HomeMy WebLinkAboutCOW 2010-10-11 Item 3D - Resolution - Opposing Initiative 1100 and Initiative 1105 Regarding Alcohol Privatization COUNCIL AGENDA SYNOPSIS
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10/18/10 KAM
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ITEM INFORMATION
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CAS NUMBER: 10-114 I ORIGINAL AGENDA DATE: OCTOBER 11, 2010
AGENDA ITEM TITLE A resolution opposing Initiatives 1100 and 1105.
CATEGORY Discussion Motion Resolution Ordinance Bid Award 1 1 Public Heanng Other
Mt Date 10/11/10 Mtg Date Mtg Date 10/18/10 Mtg Date Mtg Date Mtg Date Mtg Date
SPONSOR Council Mayor Adm Svcs DCD 1 1 Finance 1 'Fire Legal n P &R 1 1 Police PV
SPONSOR'S The resolution expresses City Council opposition to Initiatives 1100 and 1105, which are
SUMMARY on the November 2, 2010, general election ballot. Both initiatives concern liquor (beer,
wine and spirits), and propose to close state liquor stores and privatize the sale and
distribution of liquor.
Public comments will be accepted at the 10/11/10 and 10/18/10 Council meetings.
REVIEWED BY COW Mtg. U CA &P Cmte F &S Cmte ['Transportation Cmte
Utilities Cmte Arts Comm. n Parks Comm. Planning Comm.
DATE: 10/05/10
RECOMMENDATIONS:
SPONSOR /ADMIN. Councilmember Seal
COMMITTEE Unanimous approval; forward to COW for discussion.
COST IMPACT FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
Fund Source:
Comments:
MTG. DATE I RECORD OF COUNCIL ACTION
MTG. DATE I ATTACHMENTS
10/11/10 Informational memorandum dated September 28, 2010, with Attachments A -G.
Draft Resolution (as Attachment G above).
Minutes from Finance Safety Committee meeting of 10/05/10.
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ti City of Tukwila
City Council
2 90'
MEMORANDUM
TO: Finance and Safety Committee
FROM: Verna Seal, Councilmember
DATE: September 28, 2010
SUBJECT: 2010 Liquor Initiatives 1 -1100 and 1 -1105
ISSUE
Washington State Initiative Measure Nos 1100 and 1105: Concerning Liquor (beer, wine and spirits),
which will appear on the November 2, 2010, General Election Ballot.
BACKGROUND
If approved by voters, Initiatives 1100 and 1105 each impact a significant revenue stream for cities,
counties, and the state. While both initiatives close state liquor stores and privatize the sale and
distribution of liquor, the measures have different dates and different impacts to state and local
government revenue.
Why are their two liquor initiatives? While both initiatives allow private retailers to sell liquor, one
primary difference is who is allowed to distribute liquor Currently, the state distributes liquor to the
liquor stores 1 -1100 would allow retailers to negotiate and buy liquor directly from the manufacturers.
1 -1105 would require retailers to buy liquor from a third -party distributor; the distributors would sell to
all retailers at the same price.
According to the Washington State Public Disclosure Commission, Initiative 1100's campaign is
primarily funded by Costco, and Initiative 1105 is funded by Odom Southern Holdings and Young's
Market Company, two beverage distribution companies
Large retailers likely would benefit by negotiating discounts directly with the makers of liquor. Smaller
retailers (and distributors), on the other hand, likely would benefit from a distribution system that sells
to small and large retailers at the same price.
What happens if both initiatives pass? In 1993, when two rival tax -limit measures, 1 -601 and 1-
602, were on the ballot, the Attorney General issued a formal opinion observing it would be possible
for the Legislature to resolve any conflict by amending either or both measures with a two thirds vote.
Failing that, the courts would be tasked with resolving the differences, possibly giving deference to
the initiative that got the most votes or that had the later effective date
DISCUSSION
Approval of 1 -1100 and 1 -1105 can have adverse affects on both state and local governments from
police enforcement to revenue impacts Additionally, funding for Municipal Research and Services
Center of Washington (MRSC) could be impacted in a way that would require MRSC and local
governments to identify other funding sources for the instrumental research and information MRSC
currently provides.
Impacts to local governments if these initiatives are approved. The Liquor Control Board
indicates that if either of the liquor initiatives passes, they likely will have sufficient funding from other
45
Initiatives 1100 and 1105 page 2
sources to continue their current enforcement operations. However, they do not anticipate sufficient
additional enforcement funding to mitigate a substantial increase in the number of liquor retailers. As
a result of the increased work load and limited resources, local law enforcement could feel the impact
from the expansion of liquor sales.
In regards to the Municipal Research and Services Center, it receives almost all of its funding from a
contract with the state. The contract is funded through cities' (76.7 and counties' (15.9 share of
liquor revenue. The city share is paid out of city liquor profits, which would be eliminated by both
initiatives, and the county share is paid out of county liquor taxes, which would be eliminated by 1-
1105.
Initiatives' impact to local and state revenue. State and local governments get two types of
revenue from the sale of liquor: liquor profits and liquor taxes.
Liquor board profits are revenues from permits, licenses, and liquor store sales. The state
first pays for the activities of the Liquor Control Board (administration, sales people, leases,
etc.), and the remaining profits are divided 50% to the state, 40% to the cities, and 10% to
counties.
Liquor excise taxes come from a state tax to consumers and restaurant licensees. The tax
rates include a basic rate plus surcharges. Revenues from the basic rates of 15% for
consumers and 10% for restaurants are shared 65% to the state, 28% to cities, and 7% to
counties.
According to estimates in MRSC's Budget Suggestions For 2011 (these numbers have been
confirmed by the City of Tukwila Finance Director), Tukwila's distributions for 2006 -2008 are as
follows:
Liquor Excise Tax 1 73,376 I 81,587 1 86,638 1
1 Liquor Board Profits 1 $111,011 I $131,163 1 $121,657 1
What do the two initiatives do to profits and taxes? Both initiatives eliminate the profits 1 -1100
maintains the liquor tax; 1 -1105 eliminates the liquor tax effective April 1, 2012.
Do the initiatives require a new method of liquor taxation? No 1 -1105 has intent language that
the privatization of liquor sales and distribution "not result in revenue losses to state or local
governments" and directs the Liquor Control Board to recommend to the Legislature "a rate of
taxation that, along with other spirits related revenue sources, would project to generate at least the
same annual revenue for the state and local jurisdictions as under the current state control system
The Legislature is under no obligation to enact the Liquor Control Board's proposal, and if 1 -1053
(Eyman's initiative) passes, it makes it far more challenging to enact new or replacement tax rates on
liquor sales That initiative requires a 2/3 vote by the Legislature to raise taxes
With the removal of the state liquor taxes, liquor sales and distribution would become subject to two
local taxes the local sales tax and the local B &O tax, if a city has such taxes. Any sales tax revenues
would be distributed based on the point of sale and not the current per capita system for revenue and
thus subjected to Streamline Sales Tax.
Will the state save money by closing liquor stores? No The state pays for the administration and
operation of state liquor stores from the revenue of selling liquor. In addition, liquor generates
additional money for the state For 2011 -2015, the Office of Financial Management estimates that the
state general fund will lose between $115 and $123 million under 1 -1100 and between $513 and $547
million under 1 -1105.
46
Initiatives 1100 and 1105... page 3
How many stores will be able to sell liquor if one or both of the initiatives pass? Currently,
Washington has 315 state and contract liquor stores, and it is unknown how many private retailers will
choose to sell liquor if one or both initiatives pass. Earlier this year, the Washington State Auditor
estimated 3,357 private stores would sell liquor under a privatized system.
AWC reports that there are 31 eligible retailers in the City of Tukwila. This could be an impact on our
Police Department. Right now the Liquor Control Board's enforcement program currently has a 94%
compliance rating at the state run and contract liquor stores, and a 76 -84% compliance rate for other
alcohol suppliers. That means the state is making sure stores are not selling to underage drinkers or
intoxicated customers. They go into stores with underage testers to see if stores will sell to someone
under 21.
The Liquor Control board is expected to have sufficient funding from other sources to continue their
current enforcement operations. However, according to the Liquor Control Board they do not expect
to increase enforcement funding to account for the substantial change in the number of liquor
retailers Without compliance checks, liquor sales and consumption are basically on the honor
system. If the state fails to increase funding for the Liquor Control Board's enforcement program, it
will increasingly fall to the City of Tukwila to monitor all of the additional liquor outlets and the existing
restaurants and taverns so that they do not become public safety problems. It is reasonable to
assume that if these compliance measures are not kept up, the City of Tukwila would see an increase
in DUI's, public intoxication, and underage drinking, which in turn would be more of a drain on local
law enforcement.
1 -1100 would allow any current retailer with a beer and /or wine grocery store license or specialty store
license to sell liquor; approximately 5,200 stores currently have one of these licenses and would be
eligible to sell liquor. 1 -1105 directs the Liquor Control Board to develop criteria for issuing retail liquor
licenses.
RECOMMENDATION
Given all of the above information and resulting affects, I respectfully request the City Council
consider passing a resolution in opposition of Washington State Initiative Measure Nos. 1100 and
1105: Concerning Liquor (beer, wine and spirits).
A draft resolution is attached to this informational memorandum, but has not yet been reviewed by the
City Attorney. The draft resolution will be reviewed by the City Attorney prior to being discussed at the
October 11 COW, if recommend by the Finance Safety Committee
ATTACHMENTS
Attachment A: AWC Informational Sheet Regarding 1 -1100 and 1 -1105
Attachment B. MRSC Article, Liquor Privatization Initiatives
Attachment C: Initiative Measure No. 1100
Attachment D: Initiative Measure No 1105
Attachment E: State of Washington 2010 General Election Online Voters' Guide Excerpt Regarding
Initiative 1100
Attachment F: State of Washington 2010 General Election Online Voters' Guide Excerpt Regarding
Initiative 1105
Attachment G Draft Resolution in Opposition of Both Measures
47
48
Attachment A
AWC Informational Sheet Regarding
I -1100 and 1 -1105
49
50
S e p t e m b e r 2 0 1 0
nitiatives 1100 Et 11 ®5
ASSOCIATION
The Privatization of Liquor c T WASHINGTON
.T�;r- vaxst..
If approved by voters, Initiatives 1 100 1 105 each impact a What do the two initiatives do to profits and
significant revenue stream for cities, counties, and the state. taxes?
While both initiatives close state liquor stores and privatize Both initiatives eliminate liquor profits.1 -1 100 maintains the
the sale and distribution of liquor, the measures have liquor tax; 1 -1 105 eliminates the liquor tax effective April 1,
different effective dates and different impacts to state and 2012.
local government revenue.
Do the initiatives require a new method of liquor
How do the initiatives impact local and state taxation?
revenue? No.1 -1 105 has intent language that the privatization of
State and local governments get two types of revenue from liquor sales and distribution "not result in revenue losses to
the sale of liquor: liquor profits and liquor taxes. state or local governments" and directs the Liquor Control
Liquor board profits are revenues from permits, licenses, Board to recommend to the Legislature "a rate of taxation
first pays for the activities that, along with other spirits related revenue sources, would
and liquor store sales.The state
of the Liquor Control Board (administration, sales people, project to generate at least the same annual revenue for
leases, etc.), and the remaining profits are divided 50% the state and local jurisdictions as under the current state
to the state, 40% to cities, and 10% to counties (border control system... "The Legislature is under no obligation
areas receive an additional distribution). to enact the Liquor Control Board's proposal, and if 1 -1053
(Eyman's initiative) passes, it makes it far more challenging
Liquor excise taxes come from a state tax to consumers to enact new or replacement tax rates on liquor sales.That
and restaurant licensees.The tax rates include a basic rate initiative requires a 2/3 vote by the Legislature to raise taxes.
plus surcharges. Revenues from the basic rates of 15% for
consumers and 10% for restaurants are shared 65% to With the removal of the state liquor taxes, liquor sales
the state, 28% to cities, and 7% to counties. and distribution would become subject to two local taxes:
According to estimates in MRSC's Budget Suggestions For the local sales tax and the local B &O tax, if located in the
38 towns and cities that impose such a tax.Any sales tax
201 I, the following are city distributions:
revenues would be distributed based on the point of sale
Distributions 2008 2009 2010 2011 and not the current per capita system for liquor
to cities revised estimate* revenue.
