station and car wash near his Brazil, Ind., home.
The big enticement? Sales volume.
"The volume is awesome high," Singh said. "They are very clean stores too, very nice, but we are going to have some competition."
Sure will.
The Washington state Liquor Control Board announced Monday that bids for Washington's 167 state-run liquor stores totaled about $30.8 million in an auction prompted by a voter initiative kicking the state out of the booze business. (See a list of 19 Snohomish County liquor stores and the winning bids.)
In addition, more than 1,000 businesses, including Target and large beverage retailer BevMo!, have already applied to begin selling liquor in their stores since voters approved Initiative 1183 in the fall.
In what was the costliest initiative campaign in state history, the Costco-backed measure allows stores larger than 10,000 square feet to sell liquor. Smaller stores will be allowed to sell liquor only if there are no other large retail outlets in their area.
Only state-run stores were included in the online public auction. Washington's 163 contract liquor stores, which are run by private individuals, will be allowed to continue operating.
Successful bidders won the exclusive right to operate a liquor store at the location of the state-run store on which they bid. Because the state does not own the properties, the bidders still must negotiate a lease, acquire a liquor license and stock their stores.
The initiative takes effect June 1.
Most of the bidding activity came in a flurry in the auction's final hours Friday, when total bids increased by $23.7 million. Successful bids ranged from $49,600 for Store 186 in Spokane, to $750,100 for Store 122 in Tacoma.
Most bidders were Washington state residents, though three dozen stores went to bidders from other states and Canada.
A $4.6 million bid for all of the stores, which was far exceeded by the total bids for the individual stores, will not count. The total number of bids offered: 14,627.
Singh bought the rights to stores in Federal Way, Renton, Port Townsend, Tacoma, Bellevue, Oak Harbor, Sequim and Spokane, at a total cost of more than $1.4 million.
The auction marked a historic event for a state that has tightly controlled its liquor industry since the end of Prohibition.
Nearly 20 states control the retail or wholesale liquor business within their state lines. Some, such as Iowa and West Virginia, have relinquished partial control in recent years, but Washington will be the first in that group to abandon the liquor business entirely.
Initiative opponents have filed a lawsuit, arguing the measure violates state rules requiring initiatives to address only one subject, because it included a provision for public safety funding. A judge rejected that claim, but opponents have appealed to the Washington Supreme Court.
The state high court will hear arguments May 17. The entire measure would be nullified if the court determines voters would have rejected the initiative without the public safety provision.
Story tags » Small businessRetailState



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