OLYMPIA — State lawmakers extended a lifeline this year to small liquor stores who had struggled under the new privatization rules, but that change has also opened the door for large retailers to ask for the same break next year.
In one of the final votes taken by the Legislature before adjournment last month, lawmakers agreed to limit the fees paid by the smaller stores that used to handle liquor sales when the state controlled the market. Those outlets will no longer have to pay a 17 percent fee for sales to bars and restaurants.
Voters approved an initiative in 2011 to privatize liquor sales and dismantle Washington’s state-run liquor system, which was formed in the 1930s in the aftermath of Prohibition.
Trent House, a lobbyist working for a company that operates two of the former state-contracted liquor stores, said the initiative caused many of the small operations to lose much of their restaurant and bar business. Those clients instead have the option of buying directly from distributors and get a lower price by avoiding the markup that comes from the 17 percent fee.
“What was most important for our survival was making sure that the 17 percent came off for us,” said House, who represents Monroe-based Clearview Spirits and Wines.
Larger retailers, however, also want the same benefit. Holly Chisa, a lobbyist with the Northwest Grocery Association, said the retailers believe the state did not properly interpret the language of the liquor privatization initiative — passed by voters in 2011 — and that the 17 percent fee should not apply for such retailer-to-restaurant transactions.
Grocery outlets had tried to get that changed this year, but Chisa now says that they will work with lawmakers next year to get it implemented.
“We’re not giving up by any stretch,” Chisa said.
Senate Republican Leader Mark Schoesler of Ritzville said lawmakers didn’t have the votes this year to expand the measure to other retailers. He said there was a lot of sympathy for the former contract stores who needed a break, so lawmakers focused primarily on providing aid there.
Next year, Schoesler said it’s a possible that the Legislature will expand the rule, but he said budget writers may balk at the plan since it would likely impact state revenues.
“I think everybody’s just taking a wait-and-see attitude,” Schoesler said.
John Guadnola, executive director of the Association of Washington Spirits and Wine Distributors, said the group supported exempting the former contract stores from the 17 percent fee, since a lot of those people are small businesses trying to fill a niche. The group opposes the idea of eliminating the 17 percent fee for large retailers who are trying to act more like distributors.
If large retailers don’t pay the 17 percent and don’t pay the 10 percent fee paid by licensed distributors, Guadnola said those large retailers would have a significant and unfair competitive advantage.
That would make it difficult for distributors to compete in some ways. And, if restaurants and bars rely on retailers for their supply instead of distributors, it could mean less selection and variety for consumers, Guadnola said.