Liquor $27,090,572 $27,091,000 $34,072,000 $31,200,000
Will the state save money by closing liquor
profits
Per capita $6.73 $6.67 $8.21 $7.34 stores?
No.The state pays for the administration and
profits
operation of state liquor stores from the revenue of
Liquor tax 1$19,301,609 I $19,900,000 $20,551,000 $21,161,000
selling liquor. In addition, liquor generates additional
Per capita $4.80 $4.90 $4.95 $4.98 money for the state. For 201 1 2015, the Office
liquor tax of Financial Management estimates that the state
*Subject to change if either of the initiatives pass. general fund will lose between $115 and $123
This means that a city of 35,000 received $460,000 in taxes million under 1 -1 100 and between $513 and $547 million
and profits in 2010, while a city of 5,000 received $66,000. under 1 -1 105.
continued
AWC has not taken a position for or against this ballot initiative.AWC's role is to provide its
members educational materials that can be shared with elected officials, staff and the community.
Association of Washington Cities o 1076 Franklin St SE e Olympia,WA 98501 www.awcnet.org
51
Are there other impacts on local governments directs the Liquor Control Board to develop criteria for
from these initiatives? issuing retail liquor licenses.
The Liquor Control Board indicates that if either liquor
initiative passes, they likely will have sufficient funding from Why are there two liquor initiatives?
other sources to continue their current enforcement While both initiatives allow private retailers to sell liquor,
operations. However, they do not anticipate sufficient one primary difference is who is allowed to distribute liquor.
additional enforcement funding to mitigate a substantial Currently, the state distributes liquor to the liquor stores.
increase in the number of liquor retailers.As a result of 1 -1 100 would allow retailers to negotiate and buy liquor
the increased work load and limited resources, local law directly from the manufacturers. I -f 105 would require
enforcement could feel the impact from the expansion of retailers to buy liquor from a third-party distributor; the
liquor sales. distributors would sell to all retailers at the same price.
Additionally, the Municipal Research and Services Center According to the Washington State Public Disclosure
receives almost all of its funding from a contract with the Commission, Initiative 1100's campaign is primarily funded
state.The contract is funded through cities' (76.7%) and by Costco, and Initiative 1 105 is funded by Odom Southern
counties' (15.9 share of liquor revenue.The city share is Holdings and Young's Market Company, two beverage
paid out of city liquor profits, which would be eliminated by distribution companies.
both initiatives, and the county share is paid out of county Large retailers likely would benefit by negotiating discounts
liquor taxes, which would be eliminated by 1 -1 105. directly with the makers of liquor. Smaller retailers (and
distributors), on the other hand, likely would benefit from a
When would private stores open? When would distribution system that sells to small and large retailers at
liquor profits and taxes end? the same price.
The initiatives have different effective dates:
What happens if both initiatives pass?
1 100 1 105 In 1993, when two rival tax -limit measures, I -601 and 1 -602,
Date private liquor distribution 1/1/2011 10 /I /201 I were on the ballot, the Attorney General issued a formal
begins opinion observing it would be possible for the Legislature
Private liquor stores open 1 6/1/201 1 I 1 1/1/201 1 1 to resolve any conflict by amending either or both measures
State liquor stores close 6/15/201 1 I 1 I/ 15/201 1 with a two- thirds vote. Failing that, the courts would be
according to OFM fiscal note tasked with resolving the differences, possibly by giving
State liquor distribution liquor 6/15/2011 1 1/15/201 1 deference to the initiative that got the most votes or that
profits end according to OFM had the later effective date.
fiscal note
1 State liquor stores must close 1 12/31/2011 14/1/2012 1 What is AWC's role?
State liquor distribution must 12/31/2011 4/1/2012 AWC will continue to provide our members with
end liquor profits end educational materials. Please check our website for additional
information at www.awcnet.org /initiatives.This website
State liquor taxes end I N/A 1 4/1/2012 1
includes:
How many stores will be able to sell liquor if one Summaries of 1 I00 and 1
or both of the initiatives pass? Tables of liquor taxes and profits received by each city
Currently,Washington has 315 state and contract liquor from 2006 2008.
stores, and it is unknown how many private retailers will News articles about the initiatives.
choose to sell liquor if one or both initiatives pass. Earlier Resources from the Public Disclosure Commission
this year, the Washington State Auditor estimated 3,357 Attorney General's Office about elected and appointed
private stores would sell liquor under a privatized system. officials ballot measure campaign activities and use of
1 -1 100 would allow any current retailer with a beer and/ public funds.
or wine grocery store license or specialty store license to
sell liquor; approximately 5,200 stores currently have one For more information
of these licenses and would be eligible to sell liquor. 1-1105 Candice Bock, Legislative Policy Advocate
candiceb @awcnet.org, (360) 753 -4137.
AWC has not taken a position for or against this ballot initiative.AWC's role is to provide its
members educational materials that can be shared with elected officials, staff and the community
52
Attachment B
MRSC Article: Liquor Privatization Initiatives
53
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What's Inside Liquor Pr Initiatives
MRSC left "bone dry"
Nordby's Notes 5 By Rich Yukubousky, Executive Director, Municipal Research and Services Center
Between 1945 and 1999, the motor vehicle excise tax was the fund source that cities
Ask MRSC 7 used to fund services received from the Municipal Research and Services Center (MRSC).
That era ended when the voters passed Initiative 695, abolishing the motor vehicle excise
tax. Although Initiative 695, which repealed this tax in 1999, was found unconstitutional,
the 2000 legislature decided that the people had spoken and repealed this tax, replacing
Heads Up 9 it with a $30 license fee.' Cities urged the legislature to continue funding MRSC and to
replace funds lost with a small fraction of the cities' distribution of liquor profits.
New Acquisitions 1 1 This year there are two initiatives that could adversely affect local government funding,
including most of the monies used by MRSC to provide services to cities and counties. The
purpose of this brief article is to alert local officials that our funding is once again at risk
and that we will be seeking an alternative way to fund MRSC if one or both of these initia-
MRSC Rosters 12 tives pass in November.
This article is provided for informational purposes in response to questions received from lo-
cal officials. It is not intended to express support or opposition to the initiatives.
Liquor Receipts Profits and Taxes
Since cities and counties are responsible for the policing of liquor establishments located
within their limits but are precluded from taxing them because of the state liquor monopoly,'
state law provides that a share of the state collected profits and taxes be returned to cities
and counties to help defray policing costs.
Liquor board profits consist of the difference between revenue generated by the Washington
State Liquor Control Board and the board's expenditures, specific revenues collected for a
dedicated purpose, and administrative fees attributable to specific licensees that serve hard
alcohol. Revenues are generated from sales at state liquor stores, taxes collected on wine
and beer manufacture and distribution, licensee fees, alcohol related permit fees, penalties,
and forfeitures.
Municipal Research News is
published quarterly by the Liquor profits are divided among the state, counties, and cities. Fifty percent goes to the
Municipal Research and Services Center state general fund, 10 percent goes to counties, and 40 percent goes to cities. The county
2601 4th Avenue, Suite 800 and city amounts are distributed on a per capita basis on the last days of March, June, Sep
Seanle, WA 98121 -1280 tember, and December. An additional small amount is distributed to border cities and towns
206.625.1300 Fax 206.625.1220 and Point Roberts.'
www,mrsc.org mrsc @mrsc.org
continued on page 3
Working together, for excellence in local government
Liquor Privatization Initiatives continued from page 1
The state receives 65 percent of the liquor excise tax collections, with cities getting 28 percent and counties getting 7 percent.
These funds are distributed on a per capita basis on the last days of January, April, July, and October.
How would the initiatives impact these distributions?
1 -1100 would maintain the liquor excise tax but would repeal the liquor profits distribution, because the system would be
privatized and profits would go to the retailers.
I -1105 would remove both the liquor excise tax and liquor profit distributions. 1 -1105 has intent language in Section 101(1)
that the privatization of liquor sales and distribution "not result in revenue losses to state or local governments" and then more
prescriptive language in Section 101(3) directing the Liquor Control Board to recommend to the legislature "a rate of taxation
that, along with other spirits related revenue sources, would project to generate at least the same annual revenue for the state
and local jurisdictions as under the current state control system..."
Note that if 1 -1053 were also to pass, it would be far more challenging to enact new or replacement tax rates on liquor sales.
1 -1053 would require a two thirds affirmative vote by the state legislature to adopt new taxes or user fees.
What are the impacts on local government?
According to estimates in MRSC's Budget Suggestions for 2011, the distributions of liquor profits and excise taxes to cities
and counties are as follows:
'^'Er.`'. .i` as"<s;�r s: 'n,_,,,, -,,i...:�':r,T ti ,so. .i' 4;:j'%''
g a .Y'• +`3 4%�" a '-'e, ,.(.'k'' "vex
C Drs# bu#rorr, oa ttlq.§:= _zo fir; t„2UD2, ed o°
x [,r...�,_..,..A,__, ��.��«:�f S J10�;Revs.�- F., f�.2_,.1`�hE,s fmat
1 Liquor profits $27,090,572 1 $28,014,708 $34,072,000 1 $31,200,000
1 Per capita profits $6.73 1 $6.87 1 $8.21 1 $7.34 1
Liquor excise tax 1 $19,301,609 1 $19,902,527 1 $20,551,000 1 $21,161,000
1 Per capita liquor tax 1 $4.80 1 $4.88 1 $4.95 1 $4.98
Distribution`s to Counties; f 2008 1. 2009 1 Revised I 2011 Estimate
Liquor profits 1 $7,329,892 1 $7,564,488 $9,082,000 1 $8,364,000 1
Per capita profits $2.90 1 $2.96 $3.56 i $3.30
1 Liquor excise tax $4,401,902 1 $4,528,882 $4,668,000 1 $4,820,000
1 Per capita liquor tax 1 $1.74 1 $1.77 $1.83 1 $1.90
The Office of Financial Management is required to develop a fiscal impact note detailing the way an initiative impacts state and
local governments. The fiscal note for these initiatives was due by August 10, 2010.
MRSC Funding
Nearly all the funding for MRSC is derived from liquor profits and taxes. The city portion of MRSC's programs and services is
funded from a small share of the cities' distribution of liquor profits, and the county program is funded from the counties' share
of liquor excise taxes. You might ask why MRSC is funded in this manner. The conceptual approach that has been used histori-
cally to fund MRSC is to tap a fund that is collected by the state and distributed back to local government. This produces a
program that is owned by local governments for the purpose of meeting critical needs of local government. An appropriation
continued on page 4
Municipal Research News Summer 2010 0 3
55
Liquor Privatization Initiatives continued from page 3
is made to a state agency formerly the Municipal Research Council and now the Department of Commerce to contract for
the provision of specified services by a qualified provider. MRSC, and its predecessor, the University of Washington Bureau of
Governmental Research, has been that provider for 76 years. This approach insures that all cities and counties share in the
funding of services.
If one or both of these initiatives pass, MRSC will need your support. We are currently identifying options to fund MRSC, and if
you have any suggestions, please pass them on.
