It may have taken nearly 80 years, 1,128,904 voters (59%) and 5 State Supreme Court Justices but Washington’s prohibition-era government monopoly on the sale of liquor has finally ended.

Many thanks to all who made adoption of I-1183 possible, demonstrating that Washingtonians embrace the policy of focusing government efforts on strict enforcement of the public health, safety and drinking-age laws related to liquor sales, while leaving the business of distributing, pricing and selling liquor products to the competitive marketplace.

As noted by the Reason Foundation, Washington’s long-overdue move back to the private marketplace for liquor sales is being watched nationwide:

“Friday will mark a historic first: Washington State will become the first of 18 liquor ‘control’ states to fully privatize its state-run monopoly on the wholesale and retail trade in distilled spirits . . .

This will be interesting to watch on many levels. One topic of particular interest will be the impact of privatization on liquor prices. Many observers expect prices to increase overall, which on the surface might seem counterintuitive when considering the establishment of a competitive market among private vendors where one previously did not exist. However, to secure enough political support for privatization, drafters of the ballot initiative made a strategic calculation that merely replacing revenues to the state (via new excise taxes to replace the previous state monopoly markup, or profit) would not be enough to secure voter approval . . .

So if prices increase overall, well…it would make sense, since you’re tacking on new fees onto already high taxes. But we should be clear: if prices do rise, then it will be due to that particular policy decision, not a natural result of privatization. Observers in other states like Pennsylvania, where a policy debate over liquor privatization is ongoing in the legislature, should keep that context in mind as they consider how to design similar initiatives.

And in Washington State, policymakers always have the option of lowering the alcohol tax burden to drive prices down, though I don’t suspect that many policymakers there will be rushing to do so given their interest in higher tax revenues.

At a larger level, it will be interesting to see how Washington’s experience influences the liquor privatization discussion in the other 17 so-called ‘control’ states, which retain post-Prohibition era wholesale and/or retail liquor monopolies.”

On the issue of price, the Seattle Times has created this web page to compare and contrast initial price changes. One thing to keep in mind on prices, I-1183 wasn’t a minor tweak to the state’s liquor system but a major culture shock creating for the first time in nearly 80 years a competitive marketplace. As with other radical changes to the status quo (think post-Berlin wall Germany) it will take time for the market to finds its footing. Hopefully there won’t be any artificial roadblocks put in the way to facilitating a competitive marketplace.


[Reprinted with permission from the Washington Policy Center blog]