Thursday, October 21, 2010

The Battle Begins: Initiatives 1100 & 1105


The battle isn't just about proponents and opponents, but also just the battle of trying to understand these issues. I haven't seen an initiative yet that makes the language very clear. It is often so twisted that what you think you may be voting "yes" on, you really just voted "no" - - or vice versa.

Here are copies of the original initiatives filed (pdf):
Initiative 1100
Initiative 1105

Proponents of these initiatives feel that Washington state needs to get out of the liquor business. With the state out of the liquor business proponents of these initiatives feel the consumers will be provided with fair prices, more buying options and convenience.

Opponents of these initiatives feel that if passed, deregulation will cut over 1,000 union jobs across the state. They feel it will dismantle a system that generates over $300 million for important state and local services, besides increasing the availability of liquor to minors.

How could these initiatives affect the local wineries in the Walla Walla Valley, you ask? Here is a letter I received today.
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Dear Friends,

Washington State has become the testing ground for a major new push by chain store retailers to test their political and economic clout by using the citizen’s initiative process. After losing their court battle to strip the Washington State Liquor Control Board of their mandate to regulate alcohol sales two years ago, Costco and other giant retailers are trying to circumvent this court decision by using the initiative process via Initiative I-1100.

Afraid of losing control of their own industry, distributors and manufacturers of hard liquor have also usurped the initiative process, and are promoting their own version of getting rid of the Washington State Liquor Control Board’s regulatory authority by introducing I-1105.

Both of these initiatives would allow any retailer of wine or beer to also sell hard liquor, increasing the potential number of hard liquor retailers to over 5,000, from the current 315. Yes, the current system probably results in liquor being more expensive than it would be if it was sold in gas stations and grocery stores, but a lot of the increased cost is due to taxes that the state uses to help cities and counties provide essential services. In this economy, does our state really need to lose that revenue? It would have to be made up by taxing something else, or giving up some of our already stretched public services. And why? So these huge retailers can increase their profits!

The other important issue that the promoters of these two initiatives don’t mention in their well-funded advertising, is that they both want to get rid of what is called “tied-house” rules. These rules prohibit manufacturers and distributors of alcohol from giving incentives (bribes) to retailers in order to influence their purchasing choices. These rules prevent large, wealthy companies like Gallo, Franzia, or Sutter Home, from offering free goods, free advertising, and paying for shelf space for their products at retailers like Costco, QFC, Safeway, Fred Meyer, etc. Small wineries and breweries without the money to compete, would lose sales. Eventually the consumer would only have the large, international brands to choose from as shelf space is auctioned off to the highest bidder.

For small, family owned wineries, breweries, and retailers, the tied house rules help level the playing field, making it possible for us to compete with the mega-companies. They are one reason why Washington consumers can proudly say that we have 700 wineries across the state that have some of the highest quality wine in the world.

We urge you to vote “NO” on I-1100 and I-1105. Both of these initiatives will harm Washington’s small wine and beer producers, causing many of them to close because they can’t compete with the bribes offered by huge international suppliers. The Washington State Liquor Control Board rules have been arrived at after more than 75 years of Post-Prohibition experience. I-1100 and I-1105 would get rid of them merely so that already huge companies could make even more money. Is that why we have the initiative process?

Thank you for taking the time to read this lengthy letter. These issues are not simple, but the bottom line is: Should we let the initiative process be used by big companies to help them get even bigger?

Sincerely,
Debbie and Dave Hansen
“Mom” and “Pop” of Cougar Crest Estate Winery

Debbie later points out to me:

We certainly can’t count on getting all our information on the issues from the sponsors of the TV advertisements. Those ads only cover 1/8th of the issues involved and are certainly skewed toward the sponsors of the initiative. I contend there is a lot more at stake here than just the economics of the tax base. The issue of viability for companies that aren’t billion dollar, multi-national corporations, is also at stake. There are many small businesses and their employees at stake as well, not just the employees of the state liquor stores. Of the 700+ wineries in Washington, if you look at the smallest 690 of them, you will see they are very small businesses, certainly not able to compete financially with the big wine companies of the world that will be aggressively pursuing the Washington wine market if either one of these initiatives passes.