We think that MRSC is a model of government efficiency:
By pooling resources, local governments gain access to services they could not afford to provide alone. MRSC is a national
model of intergovernmental cooperation providing efficient, shared services.
MRSC saves money for local governments in Washington State by providing quality and expert advice and research.
Liability is reduced through timely advice.
MRSC serves as a clearinghouse for examples of successful solutions, saving local government time and money while
enhancing the quality of local service delivery.
For further information about these initiatives, please see out website http• /www.mrsc.org. We will be posting information
about the impacts of the initiatives, links to important documents and news articles, and editorials and opinions.)
1 Ch. 2, Laws of 2000, 1st sp. sess.
2 "Locally Shared Liquor Profits and Taxes," (source unknown) July 27, 1962, mimeographed copy in MRSC files.
3 RCW 66 08.190(1)(a) and RCW 66.08.195.
4 RCW 82.08.160 specifies that 35 percent of the total tax collected under RCW 82.08.150 must be deposited in the "liquor excise tax fund Per
RCW 82.08.160, 80 percent of the monies in the liquor excise tax fund is distributed to cities. (.35 x .8 .28) Twenty percent is distributed to counties.
(.35 x .2 .07)
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5% Municipal Research News Summer 2010
Attachment C
Initiative Measure No. 1100
57
Initiative Measure No. 1100
FLEJ
APR 2 7 2010
SECRETARY OF STATE
STATE OF WASHINGTON
AN ACT Relating to liquor; amending RCW 43.19.19054, 66.08.020,
66.08.060, 66.20.010, 66.20.160, 66.24.310, 66.24.380, 66.24.540,
66.24.590, 66.28.040, 66.28.060, 66.28.280, 66.44.150, 66.44.160, and
82.08.160; adding a new section to chapter 66.04 RCW; adding new
sections to chapter 66.08 RCW; adding a new section to chapter 66.12
RCW; adding a new section to chapter 66.20 RCW; adding new sections to
chapter 66.24 RCW; adding a new section to chapter 66.28 RCW; adding a
new section to chapter 66.32 RCW; adding new sections to chapter 66.44
RCW; adding a new section to chapter 82.08 RCW; creating a new
section; repealing RCW 66.24.145, 66.32.010, 66.28.010, 66.28.170,
66.28.180, 66.28.285, 66.28.290, 66.28.295, 66.28.300, 66.28.305,
66.28.310, 66.28.315, 66.28.320, 66.12.110, 66.12.120, 66.08.026,
66.08.030, 66.08.050, 66.08.070, 66.08.075, 66.08.165, 66.08.166,
66.08.167, 66.08.220, 66.08.235, 66.16.010, 66.16.040, 66.16.041,
66.16.050, 66.16.060, 66.16.070, 66.16.090, 66.16.100, 66.16.110,
66.16.120, 66.24.440 and 66.28.045; and providing effective dates.
58
BE IT ENACTED BY THE PEOPLE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. (1) The people of Washington state desire
that the liquor control board focus on its core mission of education
and enforcement to protect the health, welfare, and safety of the
citizens.
(2) In order to strengthen the agency to more effectively educate
the public, combat abuse, collect tax revenue, and enforce state
liquor laws, the Washington state liquor control board will stop
selling liquor and end its prohibition -era monopoly on selling
distilled spirits. The state will license the sale of distilled
spirits to strictly regulated vendors who are already proven to be
responsible sellers of beer and wine.
(3) This act will improve regulations to prevent abusive and
underage drinking, enforce licensing regulations, and collect taxes
for the state's general fund.
Sec. 2. RCW 43.19.19054 and 1975 -'76 2nd ex.s. c 21 s 7 are each
amended to read as follows:
The provisions of RCW 43.19.1905 shall not apply to materials,
supplies, and equipment purchased for resale to other than public
agencies by state agencies, including educational institutions. ((3-n
addition, RCW 43.19.1905 nhal l not apply tc 4. `'y the
otatc =ro-',4,
NEW SECTION. Sec. 3. A new section is added to chapter 66.04 RCW
to read as follows:
The following definitions apply throughout this title unless the
context clearly requires otherwise.
(1) "Authorized representative" includes a person who satisfies
RCW 66.04.010(2) (a) and (b) and who acquires ownership of spirits for
transportation into and resale in the state of Washington, and which
spirits are produced by a distiller in the United States outside of
the state of Washington, and who is appointed by the distiller as its
authorized representative for marketing and selling its products
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within the United States in accordance with a written agreement
between the authorized representative and such distiller pursuant to
this title.
(2) "Spirits distributor" means a person who buys spirits from a
domestic distiller, spirits certificate of approval holder, or spirits
importer, or who acquires foreign produced spirits from a source
outside of the United States, for the purpose of selling the same not
in violation of this title, or who represents such distiller as agent.
(3) "Spirits importer" means a person who buys distilled spirits
from a distiller outside the state of Washington and imports such
spirits into the state for sale or for export.
(4) "Store" includes any liquor store licensed under this title.
Sec. 4. RCW 66.08.020 and 1933 ex.s. c 62 s 5 are each amended to
read as follows:
The administration of this title((, including the general control,
siert of all liquor stores)) shall be vested in
the liquor control board, constituted under this title.
NEW SECTION, Sec. 5. A new section is added to chapter 66.08 RCW
to read as follows:
Administrative expenses of the board shall be appropriated and
paid from the liquor revolving fund. These administrative expenses
include, but are not limited to: The salaries and expenses of the
board and its employees, legal services, pilot projects, annual or
other audits, and other general costs of conducting the business of
the board. All expenditures and payment of obligations authorized by
this section are subject to the allotment requirements of chapter
43,88 RCW.
NEW SECTION. Sec. 6. A new section is added to chapter 66.08 RCW
to read as follows:
The board has the power to make regulations, in accordance with
the provisions of the administrative procedure act, chapter 34.05 RCW,
to implement this title. Because the board will no longer be selling
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60
liquor, regulations adopted by the board must be to enforce the
licensing requirements of this title, the collection of tax on liquor,
the prevention of underage drinking of liquor and alcohol abuse, and
managing the board and its employees.
NEW SECTION. Sec. 7. A new section is added to chapter 66.08 RCW
to read as follows:
The board, subject to the provisions of this title and the rules,
shall:
(1) Execute, or cause to be executed, all contracts, papers, and
documents in the name of the board, under such regulations as the
board may fix;
(2) Require bonds from all employees in the discretion of the
board and to determine the amount of fidelity bond of each such
employee;
(3) Perform service for the state lottery commission to such
extent and for such compensation, as may be mutually agreed upon
between the board and the commission;
(4) Accept and deposit into the general fund -local account and
disperse, subject to appropriation, federal grants or other funds or
donations from any source for the purpose of improving public
awareness of the health risks associated with alcohol consumption by
youth and the abuse of alcohol by adults in Washington. The alcohol
awareness program shall cooperate with federal and state agencies,
interested organizations, and individuals to promote alcohol
awareness;
(5) Perform all other matters and things to carry out the
provisions of this title, and shall have full power to do every act
necessary to the conduct of its business. However, the board shall
have no authority to regulate the content of spoken language on
licensed premises where wine and other liquors are served and where
there is not a clear and present danger of disorderly conduct being
provoked by such language.
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Sec. 8. RCW 66.08.060 and 2005 c 231 s 3 are each amended to read
as follows:
(1) The board shall not advertise liquor in any form or through
any medium whatsoever.
(2) ((In store 1 =t advertising for the
PurPee-e-F- of thic ccction.
1 3 The board shall have power to adopt any and all reasonable
rules as to the kind, character, and location of advertising of liquor
solely for the purpose of and that have a demonstrable effect of
reducing underage or abusive consumption.
NEW SECTION. Sec. 9. A new section is added to chapter 66.08 RCW
to read as follows:
Fees from the issuance of licenses to sell spirits under sections
14, 16 and 17 of this act may be expended only for purposes of the
administration and enforcement of liquor licenses and reducing
underage or abusive consumption.
NEW SECTION, Sec. 10. A new section is added to chapter 66.12
RCW to read as follows:
(1) A person twenty -one years of age or over may bring into the
state from without the state, free of tax, for his or her own personal
or household use such alcoholic beverages as have been declared and
permitted to enter the United States duty free under federal law.
(2) Such entry of alcoholic beverages in excess of two liters of
spirits or wine or two hundred eighty -eight ounces of beer per
calendar month shall be taxed as would be applicable to the purchase
of the same or similar liquor within the state.
NEW SECTION, Sec. 11. A new section is added to chapter 66.20
RCW to read as follows:
Any licensee to sell spirits under this title must post in
conspicuous places in a number to be determined by the board, within
each store that sells spirits, notices in print no less than one inch
high warning persons that consumption of alcohol shortly before
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conception or during pregnancy may cause birth defects, including
fetal alcohol syndrome and fetal alcohol effects.
Sec. 12. RCW 66.20.010 and 2008 c 181 s 602 are each amended to
read as follows:
Upon application in the prescribed form being made to any employee
authorized by the board to issue permits, accompanied by payment of
the prescribed fee, and upon the employee being satisfied that the
applicant should be granted a permit under this title, the employee
shall issue to the applicant under such regulations and at such fee as
may be prescribed by the board a permit of the class applied for, as
follows:
(1) Where the application is for a special permit by a physician
or dentist, or by any person in charge of an institution regularly
conducted as a hospital or sanitorium for the care of persons in ill
health, or as a home devoted exclusively to the care of aged people, a
special liquor purchase permit, except that the governor may waive the
requirement for a special liquor purchase permit under this subsection
pursuant to an order issued under RCW 43.06.220(2);
(2) Where the application is for a special permit by a person
engaged within the state in mechanical or manufacturing business or in
scientific pursuits requiring alcohol for use therein, or by any
private individual, a special permit to purchase alcohol for the
purpose named in the permit, except that the governor may waive the
requirement for a special liquor purchase permit under this subsection
pursuant to an order issued under RCW 43.06.220(2);
(3) Where the application is for a special permit to consume
liquor at a banquet, at a specified date and place, a special permit
to purchase liquor for consumption at such banquet, to such applicants
as may be fixed by the board;
(4) Where the application is for a special permit to consume
liquor on the premises of a business not licensed under this title, a
special permit to purchase liquor for consumption thereon for such
periods of time and to such applicants as may be fixed by the board;
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(5) Where the application is for a special permit by a
manufacturer to import or purchase within the state alcohol, malt, and
other materials containing alcohol to be used in the manufacture of
liquor, or other products, a special permit;
(6) Where the application is for a special permit by a person
operating a drug store to purchase liquor at retail prices only, to be
thereafter sold by such person on the prescription of a physician, a
special liquor purchase permit, except that the governor may waive the
requirement for a special liquor purchase permit under this subsection
pursuant to an order issued under RCW 43.06.220(2);
(7) Where the application is for a special permit by an authorized
representative of a military installation operated by or for any of
the armed forces within the geographical boundaries of the state of
Washington, a special permit to purchase liquor for use on ,such
military installation at prices to be fixed by the board;
(8) Where the application is for a special permit by a
manufacturer, importer, or distributor, or representative thereof, to
serve liquor without charge to delegates and guests at a convention of
a trade association composed of licensees of the board, when the said
liquor is served in a hospitality room or from a booth in a board
approved suppliers' display room at the convention, and when the
liquor so served is for consumption in the said hospitality room or
display room during the convention, anything in Title 66 RCW to the
contrary notwithstanding. Any such liquor shall be
purchased from any licensee authorized by the board ((or a spirits
bear, and wing rcotauran` lIe to sell liquor and any such
((bccr and wino)) liquor shall be subject to the taxes imposed by RCW
66.24.290 and 66.24.210;
(9) Where the application is for a special permit by a
manufacturer, importer, or distributor, or representative thereof, to
donate liquor for a reception, breakfast, luncheon, or dinner for
delegates and guests at a convention of a trade association composed
of licensees of the board, when the liquor so donated is for
consumption at the said reception, breakfast, luncheon, or dinner
during the convention, anything in Title 66 RCW to the contrary
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notwithstanding. Any such ((spirituous)) liquor shall be purchased
from any licensee authorized by the board ((or a spiritc, beer, and
wire restaurant licensee)) to sell liquor and any such ((beer and
wino)) liquor shall be subject to the taxes imposed by RCW 66.24.290
and 66.24.210;
(10) Where the application is for a special permit by a
manufacturer, importer, or distributor, or representative thereof, to
donate and /or serve liquor without charge to delegates and guests at
an international trade fair, show, or exposition held under the
auspices of a federal, state, or local governmental entity or
organized and promoted by a nonprofit organization, anything in Title
66 RCW to the contrary notwithstanding. Any such ((spirituous))
liquor shall be purchased from any licensee authorized by the board to
sell liquor and any such ((becr ---er wine)) liquor shall be subject to
the taxes imposed by RCW 66.24.290 and 66.24.210;
(11) Where the application is for an annual special permit by a
person operating a bed and breakfast lodging facility to donate or
serve wine or beer without charge to overnight guests of the facility
if the wine or beer is for consumption on the premises of the
facility. "Bed and breakfast lodging facility," as used in this
subsection, means a facility offering from one to eight lodging units
and breakfast to travelers and guests.
