Agonizing Over and Analyzing Washington Ballot Initiatives I-1100 & I-1105



By John ~ September 24th, 2010.

A month ago, I was fairly certain how I would vote on both of these initiatives. Today, I’m not as sure. How about you?

Earlier this month, a good, concise summary of the two initiatives appeared in the Seattle P-I Online. It said in part, “I-1100 would eliminate Washington’s ‘three-tiered’ liquor control system, which segregates the manufacturing, distributing and retailing of spirits. Bans against volume discounts would be repealed and retailers like Costco and Wal-Mart would be allowed to buy directly from manufacturers [without going through a distributor]. The other measure, I-1105, would privatize the liquor retail system but keep in place state laws that protect the liquor distributors, who are behind 1105.”

Studying the two initiatives, it appears to me that I-1100 is pro-consumer, while I-1105 is pro-the middleman. I-1100 preserves the existing liquor excise tax, while I-1105 repeals it. It also appears that I-1100 will provide more funds for liquor enforcement and education, but I-1105 does not.

Traditionally, I’ve found it helpful to “follow the money” when I’m deciding how to vote on something like these initiatives. Seeing who is backing them financially gives me a good feel for who will benefit the most and whether or not I agree that it is for the greater good.

Following the money shows a group called “Modernize Washington” has raised almost $2 million to support I-1100. Costco, Wal-Mart, and Safeway are its largest donors, according to the Public Disclosure Commission. “Washington Citizens for Liquor Reform” has raised about $2.2 million to support I-1105. The group’s donors (virtually 100%) are liquor distributors Odom Southern Holdings and Young’s Market Company. And a group called “Protect our Communities,” a somewhat disingenuous name considering its main donors are beer and wine wholesalers, has raised about $6 million to oppose both initiatives.

After following the money, studying what the initiatives do and don’t do, and since I am a big proponent of dismantling the archaic three-tiered system that exists primarily for the benefit of distributors and for getting the state monopoly out of the wine retail business, I had concluded that I’m for I-1100 and against I-1105.

I have been especially incensed that Rick Garza of the Washington State Liquor Control Board (WSLCB) has been traveling around the state on state time and money campaigning against both initiatives. It’s not surprising given that his and other jobs may be at stake, but it “walks and talks” like a clear violation of state ethics legislation.

Quite honestly, as a small businessman myself for many, many years, I thought it would be a slam-dunk for wineries and winemakers around the state to be in favor of I-1100. However, in recent weeks, I’ve learned that they are divided on the issue. The Family Winemakers of Washington group is strongly pro I-1100, while the Washington Wine Institute is equally vehement in its opposition. Darby English of Darby Winery, James Mantone of Syncline Cellars, and Caleb Foster of Buty Winery have come out on TV (English) and print (Mantone and Foster) against I-1100. I don’t know English personally and his ad appeared to be paid by the wholesalers’ group, so I discounted it somewhat. On the other hand, I did believe Mantone and Foster’s objections deserved careful study. If I understand correctly, their objections revolve around concerns about the elimination of both uniform pricing and the requirement for immediate cash payment for wine. Since almost every other business in the world offers volume discounts and extends short-term credit to its customers, I’m not sure I understand the anguish. Besides, I don’t believe the initiative requires a winery to extend credit. And most wineries already offer case discounts to consumers, which is the same in principle as volume discounts to merchants.

I respect Mantone and Foster personally and as talented winemakers, so their concerns made me reconsider my position. However, after further study and reflection, I still believe the benefits outweigh the concerns about I-1100. I’m still leaning toward a “yes” vote on I-1100 and a “no” vote on I-1105.

Have you made up your mind about these initiatives? Please weigh in with your thoughts and tell me if you think I should reconsider my position.


Filed under: American Wine, Miscellaneous, Washington State Wine

Reader's Comments

  1. Michael | September 24th, 2010 at 8:45 pm

    No doubt you are correct, John, the issues are complex and certainly deserve a great deal of thought. The 3 tiered system is really of no concern to wineries in the state as they are already allowed to sell directly to retailers. Their problem is really getting to the retailer in a cost effective manner. As for pay as you go for alcohol, I believe this to be a prudent approach and may very well keep a more unsavory element from conducting business in the industry. I see no benefit to the taxpayers of Washington in having the state involved in selling alcohol. I do, however see a benefit in the WSLCB being more effective in “policing” purveyors of public alcohol consumption (wine and beer included) as I see a great deal of non-compliance with a good many laws as I frequent wine bars in the South Sound area. Do keep in mind that the “Gallo” of Washington, Chateau Ste. Michelle, is right in there with Costco. If you were in grocery stores for Washington Wine Month (Aug) and saw the display area allocated to them you would probably understand why small wineries are reluctant to eliminate any foot hold they may have in retail shelf space. There has got to be some middle ground here that gets the State out of the sale of alcohol but maintains a modicum of retail fairness for the small winery. If I were sure what that might be I would offer it tonight. I only believe that neither 1100 nor 1105 is the answer. I look forward to your response if any and to other posts.

