Liquor: HOTG article Jan. 2016

Liquor: HOTG article Jan. 2016

17 percent fee – passage of SB 5301/HB 1343

When voters passed initiative 1183, which privatized the sale and distribution on spirits in Washington, they gave more options to suppliers than businesses in any other state. The goal of I-1183 was to create a private, competitive marketplace that was established through direct supplier/distributor/retailer relationships. However, when the Washington State Liquor and Cannabis Board (LCB) crafted rules to implement the voter approved initiative, they took a few major steps to cut off our industry’s relationship with spirit retailers. They specifically restricted the amount of spirits we could purchase per day and imposed a 17 percent fee on retail sales of alcohol to restaurants.

The WRA filed a legal challenge of the LCB’s per day limitation on sales of spirits to our industry, and prevailed. For the past 3 years, the WRA has asked the legislature to repeal the 17% fee so that a level of competition can be restored, businesses can have more options, and so smaller operators can pursue supply options that better fit their needs.

Opponents of our legislation to remove the 17 percent retail fee, led by the two large spirits wholesalers that collectively control 94 percent of spirit sales, have argued that many jobs will be lost if they are forced to compete with for our industry’s business with retailers.

Currently, Senate Bill 5301, sponsored by Sen. John Braun and Sen. Mark Mullet, sits in the Senate Rules Committee, and the House version of the bill, House Bill 1343, sponsored by Rep. Larry Springer and Rep. Cary Condotta, sits in the House Finance Committee.

This year, we will continue to remind lawmakers of the importance of removing this fee and our collaboration with the lodging industry will help strengthen our voice.

WRA and WLA Challenge LCB pricing rules

Over the past two years, the WRA has been challenging the LCB’s attempt to further restrict marketplace decisions. The LCB has adopted a complicated pricing scheme, which prohibits our industry from negotiating price despite a number of legitimate business reasons for doing so.

The rules, which the LCB adopted in September, establish a strict system of uniform quantity discounts for spirits that specify when and how volume discounts can be calculated. Businesses are prohibited from taking advantage of product promotion and pricing specials, including “family plans,” and from establishing a customer relationship beyond a single, one-time order. The WLA and the WRA believe the courts will ultimately find the rules to be illegal. In October, WRA filed a lawsuit (LCB) over its rules that restrict options for negotiating liquor prices, and WLA, the Northwest Grocery Association and Costco have joined the suit.

The WRA and WLA will not be requesting any legislation on this topic because we do not wish to change the law; rather, we feel the law is clear and are asking the court to uphold the law by overturning LCB rules.

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