Sec. 13. RCW 66.20.160 and 2005 c 151 s 8 are each amended to
read as follows:
Words and phrases as used in RCW 66.20.160 ((te)) through
66,20.210, inclusive, ((shall)) have the following meaning:
"Card sf identification" means any one cf thocc ca g---
in RCW
(1) "Licensee" means the holder of a retail liquor license issued by
the board, and includes any employee or agent of the licensee.
(2) "Store employee" means a person employed in a statc
store to sell liquor.
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NEW SECTION. Sec. 14. A new section is added to chapter 66.24
RCW to read as follows:
(1) Beginning June 1, 2011, there shall be a general liquor
retailer's license to sell spirits, beer, and wine at retail in
original containers, not to be consumed on the premises where sold.
(2) The annual fee for the general liquor retailer's license is
one thousand dollars.
(3) There shall be a one -time application fee for the general
liquor retailer's license of one thousand dollars to be submitted with
the application for the license and to be refunded if the application
is not granted.
(4) Beginning January 1, 2011, there shall be a general liquor
distributor's license to have the privileges of a beer distributor's
license and a wine distributor's license and to sell spirits,
purchased from licensed Washington distilleries, spirits certificate
of approval holders, licensed spirits importers, or suppliers of
foreign spirits located outside of the United States, to eligible
licensed retailers and other licensed distributors and to export the
same from the state. The fee is two thousand dollars per year for
each distributing unit.
(5) There shall be a one -time application fee for the general
liquor distributor's license of two thousand dollars to be submitted
with the application for the license and to be refunded if the
application is not granted.
NEW SECTION. Sec. 15. A new section is added to chapter 66.24
RCW to read as follows:
(1) Any licensed distillery may also act as a distributor and /or
retailer for spirits of its own production without further application
or fee. Any distillery operating as a distributor and /or retailer
under this subsection shall comply with the applicable laws and rules
relating to distributors and /or retailers.
(2) Any licensed distillery may contract distill spirits for, and
sell contract distilled spirits to, holders of distillers' or
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66
manufacturers' licenses, including licenses issued under RCW
66.24.520, or for export.
(3) Any licensed distillery may provide, free of charge, one -half
ounce or less samples of spirits of its own production to persons on
the premises of the distillery. The maximum total per person per day
is two ounces. Every person who participates in any manner in the
services of samples must obtain a class 12 alcohol server permit.
(4) The board shall adopt rules to implement the alcohol server
permit requirement and may adopt additional rules to implement this
section.
(5) Distilling is an agricultural practice.
NEW SECTION. Sec. 16. A new section is added to chapter 66.24 RCW to
read as follows:
There shall be a license for spirits distributors to sell spirits,
purchased from licensed Washington distilleries, spirits certificate
of approval holders, licensed spirits importers, or suppliers of
foreign spirits located outside of the United States, to licensed
spirits retailers and other spirits distributors and to export the
same from the state of Washington with a fee of one thousand dollars
per year for each distributing unit.
NEW SECTION. Sec, 17. A new section is added to chapter 66.24
RCW to read as follows:
There shall be a license for spirits importers that authorizes the
licensee to import spirits purchased from certificate of approval
holders into the state of Washington. The licensee may also import
from suppliers located outside of the United States spirits
manufactured outside the United States.
(1) Spirits importers licensed under this section may sell spirits
to licensed spirits distributors or licensed spirits retailers, or
export spirits from the state.
(2) Every person, firm, or corporation licensed as a spirits
importer shall establish and maintain a principal office within the
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67
state at which shall be kept proper records of all spirits imported
into the state under this license.
(3) No spirits importer's license shall be granted to a
nonresident of the state or to a corporation whose principal place of
business is outside the state until such applicant has established a
principal office and agent within the state upon which service can be
made.
(4) As a requirement for license approval, a spirits importer
shall enter into a written agreement with the board to furnish on or
before the twentieth day of each month a report under oath, detailing
the quantity of spirits sold or delivered to each licensed spirits
distributor. Failure to file such reports may result in the
suspension or cancellation of this license.
(5) Spirits imported under this license must conform to the
provisions of RCW 66.28.100 and have received label approval from the
board. The board shall not certify spirits labeled with names that
may be confused with other nonalcoholic beverages whether manufactured
or produced from a domestic distiller or imported nor spirits that
fail to meet quality standards established by the board.
(6) The license fee shall be one hundred sixty dollars per year.
NEW SECTION. Sec. 18. A new section is added to chapter 66.24
RCW to read as follows:
(1) Every person, firm, or corporation holding a license to
manufacture spirits within the state of Washington shall, on or before
the twentieth day of each month, furnish to the board, on a form to be
prescribed by the board, a statement showing the quantity of spirits
sold for resale during the preceding calendar month to each spirits
distributor within the state of Washington.
(2)(a) A United States distiller or manufacturer of spirits,
located outside the state of Washington, must hold a certificate of
approval to allow sales and shipment of the certificate of approval
holder's spirits to licensed Washington spirits distributors,
importers, or retailers. A certificate of approval holder with a
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direct shipment endorsement may act as a distributor for spirits of
its own production.
(b) Authorized representatives must hold a certificate of approval
to allow sales and shipment of United States produced spirits to
licensed Washington spirits distributors or importers.
(c) Authorized representatives must also hold a certificate of
approval to allow sales and shipments of foreign produced spirits to
licensed Washington spirits distributors or importers.
(3) The certificate of approval shall not be granted unless and
until such distiller or manufacturer of spirits or authorized
representative shall have made a written agreement with the board to
furnish to the board, on or before the twentieth day of each month, a
report under oath, on a form to be prescribed by the board, showing
the quantity of spirits sold or delivered to each licensed spirits
distributor, importer, or retailer during the preceding month, and
shall further have agreed with the board that such distiller of
spirits or authorized representative and all general sales
corporations or agencies maintained by them, and all of their trade
representatives, corporations, and agencies, shall and will faithfully
comply with all laws of the state of Washington pertaining to the sale
of intoxicating liquors and all rules and regulations of the board. A
violation of the terms of this agreement will cause the board to take
action to suspend or revoke such certificate.
(4) The fee for the certificate of approval and related
endorsements, issued pursuant to the provisions of this title, shall
be from time to time established by the board at a level that is
sufficient to defray the costs of administering the certificate of
approval program. The fee shall be fixed by rule by the board in
accordance with the provisions of the administrative procedure act,
chapter 34.05 RCW.
(5) Certificate of approval holders are deemed to have consented
to the jurisdiction of Washington concerning enforcement of this
chapter and all laws and rules related to the sale and shipment of
spirits.
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69
Sec. 19. RCW 66.24,310 and 1997 c 321 s 17 are each amended to
read as follows:
(1) No person shall canvass for, solicit, receive, or take orders
for the purchase or sale of liquor, nor contact any licensees of the
board in goodwill activities, unless such person shall be the
accredited representative of a person, firm, or corporation holding a
certificate of approval issued pursuant to RCW 66.24.270 ((o)),
66.24.206, or section 18 of this act, a beer distributor's license, a
microbrewer's license, a domestic brewer's license, a beer importer's
license, a domestic winery license, a wine importer's license, a wine
distributor's license, a spirits distributor's license, a distiller's
license, or a '4. spirits importer's license within
the state of Washington, or the accredited representative of a
distiller, manufacturer, importer, or distributor of ((spirituous
liquor)) spirits, or foreign produced beer or wine, and shall have
applied for and received a representative's license(k DROVIDED,
1IOWEVD11, That)). However, the provisions of this section shall not
apply to drivers who deliver beer ((e)), wine, or spirits;
(2) Every representative's license issued under this title shall
be subject to all conditions and restrictions imposed by this title or
by the rules and regulations of the board; the board, for the purpose
of maintaining an orderly market, may limit the number of
representative's licenses issued for representation of specific
classes of eligible employers;
(3) Every application for a representative's license must be
approved by a holder of a certificate of approval issued pursuant to
RCW 66.24.270 ((er)), 66,24.206, or section 18 of this act, a licensed
beer distributor, a licensed domestic brewer, a licensed beer
importer, a licensed microbrewer, a licensed domestic winery, a
licensed wine importer, a licensed wine distributor, or by a
distiller, manufacturer, importer, or distributor of
liquor)) spirits, or foreign produced beer ((er)), wine, or spirits,
as the rules and regulations of the board shall require;
(4) The fee for a representative's license shall be twenty -five
dollars per year((;
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70
o s of a distiller,
importer, or distributor cf -z" --y, after he or the as
applied for and re--
licensees cf the board only in--goodwill activities pertaining to
Sec. 20. RCW 66.24.380 and 2005 c 151 s 10 are each amended to
read as follows:
There shall be a retailer's license to be designated as a special
occasion license to be issued to a not for profit society or
organization to sell spirits, beer, and wine by the individual serving
for on- premises consumption at a specified event, such as at picnics
or other special occasions, at a specified date and place; fee sixty
dollars per day,
(1) The not for profit society or organization is limited to sales
of no more than twelve calendar days per year. For the purposes of
this subsection, special occasion licensees that are "agricultural
area fairs" or "agricultural county, district, and area fairs," as
defined by RCW 15.76.120, that receive a special occasion license may,
once per calendar year, count as one event fairs that last multiple
days, so long as alcohol sales are at set dates, times, and locations,
and the board receives prior notification of the dates, times, and
locations. The special occasion license applicant will pay the sixty
dollars per day for this event.
(2) The licensee may sell beer and /or wine in original, unopened
containers for off premises consumption if permission is obtained from
the board prior to the event.
(3) Sale, service, and consumption of spirits, beer, and wine is
to be confined to specified premises or designated areas only.
(4) ((Cpirituous liquor)) Spirits sold under this special occasion
license must be purchased at a state liquor store or contract
liquor store ((without d- ssunt)) or store licensed by the board at
retail prices, including all taxes.
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(5) Any violation of this section is a class 1 civil infraction
having a maximum penalty of two hundred fifty dollars as provided for
in chapter 7.80 RCW.