  2. John | September 25th, 2010 at 8:33 am

    Michael,
    Thanks for your good and thoughtful comments. I agree that there is no magic solution that will make everyone ecstatic, but I believe that I-1100 is a step in the right direction. While concern for the small winery is most often cited as a reason to vote against the initiatives, I note with interest that a group of small wineries, The Family Wineries of Washington, is a big proponent of I-1100. And several of the small to mid-sized wineries are moving aggressively into markets like Chicago where they are having to give volume discounts. Why would they do that if price controls are critical to their survival? Getting the state out of the wine business is the critical issue here in my opinion, and in a fashion that doesn’t do irreparable harm to smaller wineries. As of this moment, that’s what I see I-1100 accomplishing. Tell me where I’m off base.

  3. Liz | September 25th, 2010 at 10:01 pm

    People will continue to purchase the “small vintner’s wine” as long as the stores and their wine buyers continue to showcase the small grower’s accomplishments, such as Wine spectator placement, etc. There are many stores that rate the wines and their staff is really helpful – Food Emporium, Albertsons, QFC, Trader Joes, Whole Foods, etc. Not to mention wine bars.
    As far as access to alcohol – if a under-age person wants to obtain alcohol, they will, no matter who sells the bottles, or who buys it for them. Making it the “forbidden fruit” will only make it worse! I mean, we let our military personnel drink (and kill!) at 18!
    The answer is education. And if they do drink, they need to feel comfortable calling someone to help them safely home, or strong enough to refuse that “ride” from a drunk person.

  4. Liz | September 25th, 2010 at 10:10 pm

    People will continue to purchase the “small vintner’s wine” as long as the stores and their wine buyers continue to showcase the small grower’s accomplishments, such as Wine spectator placement, etc.
    There are many stores that rate wines and their staff is really helpful – Food Emporium, Albertsons, QFC, Trader Joes, Whole Foods, etc. Not to mention wine bars. I do not foresee a monopoly by Costco or Walmart either. People want convenience and will buy it, along with their string beans, at their local grocery store, at the hours that WORK for them.
    As far as access to alcohol – if a under-age person wants to obtain alcohol, they will, no matter what business sells the bottles, or who buys it for them. Making it the “forbidden fruit” will only make it worse!
    The answer is education. And if they do drink, they need to feel comfortable calling someone to help them safely home, or strong enough to refuse that “ride” from a drunk person.
    I’m for I-1100 because of the 800 unnecessary State Union employees.
    I’m sorry that they may lose their jobs, but the Government waste needs to be trimmed.
    And by golly, This IS the 21st Century – There is no Volstead Act anymore!

  5. John | September 26th, 2010 at 5:38 am

    Liz,
    Thanks for you comments. You make some good points.

  6. Surely this is one we can ALL agree on. « Does It All Matter 2 | September 27th, 2010 at 1:54 pm

    [...] Agonizing Over and Analyzing Washington Ballot Initiatives I-1100 & I-1105 (winepeeps.com) [...]

  7. Bart Reynolds | October 6th, 2010 at 9:37 am

    Hi John,

    My partner Peter and I own Poco Wine Room and we remain as confused as you. To understand the implications of 1100 and 1105 better, I highly recommend you watch the documentary “Beer Wars”. It is available on Netflix and elsewhere.

    It is all about breweries, distributors, retailers and the way laws and economics interplay. It is entertaining and informative in a way that applies to the wine world directly.

    Retail space is everything to many wineries. That’s where the story gets complicated, and why uniform pricing and credit were put in place in the first place.

    I’m in favor of ditching state liquor stores, but I hope that neither 1100 or 1105 pass, or that both pass, so the legislature can work it out, as they should have already.

  8. John | October 6th, 2010 at 2:54 pm

    Bart, Thanks for the heads-up on the documentary. Re 1100 and 1005, it is a tough call. I understand your point about the legislature working it out, but I’m not sure that I want a purely political, therefore lobbyist driven, solution. That’s why I’ve been leaning toward Yes on 1100.

  9. Michael | October 6th, 2010 at 4:15 pm

    John,

    With all due respect, the initiative campaigns are being driven by the same lobbyist monies that you worry will cloud the legislative process. I-1100 is at its core a deregulation effort. We have, at a national level as well as states level, an extremely poor behavioral history when it comes to deregulating business sectors and industries. The list is endless but includes the S & Ls, railroads, airlines, banking industry, etc. I am not against getting the state out of the sales arena, however, I do believe 1100 favors the big players and leaves little room for anything other than many small producers being gobbled up or put under in the frenzy that will ensue. It is true that some of the big name cult players will survive and it is also true that the California wine industry has thrived and increased 10 fold since the 1950s, but, I believe there is a calmer way of progressing rather than just opening the flood gates because Costco and Ste. Michelle have money to drive their agenda full speed at us. Perhaps an incremental approach would be more likely to end with better results in a more stable atmosphere. Getting the state out of the sales business would be a good start, in my opinion, but without allowing open season on volume discounts, give aways, and a “free for all” along the supply lines.

    In another month all of this will be decided. Let me say that this has been one of the most civil and interesting exchanges I have encountered this political cycle and that speaks well for wine lovers. Further, I appreciate all that you folks at Wine Peeps do for wine in general and for the Washington State wine industry.

  10. John | October 6th, 2010 at 5:00 pm

    Michael, Thanks for your comment. You make some good points. We appreciate your kind words about Wine Peeps.

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