In November the people of Washington will vote on Initiative 1183. Initiative 1183 would end the state’s 78-year old prohibition-era monopoly on the sale of liquor in Washington. Though there are similarities to last year’s Initiative 1100, which was rejected by voters, there are also important differences. We will be releasing a full analysis discussing these differences next week.

There are currently 18 liquor monopoly states in the U.S., including Washington. These states maintain some level of monopoly control over the sale of liquor. Washington is one of 12 states that impose a government-only monopoly on both the retail and wholesale liquor sales.

Based on a story in the Everett Herald, the campaign against I-1183 will be very similar to the one run against I-1100 focusing on the expected increase in the number of retail liquor stores:

“Let the ad battle begin in the fight on whether the state should get out of the business of selling hard liquor.

Initiative 1183 would close state liquor stores and let booze be sold in stores with at least 10,000 square feet of retail space. That will ratchet up the number of places where you can buy a bottle of Jim Beam.

Foes of Initiative 1183 are airing a television commercial in which law enforcement officers and firefighter paramedics warn that such an increase poses a great threat to public safety.

The latest ad is not available online as of this afternoon. However, it’s virtually the same argument made in commercials opposing both liquor privatization measures on the 2010 ballot.”

According to the Office of Financial Management (OFM), if voters adopt I-1183 the number of retail liquor stores in the state would increase from the current 328 to 1,428. OFM estimated that last year’s I-1100 would have resulted in 3,357 retail liquor stores being available to consumers.

OFM also estimates that I-1183 would increase state revenues by more than $200 million, as well add approximately an additional $200 million more in local government revenues over the next six years to help fund public services.

So how would I-1183’s projected increase in Washington’s retail liquor stores compare with the retail liquor density in other western states?

Out of 11 western states (excluding Nevada and New Mexico due to lack of comparable information), Washington currently has the second most restrictive liquor retail outlet density, with one store per 20,502 inhabitants. Utah has the most restrictive with one store per 28,494 inhabitants and Wyoming the least restrictive, with one store per 765 inhabitant.

As would be expected, the top five most restrictive liquor retail outlet densities are in strict control states. If Initiative 1183 is enacted, Washington would still rank among the top five state for restrictive access to liquor sales, moving from second to fifth most restrictive, and would be the most restrictive non-monopoly-control state in the West. The state liquor retail store density rankings do not change when adjusting for population numbers for those only 18 and over (though the density does increase).

Current

Under I-1183

State

Retail Outlets

Population

Outlet Density

State

Retail Outlets

Population

Outlet Density

UT*

97

2,763,885

28,494

UT*

97

2,763,885

28,494

WA*

328

6,724,540

20,502

OR*

247

3,831,074

15,510

OR*

247

3,831,074

15,510

MT*

97

989,415

10,200

MT*

97

989,415

10,200

ID*

163

1,567,582

9,617

ID*

163

1,567,582

9,617

WA

1,428

6,724,540

4,709

AZ

1,450

6,392,017

4,408

AZ

1,450

6,392,017

4,408

CO

1,616

5,029,196

3,112

CO

1,616

5,029,196

3,112

CA

13,587

37,253,956

2,742

CA

13,587

37,253,956

2,742

AK

367

710,231

1,935

AK

367

710,231

1,935

HI

815

1,360,301

1,669

HI

815

1,360,301

1,669

WY*

737

563,626

765

WY*

737

563,626

765

*Control states
(Source: Liquor Control Board for each state and U.S. Census Bureau for 2010)

I asked the Washington State Liquor Control Board (WSLCB) to review this table and for its comments. According to the WSLCB:

“Your numbers are technically accurate as far as the OFM Analysis is concerned. We have 328 stores now. The OFM analysis estimates 1,428 stores selling spirits should I-1183 pass.

However, the analysis doesn’t take into account the number of outlets that could sell liquor in the ‘trade areas’ designation of the initiative. The initiative says that store’s with less than 10,000 square feet can sell spirits if there is no other retail spirits license holder in the trade area. Trade area is not defined. So, it’s impossible to say how many that could be, which is probably why it is not part of the analysis.”

Based on these comments I followed up with OFM.

While OFM stands by its analysis it acknowledged that estimates are always somewhat indeterminate due to different assumptions. OFM also said that whether there are 1,428 stores or 2,000 stores, due to the 5% elasticity assumption based on an academic study and growth experienced in Alberta, Canada after converting from state stores to private stores, no additional sales would be expected due to the additional stores. Purchases instead would occur within a larger base but not result in increased total sales due to market saturation.

OFM also confirmed it “felt comfortable with the 5% regardless of number of stores because at that level our per capita consumption would increase, but at a level consistent with west coast states both private market and control states.”

The bottom line is that the number of retail liquor stores would increase in Washington under I-1183 but this would not result in the state becoming the wild, wild west of liquor retail stores or sales.

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[Reprinted from the Washington Policy Center blog; photo credit: Indiana Public Media]