Sec. 21. RCW 66.24,540 and 1999 c 129 s 1 are each amended to
read as follows:
There shall be a retailer's license to be designated as a motel
license. The motel license may be issued to a motel regardless of
whether it holds any other class of license under this title. No
license may be issued to a motel offering rooms to its guests on an
hourly basis. The license authorizes the licensee to:
(1) Sell, at retail, in locked honor bars, spirits in individual
bottles not to exceed fifty milliliters, beer in individual cans or
bottles not to exceed twelve ounces, and wine in individual bottles
not to exceed one hundred eighty -seven milliliters, to registered
guests of the motel for consumption in guest rooms.
(a) Each honor bar must also contain snack foods. No more than
one -half of the guest rooms may have honor bars.
(b) All spirits to be sold under the license must be purchased
from the board or from licensees authorized by the board to sell
spirits.
(c) The licensee shall require proof of age from the guest renting
a guest room and requesting the use of an honor bar. The guest shall
also execute an affidavit verifying that no one under twenty -one years
of age shall have access to the spirits, beer, and wine in the honor
bar.
(2) Provide without additional charge, to overnight guests of the
motel, beer and wine by the individual serving for on- premises
consumption at a specified regular date, time, and place as may be
fixed by the board. Self service by attendees is prohibited. All
beer and wine service must be done by an alcohol server as defined in
RCW 66.20.300 and comply with RCW 66.20.310.
The annual fee for a motel license is five hundred dollars.
"Motel" as used in this section means a transient accommodation
licensed under chapter 70.62 RCW.
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As used in this section, "spirits," "beer," and "wine" have the
meanings defined in RCW 66.04.010.
Sec. 22. RCW 66.24.590 and 2008 c 41 s 11 are each amended to
read as follows:
(1) There shall be a retailer's license to be designated as a
hotel license. No license may be issued to a hotel offering rooms to
its guests on an hourly basis. Food service provided for room
service, banquets or conferences, or restaurant operation under this
license shall meet the requirements of rules adopted by the board.
(2) The hotel license authorizes the licensee to:
(a) Sell ((spiritous- l uo spirits, beer, and wine, by the
individual glass, at retail, for consumption on the premises,
including mixed drinks and cocktails compounded and mixed on the
premises;
(b) Sell, at retail, from locked honor bars, in individual units,
spirits not to exceed fifty milliliters, beer in individual units not
to exceed twelve ounces, and wine in individual bottles not to exceed
three hundred eighty -five milliliters, to registered guests of the
hotel for consumption in guest rooms. The licensee shall require
proof of age from the guest renting a guest room and requesting the
use of an honor bar. The guest shall also execute an affidavit
verifying that no one under twenty -one years of age shall have access
to the spirits, beer, and wine in the honor bar;
(c) Provide without additional charge, to overnight guests,
spirits, beer, and wine by the individual serving for on- premises
consumption at a specified regular date, time, and place as may be
fixed by the board. Self- service by attendees is prohibited;
(d) Sell beer, including strong beer, wine, or spirits, in the
manufacturer's sealed container or by the individual drink to guests
through room service, or through service to occupants of private
residential units which are part of the buildings or complex of
buildings that include the hotel;
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(e) Sell beer, including strong beer, or wine, in the
manufacturer's sealed container at retail sales locations within the
hotel premises;
(f) Sell for on or off premises consumption, including through
room service and service to occupants of private residential units
managed by the hotel, wine carrying a label exclusive to the hotel
license holder;
(g) Place in guest rooms at check -in, a complimentary bottle of
spirits, beer, including strong beer, or wine in a manufacturer sealed
container, and make a reference to this service in promotional
material.
(3) If all or any facilities for alcoholic beverage service and
the preparation, cooking, and serving of food are operated under
contract or joint venture agreement, the operator may hold a license
separate from the license held by the operator of the hotel. Food and
beverage inventory used in separate licensed operations at the hotel
may not be shared and shall be separately owned and stored by the
separate licensees.
(4) All spirits to be sold under this license must be purchased
from the board or from licensees authorized by the board to sell
spirits.
(5) All on- premise alcoholic beverage service must be done by an
alcohol server as defined in RCW 66.20.300 and must comply with RCW
66.20.310.
(6)(a) The hotel license allows the licensee to remove from the
liquor stocks at the licensed premises, liquor for sale and service at
event locations at a specified date and place not currently licensed
by the board. If the event is open to the public, it must be
sponsored by a society or organization as defined by RCW 66.24.375.
If attendance at the event is limited to members or invited guests of
the sponsoring individual, society, or organization, the requirement
that the sponsor must be a society or organization as defined by RCW
66.24.375 is waived.
(b) The holder of this license shall, if requested by the board,
notify the board or its designee of the date, time, place, and
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74
location of any event. Upon request, the licensee shall provide to
the board all necessary or requested information concerning the
society or organization that will be holding the function at which the
endorsed license will be utilized.
(c) Licensees may cater events on a domestic ((wintry)) liquor
manufacturer premises.
(7) The holder of this license or its manager may furnish spirits,
beer, or wine to the licensee's employees who are twenty -one years of
age or older free of charge as may be required for use in connection
with instruction on spirits, beer, and wine. The instruction may
include the history, nature, values, and characteristics of spirits,
beer, or wine, the use of wine lists, and the methods of presenting,
serving, storing, and handling spirits, beer, or wine. The licensee
must use the beer or wine it obtains under its license for the
sampling as part of the instruction. The instruction must be given on
the premises of the licensee.
(8) Minors may be allowed in all areas of the hotel where alcohol
may be consumed; however, the consumption must be incidental to the
primary use of the area. These areas include, but are not limited to,
tennis courts, hotel lobbies, and swimming pool areas. If an area is
not a mixed use area, and is primarily used for alcohol service, the
area must be designated and restricted to access by minors.
(9) The annual fee for this license is two thousand dollars.
(10) As used in this section, "hotel," "spirits," "beer," and
"wine" have the meanings defined in RCW 66.24.410 and 66.04.010.
Sec. 23. RCW 66.28.040 and 2009 c 373 s 8 are each amended to
read as follows:
Except as permitted by the board under RCW 66.20.010, no domestic
brewery, microbrewery, distributor, distiller, domestic winery,
importer, rectifier, certificate of approval holder, or other
manufacturer of liquor shall, within the state of Washington, give to
any person any liquor; but nothing in this section ((nor in n74
6-S.23.9-14)) shall prevent a domestic brewery, microbrewery,
distributor, domestic winery, distiller, certificate of approval
Code Rev /JA:cro 18 I- 2311.1/10
75
holder, or importer from furnishing samples of beer, wine, or
((spirituous liquor)) spirits to authorized licensees for the purpose
of negotiating a sale, in accordance with regulations adopted by the
liquor control board, provided that the samples are subject to taxes
imposed by RCW 66.24.290 and 66.24,210((, and in thc ..awe of
az.- o a
az. nothing in this section- shall prevent thc
furnishing of samples of liquor to thc board for the purpose of
negotiating thc sale 3f liquor to the :,fate liquor control board));
nothing in this section shall prevent a domestic brewery,
microbrewery, domestic winery, distillery, certificate of approval
holder, or distributor from furnishing beer, wine, or ((spirituous
liquor)) spirits for instructional purposes under RCW 66.28.150;
nothing in this section shall prevent a domestic winery, certificate
of approval holder, or distributor from furnishing wine without
charge, subject to the taxes imposed by RCW 66.24.210, to a not -for-
profit group organized and operated solely for the purpose of enology
or the study of viticulture which has been in existence for at least
six months and that uses wine so furnished solely for such educational
purposes or a domestic winery, or an out -of -state certificate of
approval holder, from furnishing wine without charge or a domestic
brewery, or an out -of -state certificate of approval holder, from
furnishing beer without charge, subject to the taxes imposed by RCW
66.24.210 or 66.24.290, or a domestic distiller licensed under RCW
66.24.140 or an accredited representative of a distiller,
manufacturer, importer, or distributor of opirituouc liquor))
spirits licensed under RCW 66.24.310, from furnishing spirits without
charge, to a nonprofit charitable corporation or association exempt
from taxation under section 501(c)(3) or (6) of the internal revenue
code of 1986 (26 U.S.C. Sec. 501(c)(3) or (6)) for use consistent with
the purpose or purposes entitling it to such exemption; nothing in
this section shall prevent a domestic brewery or microbrewery from
serving beer without charge, on the brewery premises; nothing in this
section shall prevent donations of wine for the purposes of RCW
66.12.180; nothing in this section shall prevent a domestic winery
Code Rev/JA:cro 19 1-2311.1/10
76
from serving wine without charge, on the winery premises; and nothing
in this section shall prevent a ((craft)) distillery from serving
spirits without charge, on the distillery premises subject to ((G
4::.21-=-1-4-5)) section 15 of this act.
Sec. 24. RCW 66.28.060 and 2008 c 94 s 7 are each amended to read
as follows:
Every distillery licensed under this title shall make monthly
reports to the board pursuant to the regulations. No such distillery
shall make any sale of spirits within the state of Washington except
((to the beard and as pre 3i ed-i -n GW u .2:.145)) as provided in this
title.
Sec. 25. RCW 66.28.280 and 2009 c 506 s 1 are each amended to
read as follows:
((Ths '_cgialaturc res zee that Washington's eu -r-e t tier
system, where e functions of distributing, and
retailing are distinct and the- financial a;�d rocs
the -ac t icrc are regulated is a
dab? c aystcm for the of beer and sr1c The
legislature further ressg -Eizz that)) The historical total prohibition
on ownership of an interest in one tier by a person with an ownership
interest in another tier, as well as the historical restriction on
financial incentives and business relationships between tiers, is
unduly restrictive. The ((legislature finds the
.:ontaincd in chapte —5.Ov, ..Lawe of 2009 arc war .-t=, seem -hc
modifications do)) people find that liquor regulations should not
impermissibly interfere with the goals of orderly marketing of alcohol
in the state, encouraging moderation in consumption of alcohol by the
citizens of the state, protecting the public interest and advancing
public safety by preventing the use and consumption of alcohol by
minors and other abusive consumption, and promoting the efficient
collection of taxes by the state.
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NEW SECTION, Sec. 26. A new section is added to chapter 66.28
RCW to read as follows:
(1) Licensees may not sell spirits below the cost of acquisition
or production of such spirits, except in the case of a "close -out"
item, if the item to be discontinued has been in inventory for a
period of at least six months, and upon the further condition that the
licensee who offers such a close -out price shall not restock the item
for a period of one year following the first effective date of such
close -out price.
(2) No licensed manufacturer, producer, supplier, importer,
wholesaler, distributor, authorized representative, certificate of
approval holder, warehouse, or any of its affiliates, subsidiaries,
officers, directors, partners, agents, employees, and representatives
shall provide and no retailer shall receive branded promotional items
which are targeted to or appeal principally to youth. Such items
include but are not limited to: Trays, lighters, blotters, postcards,
pencils, coasters, menu cards, meal checks, napkins, clocks, mugs,
glasses, bottles or can openers, corkscrews, matches, printed recipes,
shirts, hats, visors, and other similar items.
NEW SECTION. Sec. 27. A new section is added to chapter 66.32
RCW to read as follows:
Except as permitted by the board, no liquor shall be kept or had
by any person within this state unless the package in which the liquor
was contained had, while containing that liquor, been sealed with the
official seal adopted by the board, except (1) liquor manufactured in
the state for export, (2) beer, purchased in accordance with the
provisions of law, or (3) wine or beer exempted in RCW 66.12.010.
Sec. 28. RCW 66.44.150 and 1955 c 289 s 5 are each amended to
read as follows:
If any person in this state buys alcoholic beverages from any
person other than the board, a state liquor store, or
a licensee authorized by the board to sell them, he ((shall be)) or
she is guilty of a misdemeanor.