To me the main issue is this: There are some very large, wealthy retailers who want to become even larger and wealthier, and they have written and sponsored these initiatives in order to do so. They are stirring a tempest in a teapot in order to cover their main motives. Will we the people be able to see through the dustup in the teapot and say no, we don’t want our initiative process used to increase the profits of big corporations? We need to be questioning why do we need this initiative and who are the big beneficiaries? The difference in the taxes, where they come from and who pays them, is nothing compared to the extra profits to be made by these large corporations. Follow the money; who are the really big beneficiaries here???
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My wine blogging peers, respectively, have given their opinions. John of Wine Peeps has been "agonizing and analyzing" while Sean of Washington Wine Report "boiled it down and boiled it down again." I would advise wine consuming readers to please read each blog and while you are reading, do take the time to check out what the Wine Spectator has to say about these issues, as well. Last, but not least, the Seattle Times says, "Yes" and the Seattle PI says, "No." (Note: it is important to have just one glass of wine, not two, while reading these opinions so that you don't get even more confused.)

Most important? Please vote on Tuesday, November 2. If you don't vote, you don't get a voice.

4 comments:

Morisseau said...

The big beneficiaries are the consumers of the state of Washingion. Any claims otherwise are disingenuous populist appeals.

Plainly put: I care NOTHING for the lost union jobs. These are unskilled retail positions. Every person who may lose a job at a state-run liquor store can easily find a new job at a private liquor store, or any other retail employer. This argument is irrelevant to the discussion -- other than to point out that the state employee's union has exerted undue influence over the issue in the interest of a small handful of its members, at the expense of the entire population of Washington state.

I'm empathetic to the plight of small wineries and breweries -- but simply put, you don't NEED to sell to Costco to run a successful business. If you make a good enough product, people will seek it out and support it. Nowhere is this more evident than in the behavior of wine collectors and enthusiasts. This is Capitalism 101.

I say: vote YES on I-1100 and I-1105. And no, I'm not a mouthpiece for big retailers, I'm just a free-market loving boozehound.

Jessica said...

I went into Costco the other day and there was a HUGE sign letting me know that if 1100 &1105 pass I would no longer pay $45 for a bottle of name brand tequila, it would magically be $19.95 on their shelves. My first thought wasn't “Oh, wow! What a great deal!” (Though honestly, I have to admit it crossed my mind) First among my thoughts was this “At a price like that, and availability like this... I wonder how many more cops we will have to hire?” Then I followed with this thought “How can we afford to hire more cops when each bottle of tequila $25 less?” (here I am cautiously assuming that that $25 was all state taxes.) I remember hearing the TV commercials telling me that if 1100 & 1105 passed that small wineries/breweries would be pushed off the grocery store shelves. At the time, I honestly didn't understand that point until reading Catie's article here. Now, I have heard some say that well, its tough luck guys! You don't need grocery shelves to sell wine, do it from your tasting rooms. What a bummer though, that those wine bottles would cost all the more if they had to limit sales to their own tasting rooms or possibly not be available at all. What a bummer that I, here in the Tri-cities would have to drive an hour just to get my hands on a Forgeron Cellars Zinfandel, or have it mailed to me, for we all know how well UPS treats a mailed package marked FRAGILE. Another thought is this, though I have stood on both sides of the fence regarding the Walla Walla wine business, I do believe that the greater good is the industry and jobs that they have brought to the valley. I have friends who would be hard pressed to make ends meet if not for bottling wine, not for becoming tasting room associates. What happens to Walla Walla if these wineries close shop because the mounting cost of doing business grows too high? Not only would we loose access to some of the world's most sought after vintages, we would loose the folks who make annual pilgrimages for spring wine tasting weekends or winter barrel tasting weekends. Those folks stay at bed and breakfasts, those folks buy coffee at local coffee shops and espresso stands, and they eat at snazzy restaurants like the White House Crawford. They go to our farmers market and buy fancy cheese, local bread, and sweet fruits to taste with the wine they bought. I know, I know, Walla Walla's focus on the wine industry has caused some lack luster focus on other things my home town should also be giving attention to. Overall, I still believe that we should give our voting support to our local wine industry because with out it, so many people I know and love would be with out jobs, and our down town would look like the famous Blue Mountain Mall. That isn't what we want is it?

john said...

Catie, Don't know if you noticed or not, but yesterday I quit "agonizing and analyzing" and decided once and for all, for right or for wrong, "Yes" on I-1100, and "NO" on I-1105 on Wine Peeps.

Catie said...

Thanks John for checking in with your final decision.
C~

Check out John's final decision at

Wine Peeps