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78
Sec. 29. RCW 66.44.160 and 1955 c 289 s 6 are each amended to
read as follows:
Except as otherwise provided in this title, any person who has or
keeps or transports alcoholic beverages other than those purchased
from the board, a state liquor store, or ((some person)) a licensee
authorized by the board to sell them((, shall be)) is guilty of a
violation of this title.
NEW SECTION. Sec. 30. A new section is added to chapter 66.44
RCW to read as follows:
Employees between the ages of eighteen and twenty -one of licensees
may stock, merchandise, and handle spirits under the same conditions
for handling beer or wine under RCW 66.44.318 and 66.44.340.
NEW SECTION. Sec. 31. A new section is added to chapter 66.44
RCW to read as follows:
Nothing in this act is intended to restrict the authority of
cities and counties to enact or enforce land use regulations governing
where liquor may be sold.
NEW SECTION. Sec. 32. A new section is added to chapter 66.44
RCW to read as follows:
(1) Within ninety days of the effective date of this section, the
board shall have formulated a plan and begun implementing such plan to
terminate the system of state liquor stores and liquor distribution
and dispose of assets no longer useful to the board's mission under
the terms of this act.
(2) State liquor stores may not sell liquor after December 31,
2011. The state liquor distribution unit may not purchase, or accept
for bailment, any liquor after December 31, 2011. Any inventory of
unsold liquor which remains after this date shall be returned to the
supplier or sold at auction.
(3)(a) As of the effective date of this section, any licensee in
good standing who has a beer and /or wine grocery store license or a
beer and /or wine specialty store license, and are not restricted from
Code Rev /JA:cro 22 I- 2311,1/10
79
selling strong beer or fortified wine as of June 1, 2011, shall be
granted an upgrade of their license to a general liquor retail
license, to include the sale of spirits, valid until the next renewal
date for the existing license upon paying the one -time application fee
of one thousand dollars.
(b) As of the effective date of this section, licensees in good
standing who have an existing license to distribute liquor as of
January 1, 2011, shall be granted a general liquor distributor's
license, to include the distribution of spirits, valid until the next
renewal date for the existing license upon paying the one -time
application fee of two thousand dollars.
(c) As of the effective date of this section, any supplier of
spirits to the board and their authorized representatives who meet the
other qualifications for a certificate of approval under section 18 of
this act as of January 1, 2011, shall be granted a certificate of
approval upon payment of a two hundred dollar fee.
(4) As of the effective date of this section, the board shall not
renew or extend contracts with existing contract liquor store
operators beyond December 31, 2011, and shall use all lawful means
for terminating existing contracts with existing contract liquor store
operators. In exchange for relinquishing any rights under contracts
to sell liquor, contract liquor store operators in good standing may
choose to receive a general liquor retailer's license valid through
December 31, 2012, without payment of any fee, and shall be exempt
from the application fee upon renewal. The board shall notify
existing contract liquor store operators of the choice available under
this subsection within thirty days of the effective date of this
section and any choice to receive a general liquor retailer's license
under this subsection must be made within ninety days of the effective
date of this section.
NEW SECTION, Sec. 33. A new section is added to chapter 82.08
RCW to read as follows:
There is levied and collected a tax upon each sale of spirits in
the original package at the rate of ten percent of the selling price
Code Rev /JA:cro 23 1- 2311.1/10
80
on sales by spirits retailer and distributor licensees to spirits,
beer, and wine restaurant licensees.
Sec. 34. RCW 82.08.160 and 1982 1st ex.s. c 35 s 4 are each
amended to read as follows:
On or before the twenty -fifth day of each month, all taxes
collected under RCW 82.08.150 and section 33 of this act during the
preceding month ((shall)) must be remitted to the ((ete)) department
((e-f. rov nuc)), to be deposited with the state treasurer. Upon
receipt of such moneys the state treasurer ((shall)) must credit
sixty -five percent of the sums collected and remitted under RCW
82.08.150 (1) and (2) and section 33 of this act and one hundred
percent of the sums collected and remitted under RCW 82.08.150 (3) and
(4) to the state general fund and thirty -five percent of the sums
collected and remitted under RCW 82.08.150 (1) and (2) and section 33
of this act to a fund which is hereby created to be known as the
"liquor excise tax fund."
NEW SECTION. Sec. 35. The following acts or parts of acts are
each repealed:
(1) RCW 66.24.145 (Craft distillery- -Sales and samples of spirits)
and 2010 c 290 s 2 2008 c 94 s 2; and
(2) RCW 66.32.010 (Possession of contraband liquor) and 1955 c 39
s 3.
(3) RCW 66.28.010 (Manufacturers, importers, distributors, and
authorized representatives barred from interest in retail business or
location Advances prohibited "Financial interest" defined-
Exceptions) and 2009 c 373 s 5 2008 c 94 s 5;
(4) RCW 66.28.170 (Wine or malt beverage manufacturers-
Discrimination in price to purchaser for resale prohibited) and 2004 c
160 s 17, 1997 c 321 s 50, 1985 c 226 s 3;
(5) RCW 66.28.180 (Price list Contents Contracts and memoranda
with distributors) and 2009 c 506 s 10, 2006 c 302 s 10, 2005 c 274
s 327;
Code Rev /JA:cro 24 I- 2311.1/10
81
(6) RCW 66.28.285 (Three -tier system Definitions) and 2009 c 506
s 2;
(7) RCW 66.28.290 (Three -tier system Direct or indirect interests
between industry members, affiliates, and retailers) and 2009 c 506 s
3;
(8) RCW 66.28.295 (Three -tier system Direct or indirect
interests Allowed activities) and 2009 c 506 s 4;
(9) RCW 66.28.300 (Three -tier system- -Undue influence-
Determination by board) and 2009 c 506 s 5;
(11) RCW 66.28.305 (Three -tier system -Money advances-
Prohibition) and 2009 c 506 s 6;
(12) RCW 66.28.310 (Three -tier system Promotional items) and 2010
c 290 s 3, 2010 c 141 s 2, 2009 c 506 s 7;
(13) RCW 66.28.315 (Three -tier system-- Recordkeeping) and 2009 c
506 S 8;
(14) RCW 66.28.320 (Three -tier system -Rule adoption) and 2009 c
506 s 9; and
(15) RCW 66.32.010 (Possession of contraband liquor) and 1955 c 39
s 3.
NEW SECTION. Sec. 36. The following acts or parts of acts are
each repealed:
(1) RCW 66.12.110 (Duty -free alcoholic beverages for personal use)
and 1999 c 281 s 3 1975 -'76 2nd ex.s. c 20 s 1; and
(2) RCW 66.12.120 (Bringing alcoholic beverages into state from
another state Payment of markup and tax) and 1995 c 100 s 1 1975
1st ex.s. c 173 s 3;
NEW SECTION. Sec. 37. The following acts or parts of acts are
each repealed:
(1) RCW 66.08.026 (Appropriation and payment of administrative
expenses from liquor revolving fund "Administrative expenses"
defined) and 2008 c 67 s 1, 2005 c 151 s 2, 2004 c 63 s 1, 2001 c 313
s 1, 1998 c 265 s 2, 1997 c 148 s 1, 1996 c 291 s 3, 1983 c 160 s 2,
1963 c 239 s 1, 1961 ex.s. c 6 s 4;
Code Rev /JA:cro 25 1- 2311.1/10
82
(2) RCW 66.08.030 (Regulations Scope) and 2002 c 119 s 2, 1977
ex.s. c 115 s 1, 1971 c 62 s 1, 1943 c 102 s 1, 1933 ex.s. c 62 s
79;
(3) RCW 66.08.050 (Powers of board in general) and 2005 c 151 s 3,
1997 c 228 s 1, 1993 c 25 s 1, 1986 c 214 s 2, 1983 c 160 s 1, 1975
1st ex.s. c 173 s 1, 1969 ex.s. c 178 s 1, 1963 c 239 s 3, 1935 c 174
s 10, 1933 ex.s. c 62 s 69;
(4) RCW 66.08.070 (Purchase of liquor by board Consignment not
prohibited Warranty or affirmation not required for wine or malt
purchases) and 1985 c 226 s 2, 1973 1st ex.s. c 209 s 1, 1933 ex.s.
c 62 s 67;
(5) RCW 66.08.075 (Officer, employee not to represent
manufacturer, wholesaler in sale to board) and 1937 c 217 s 5;
(6) RCW 66.08.165 (Strategies to improve operational efficiency
and revenue) and 2005 c 231 s 1;
(7) RCW 66.08.166 (Sunday sales authorized -Store selection and
other requirements) and 2005 c 231 s 2;
(8) RCW 66.08.167 (Sunday sales- -Store selection) and 2005 c 231 s
4;
(9) RCW 66.08.220 (Liquor revolving fund Separate account-
Distribution) and 2009 c 271 s 4, 2007 c 370 s 15, 1999 c 281 s 2,
1949 c 5 s 11;
(10) RCW 66.08.235 (Liquor control board construction and
maintenance account) and 2005 c 151 s 4, 2002 c 371 s 918, 1997 c 75
s 1;
(11) RCW 66.16.010 (Board may establish- -Price standards Prices
in special instances) and 2005 c 518 s 935, 2003 1st sp.s. c 25 s 928,
1939 c 172 s 10, 1937 c 62 s 1, 1933 ex.s. c 62 s 4;
(12) RCW 66.16.040 (Sales of liquor by employees Identification
cards Permit holders- -Sales for cash Exception) and 2005 c 206 s 1,
2005 c 151 s 5, 2005 c 102 s 1, 2004 c 61 s 1, 1996 c 291 s 1, 1995 c
16 s 1, 1981 1st ex.s. c 5 S 8, 1979 c 158 s 217, 1973 1st ex.s. c 209
s 3, 1971 ex.s. c 15 s 1, 1959 c 111 s 1, 1933 ex.s. c 62 s 7;
(13) RCW 66.16.041 (Credit and debit card purchases--- Rules
Provision, installation, maintenance of equipment by board-
Code Rev /JA:cro 26 1- 2311.1/10
83
Consideration of offsetting liquor revolving fund balance reduction)
and 2005 c 151 s 6, 2004 c 63 s 2, 1998 c 265 s 3, 1997 c 148 s 2,
1996 c 291 s 2;
(14) RCW 66.16.050 (Sale of beer and wine to person licensed to
sell) and 1933 ex.s. c 62 s 8;
(15) RCW 66.16.060 (Sealed packages may be required, exception)
and 1943 c 216 s 1 1933 ex.s. c 62 s 9;
(16) RCW 66.16.070 (Liquor cannot be opened or consumed on store
premises) and 1933 ex.s. c 62 s 10;
(17) RCW 66.16.090 (Record of individual purchases confidential-
Penalty for disclosure) and 1933 ex.s. c 62 s 89;
(18) RCW 66.16.100 (Fortified wine sales) and 1997 c 321 s 42
1987 c 386 a 5;
(19) RCW 66.16.110 (Birth defects from alcohol Warning required)
and 1993 c 422 s 2;
(20) RCW 66.16.120 (Employees working on Sabbath) and 2005 c 231 s
5;
(21) RCW 66.24.440 (Liquor by the drink, spirits, beer, and wine
restaurant, spirits, beer, and wine private club, hotel, spirits,
beer, and wine nightclub, and sports entertainment facility license-
Purchase of liquor by licensees Discount) and 2009 c 271 s 8, 2007 c
370 s 20, 1998 c 126 s 8, 1997 c 321 s 29, 1949 c 5 s 5; and
(22) RCW 66.28.045 (Furnishing samples to board Standards for
accountability Regulations) and 1975 1st ex.s. c 173 s 9;
NEW SECTION. Sec. 38. Sections 10 and 36 of this act take effect
June 1, 2011.
NEW SECTION. SeC. 39. Sections 2, 4 through 8 and 37 of this act
take effect December 31, 2011.
NEW SECTION. Sec. 40. If any provision of this act or its
application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other
persons or circumstances is not affected.
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84
Attachment D
Initiative Measure No. 1105
85
Initiative Measure No. 1105
FILED
MAY 17 MO
SECRETARY OF STATE
STATE OF WASHINGTON
1 AN ACT Relating to privatizing the sale of spirits; amending RCW
2 66.08.050, 66.24.310, 66.28.030, 66.28.070, 66.28.180, 66.28.170,
3 66.28.190, 66.08.020, 66.08.026, 66.08.030, 66.24.145, 66.24.160,
4 66.28.060, and 66.44.120; reenacting and amending RCW 66.04.010; adding
5 new sections to chapter 66.24 RCW; adding a new section to chapter
6 66.28 RCW; creating new sections; repealing RCW 66.08.070, 66.08.075,
7 66.08.160, 66.08.165, 66.08.166, 66.08.167, 66.08.220, 66.08.235,
8 66.16.010, 66.16.040, 66.16.041, 66.16.050, 66.16.060, 66.16.070,
9 66.16.100, 66.16.110, 66.16.120, 66.28.045, and 82.08.150; and
10 providing an effective date.
11 BE IT ENACTED BY THE PEOPLE OF THE STATE OF WASHINGTON:
12 PART I
13 RETAIL SALE OF SPIRITS
14 NEW SECTION. Sec. 101. (1) The people of the state of Washington
15 intend for privatization of spirits retail and distribution to result
16 in a system that is more efficient than public sector retail and
17 distribution of spirits. The people intend, therefore, that the
18 privatization of spirits retail and distribution not result in revenue
86 Code Rev /JA:ean 1 I- 2326.1/10
1 losses to state or local governments. The people further intend to
2 provide for an orderly transition from the current state control system
3 to a privatized system of spirits retail and distribution.
4 (2) Persons holding a spirits distributor license may commence sale
5 of spirits on October 1, 2011. Persons holding a spirits retailer
6 license may commence sale of spirits on November 1, 2011. The state of
7 Washington must cease operation of all state liquor stores no later
8 than April 1, 2012. The liquor control board must make a good faith
_9 effort to sell all inventory and assets of state liquor stores and
10 distribution centers to buyers no later than April 1, 2012. The liquor
11 control board is directed to take all necessary measures to effect an
12 orderly transition from the current state control system to a
13 privatized system of spirits retail and distribution by April 1, 2012,
14 including, if necessary, a report to the legislature on further
15 necessary legislation, which may include provision for the retraining
16 of any state worker displaced by the privatization of spirits retail or
17 distribution. The liquor control board is further directed to issue a
18 rule, in accordance with the provisions of the administrative procedure
19 act, chapter 34.05 RCW, to govern the sale of spirits to tribes on
20 terms consistent with and no less favorable to tribes than those
21 reflected in WAC 314 -37 -010.
22 (3) The people direct the liquor control board to present a report
23 to the legislature by January 1, 2011, on a recommended rate of
24 taxation, to be calculated at a per -liter basis and to be paid by
25 spirits distributors, on all spirits sold to spirits distributors
26 within the state. The liquor control board is directed to recommend a
27 rate of taxation that, along with other spirits related revenue
28 sources, would project to generate at least the same annual revenue for
29 the state and local jurisdictions as under the current state control
30 system, as well as at least an additional one hundred million dollars
31 in projected revenue net of expenses of operating the business over the
32 entire course of the five -year period commencing November 1, 2011. In
33 recommending a proposed rate of taxation, the liquor control board must
34 consider that there will be other spirits related revenue including,
35 without limitation: Anticipated business and occupation tax revenue
36 under chapter 82.04 RCW, generated by privatized spirits retail and
37 distribution; the increased taxable spirits inventory base generated by
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1 taxing spirits at the distributor level; proceeds from the issuance of
2 spirits retailer licenses and spirits distributor licenses under
3 sections 102 and 103 of this act; and annual spirits license fees.
4 NEW SECTION. Sec. 102. A new section is added to chapter 66.24
5 RCW to read as follows:
6 (1) There is a spirits retailer license to sell spirits at retail
7 in original containers, not to be consumed on the premises where sold.
8 (2) The people of the state of Washington desire to have greater
9 availability of spirits and a more convenient shopping experience than
10 is currently available to them through the present control system. The
11 people also desire to retain a high degree of security and public
12 safety in the handling and sale of all alcoholic beverages.
13 (a) The liquor control board is hereby directed to develop criteria
14 for the issuance of spirits retailer licenses to applicants who can
15 demonstrate the ability to provide the same level of security and
16 safety as that which the citizens of this state have come to expect
17 from their state- operated retail stores. In considering applicants,
18 emphasis should be placed on inventory management systems, employee
19 training, employee supervision, and physical security of the product.
20 (b) Notwithstanding (a) of this subsection, the liquor control
21 board is encouraged to, in the exercise of its discretion, make spirits
22 retailer licenses available to existing contract liquor stores who
23 desire to privatize their businesses.
24 (3) No later than July 1, 2011, the liquor control board is
25 directed to notify all qualifying license applicants so that they may
26 make the necessary preparations to begin sales on or after November 1,
27 2011.
28 (4) Each licensee obtaining a spirits retailer license from the
29 liquor control board must agree to pay to the liquor control board, for
30 deposit into the state general fund, an amount equivalent of six
31 percent of the licensee's gross annual spirits sales for a five -year
32 period commencing on the date of the licensee's first sale of spirits.
33 The liquor control board shall establish rules setting forth the
34 frequency and timing of such payments and reporting of sales volume by
35 the licensee.
36 (5) In addition to the payment set forth in subsection (4) of this
37 section, each licensee must pay an annual license fee. The liquor
88 Code Rev /JA:ean 3 1 2326.1/10
1 control board must fix a reasonable annual license fee for the spirits
2 retailer license issued pursuant to the provisions of this title. The
3 liquor control board may, from time to time, make a reasonable
4 adjustment to the annual fee for the spirits retailer license. Any
5 such revision to the annual fee must be fixed by rule by the liquor
6 control board in accordance with the provisions of the administrative
7 procedure act, chapter 34.05 RCW.
8 NEW SECTION. Sec. 103. A new section is added to chapter 66.24
9 RCW to read as follows:
10 (1) There is a license for spirits distributors to sell spirits,
11 purchased from manufacturers, distillers, or suppliers, including
12 licensed Washington distilleries, licensed spirits importers, or
13 suppliers of foreign spirits located outside of the United States, to
14 any person holding a license to sell spirits under this chapter
15 including: Spirits retailer license holders; special occasion license
16 holders; interstate common carrier license holders; spirits, beer, and
17 wine restaurant license holders; spirits, beer, and wine private club
18 license holders; hotel license holders; sports entertainment facility
19 license holders; spirits, beer, and wine nightclub license holders; and
20 other spirits distributors and to export the same from the state.
21 (2) No later than July 1, 2011, the liquor control board is
22 directed to make spirits distributor licenses available to all
23 applicants who have an appointment by or are agents of a spirits
24 manufacturer, spirits distiller, or spirits supplier to distribute
25 products in the state, unless the liquor control board determines that
26 issuance of a license to such applicant is not in the public interest.
27 (3) Each licensee obtaining a spirits distributor license from the
28 liquor control board must agree to pay to the liquor control board, for
29 deposit into the state general fund, an amount equivalent of one
30 percent of the licensee's gross annual spirits sales for a five -year
31 period commencing on the date of the licensee's first sale of spirits.
32 The liquor control board must establish rules setting forth the
33 frequency and timing of such payments and reporting of sales volume by
34 the licensee.
35 (4) In addition to the payment set forth in subsection (3) of this
36 section, each licensee must pay an annual license fee. The liquor
37 control board must fix a reasonable annual license fee for the spirits
Code Rev /JA:ean 4 1- 2326.1/10 89
1 distributor license issued pursuant to the provisions of this title.
2 The liquor control board may, from time to time, make a reasonable
3 adjustment to the annual fee for the spirits distributor license. Any
4 such revision to the annual fee must be fixed by rule by the liquor
5 control board in accordance with the provisions of the administrative
6 procedure act, chapter 34.05 RCW.
7 (5) The provisions of RCW 19.126.030, 19.126.040, 19.126.050, and
8 19.126.060 govern the relationship between spirits distributors and
9 suppliers.
10 (6) Nothing in this section may be construed to allow a distiller
11 subject to licensing under RCW 66.24.140 to obtain a certificate of
12 approval with a direct shipment endorsement or to otherwise act as
13 distributor of its own production.
14 Sec. 104. RCW 66.0&.050 and 2005 c 151 s 3 are each amended to
15 read as follows:
16 The board, subject to the provisions of this title and the rules,
17 shall:
18 (1) ((Dete the '_.ocaliticc within which otatc 1 -quen: stores
19 shall 20 of the. ;itorc3 within oach locality;
21 -f2- A- crrns and other communities, in which no
22 nta` c liquor store is locate., San a 1iquol. 6'corcz In addition,
23 t- :c. board may uiat, in its di3ercti.or., c: manufacturer that ate':
24 manufactures liquor products other than wine under a license under this
25 title, as a c_.= _c „f sal: of liquor
26 prse.ucts cf its own manufacture on the licensed premises only. Sum
27 eont liquor stores shall ba authorizsc tc .sell liquor under the
28 guidelines p.rc:. it 1-;, rule., cy contract, a
29 �rc shall bc. subject to such additional rules and regulations
30 consistent with this title as thz board may require;
31 (3; 23tablish all neceasazy 2-e ,storing
32 bottling, 33 of this title,
34 (4). Prcvide for trs 1- t:, cncced ten years of
35 e business, er.
36 remodeling the :.ems,
90 Code Rev /JA:ean 5 1- 2326.1/10
1 and supplica., and for :obtaining optiono cf .ranowa-. 3. UCc by
2 thc 1-escca. The t: r- 3s 3f cucr 1z.aaes In ..ther ravpccts 3ha11 be
3 -s 6.2.. ..c thc dirt ctior. of thc board;
4 (5))) Determine the nature, form and capacity of all packages to be
5 used for containing liquor kept for sale under this title;
6 (((G))) (2) Execute or cause to be executed, all contracts, papers,
7 and documents in the name of the board, under such regulations as the
8 board may fix;
9 (((7))) (3) Pay all customs, duties, excises, charges and
10 obligations whatsoever relating to the business of the board;
11 (-8+)) (4) Require bonds from all employees in the discretion of
12 the board; and to determine the amount of fidelity bond of each such
13 employee;
14 9-)-)) (5) Perform services for the state lottery commission to
15 such extent, and for such compensation, as may be mutually agreed upon
16 between the board and the commission;
17 (((10))) (6) Accept and deposit into the general fund -local account
18 and disburse, subject to appropriation, federal grants or other funds
19 or donations from any source for the purpose of improving public
20 awareness of the health risks associated with alcohol consumption by
21 youth and the abuse of alcohol by adults in Washington state. The
22 board's alcohol awareness program shall cooperate with federal and
23 state interested organizations, and individuals to effect an
24 active public beverage alcohol awareness program;
25 (((11))) (7) Negotiate agreements at the request of any federally
26 recognized Indian tribe located in the state to replace anv liquor tax
27 comcact existing on the effective date of this section with an
28 aareement.to share amounts equivalent to liquor taxes collected by the
29 state on sales within the reservation for that federally recognized
30 tribe at percentages comparable to the compacts entered into pursuant
31 to RCW 82.36.450:
32 (8) Perform all other matters and things, whether similar to the
33 foregoing or not, to carry out the provisions of this title, and shall.
34 have full power to do each and every act necessary to the conduct of
35 its business, including all buying, selling, preparation and approval
36 of forms, and every other function of the business whatsoever, subject
37 only to audit by the state auditor: PROVIDED, That the board shall
38 have no authority to regulate the content of spoken language on
Code Rev /JA:ean 6 I- 2326.1/10 91
1 licensed premises where wine and other liquors are served and where
2 there is not a clear and present danger of disorderly conduct being
3 provoked by such language.
4 Sec. 105. RCW 66.24.310 and 1997 c 321 s 17 are each amended to
5 read as follows:
6 (1) No person shall canvass for, solicit, receive, or take orders
7 for the purchase or sale of liquor, nor contact any licensees of the
8 board in goodwill activities, unless such person shall be the
9 accredited representative of a person, firm, or corporation holding a
10 certificate of approval issued pursuant to RCW 66.24.270 or 66.24.206,
11 a beer distributor's license, a microbrewer's license, a domestic
12 brewer's license, a beer importer's license, a domestic winery license,
13 a wine importer's license, or a wine distributor's license within the
14 state of Washington, or the accredited representative of a distiller,
15 manufacturer, importer, or distributor of spirituous liquor, or foreign
16 produced beer or wine, and shall have applied for and received a
17 representative's license((. EROVIEEE, HOWEVER, That)). However, the
18 provisions of 'this section ,shall not apply to drivers who deliver
19 spirits, beer or wine;
20 (2) Every representative's license issued' under this title shall be
21 subject to all conditions and restrictions imposed by this title or by
22 the rules and regulations of the board; the board, for the purpose of
23 maintaining an orderly market, may limit the number of representative's
24 licenses issued for representation of specific classes of eligible
25 employers;
26 (3) Every application for a representative's license must be
27 approved by a holder of a certificate of approval issued pursuant to
28 RCW 66.24.270 or 66.24.206, a licensed beer distributor, a licensed
29 domestic brewer, a licensed beer importer, a licensed microbrewer, a
30 licensed domestic winery, a licensed wine importer, a licensed wine
31 distributor, or by a distiller, manufacturer, liquor importer, or
32 spirits distributor or foreign produced beer
33 or wine, as the rules and regulations of the board shall require;
34 (4) The fee for a representative's license shall be twenty -five
35 dollars per year((;
36 (5) l n accrcditcd representat.vi of a distiller, manufacturer,
37 -impete-r, or distributor of spirituous liquor may, after Lc
92Code Rev /JA:ean 7 I- 2326.1/10
1 applied for and r:.z ived a raprescntativzxs liccrcc, uc tact retail
2 the on71y in gccdwill activities pertai to
3 spirituous liquor product ;J)
4 Sec. 106. RCW 66.28.030 and 2004 c 150 s 10 are each amended to
5 read as follows:
6 Every domestic distillery, brewery and microbrewery, domestic
7 winery, certificate of approval holder, licensed liquor importer.
8 licensed wine importer, and licensed beer importer shall be responsible
9 for the conduct of any licensed spirits, beer, or wine distributor in
10 selling, or contracting to sell, to retail licensees, spirits. beer, or
11 wine manufactured by such domestic distillery. brewery, microbrewery,
12 domestic winery, manufacturer holding a certificate of approval, sold
13 by an authorized representative holding a certificate of approval, or
14 imported by such licruor. beep or wine importer. Where the board finds
15 that any licensed spirits, beer, or wine distributor has violated any
16 of the provisions of this title or of the regulations of the board in
17 selling or contracting to sell spirits, beep or wine to retail
18 licensees, the board may, in addition to any punishment inflicted or
19 imposed upon such distributor, prohibit the sale of the brand or brands
20 of spirits. beer, or wine involved in such violation to any or all
21 retail licensees within the trade territory usually served by such
22 distributor for such period of time as the board may fix, irrespective
23 of whether the distiller manufacturing such spirits or the liquor
24 importer importing such spirits. brewer manufacturing such beer, or the
25 beer importer importing such beer, or the domestic winery manufacturing
26 such wine,, or the wine importer importing such wine, or the certificate
27 of approval holder manufacturing such spirits, beep or wine or acting
28 as authorized representative actually participated in such violation.
29 Sec. 107. RCW 66.28.070 and 2006 c 302 s 8 are each amended to
30 read as follows:
31 (1) Except as provided in subsection .(2) of this section, it shall
32 be unlawful for any retail spirits. beer, or wine licensee to purchase
33 spirits. beer, or wine, except from a duly licensed distributor,
34 domestic winery, domestic brewer, or certificate of approval holder
35 with a direct shipment endorsement H, the-))
Code Rev/JA:ean 8 1- 2326.1/10 93
1 (2) A spirits, beer, or wine retailer licensee may purchase
2 spirits, beer or wine from a government agency which has lawfully
3 seized spirits, beer, or wine from a licensed spirits. beer, or wine
4 retailer, or from a board authorized retailer, or from a licensed
5 retailer which has discontinued business if the distributor has refused
6 to accept spirits, beer, or wine from that retailer for return and
7 refund. Spirits. beer and wine purchased under this subsection shall
8 meet the quality standards set by its manufacturer.
9 (3) Special occasion licensees holding a special occasion license
10 may only purchase spirits., beer, or wine from a spirits, beer, or wine
11 retailer duly licensed to sell spirits, beer, or wine for off premises
12 consumption((, the board,)) or from a duly licensed spirits, beer, or
13 wine distributor.
14 Sec. 108. RCW 66.28.180 and 2009 c 506 s 10 are each amended to
15 read as follows:
16 (1) Spirits. beer, and wine distributors.
17 (a) Every spirits, beer, or wine distributor shall maintain at its
18 liquor license& location a price list showing the wholesale prices at
19 which any and all brands of spirits, beer, and wine sold by such
20 spirits, beer, and /or wine distributor shall be sold to retailers
21 within the state.
22 (b). Each price list shall set forth:
23 (i) All brands, types, packages, and containers of spirits. beerl%
24 or wine offered for sale by such spirits, beer and /or wine
25 distributor; and
26 (ii) The wholesale prices thereof to retail licensees, including
27 allowances, if any, for returned empty containers.
28 (c) No spirits. beer, and /or wine distributor may sell or offer to
29 sell any package or container of spirits, beer, or wine to any retail
30 licensee at a price differing from the price for such package or
31 container as shown in the price list, according to rules adopted by the
32 board.
33 (d) With the exception of quantity discounts on spirits, quantity
34 discounts are prohibited. No price may be below acquisition cost.
35 (e) Distributor prices on a "close-out" item shall be allowed if
36 the item to be discontinued has been listed for a period of at least
94 Code Rev /JA:ean 9 1- 2326.1/10
1 six months, and upon the further condition that the distributor who
2 offers such a close -out price shall not restock the item for a period
3 of one year following the first effective date of such close -out price.
4 (f) Any spirits. beer, and /or wine distributor or employee
5 authorized by the distributor- employer may sell spirits, beer, and /or
6 wine at the distributor's listed prices to any annual or special
7 occasion retail licensee upon presentation to the distributor or
8 employee at the time of purchase of a special permit issued by the
9 board to such licensee.
10 (g) Every annual or special occasion retail licensee, upon
11 purchasing any spirits. beer, and /or wine from a distributor, shall
12 immediately cause such spirits_ beer, or wine t6 be delivered to the
13 licensed premises, and the licensee shall not thereafter permit such
14 spirits. wine. or beer to be disposed of in any manner except as
15 authorized by the license.
16 (h) Spirits, beer, and wine sold as provided in this section shall
17 be delivered by the distributor or an authorized employee either to the
18 retailer's licensed premises or directly to the retailer at the
19 distributor's licensed premises. When a domestic winery, brewery,
20 microbrewery, or certificate of approval holder with a direct shipping
21 endorsement is acting as a distributor of its own production, a
22 licensed retailer may contract with a common carrier to obtain the
2.3 product directly from the domestic winery, brewery, microbrewery, or
24 certificate of approval holder with a direct shipping endorsement. A
25 distributor's prices to retail licensees shall be the same at both such
26 places of delivery.
27 (2) Spirits, beer and wine suppliers' contracts and memoranda.
28 (a) Every domestic brewery, microbrewery, domestic winery,
29 certificate of approval holder, and spirits, beer, and /or wine importer
30 offering spirits, beer, and /or wine for sale within the state and any
31 spirits, beer, and /or wine distributor who sells to other spirits.
32 beer, and /or wine distributors shall maintain at its liquor licensed
33 location a price list and a copy of every written contract and a
34 memorandum of every oral agreement which such brewery or winery may
35 have with any spirits, beer, or wine distributor, which contracts or
36 memoranda shall contain:
37 (i) All advertising, sales and trade allowances, and incentive
38 programs; and
Code Rev /JA:ean 10 1- 2326.1/10 95
1 (ii) All commissions, bonuses or gifts, and any and all other
2 discounts or allowances.
3 (b) Whenever changed or modified, such revised contracts or
4 memoranda shall also be maintained at its liquor licensed location.
5 (c) Each price list shall set forth all brands, types, packages,
6 and containers of beer or wine offered for sale by such licensed
7 brewery or winery.
8 (d) Prices of a domestic distillery, brewery, microbrewery,
9 domestic winery, or certificate of approval holder shall be uniform
10 prices to all distributors or retailers on a statewide basis less bona
11 fide allowances for freight differentials. With the excention of
12 auantitv discounts on spirits, auantity discounts are prohibited. No
13 price shall be below acquisition /production cost.
14 (e) A domestic distillery, brewery, microbrewery, domestic winery,
15 certificate of approval holder, spirits,, beer or wine importer, or
16 spirits, beer or wine distributor acting as a supplier to another
17 distributor must file a distributor appointment with the board that
18 identifies each distributor who is authorized to distribute its.
19 products. The'distributor appointment must list all brands that each'
20 distributor is authorized to distribute. No distributor may offer for
21 sale any products for a supplier unless that supplier has first filed
22 a distributor appointment with the board.
23 (f) No domestic brewery, microbrewery, domestic winery, or
24 certificate of approval holder may sell or offer to sell any package or"
25 container of beer or wine to any distributor at a price differing from
26 the price list for such package or container as shown in the price list
27 of the domestic brewery, microbrewery, domestic winery, or certificate
28 of approval holder and then in effect, according to rules adopted by
29 the board.
30 Sec. 109. RCW 66.28.170 and 2004 c 160 s 17 are each amended to
31 read as follows:
32 It is unlawful for a manufacturer of spirits, a manufacturer of
33 wine or malt beverages holding a certificate of approval issued under
34 RCW 66.24.270 or 66.24.206 or the manufacturer's authorized
35 representative, a distillery, a brewery, or a domestic winery to
36 discriminate in price in selling to any purchaser for resale in the
37 state of Washington.
96 Code Rev /JA:ean 11 1- 2326,1/10
1 Sec. 110. RCW 66.28.190 and 2003 c 168 s 305 are each amended to
2 read as follows:
3 (1) Persons licensed under RCW
4 66.24.200 as wine distributors ((an4)),,_ persons licensed under RCW
5 66.24.250 as beer distributors, and persons licensed as spirits
6 distributors may sell at wholesale nonliquor food and food ingredients
7 on thirty -day credit terms to persons licensed as retailers under this
8 title, but complete and separate accounting records shall be maintained
9 an all sales of nonliquor food and food ingredients to ensure that such
10 persons are in compliance with ((RCW .0.20.01G)) any applicable laws.
11 (2) For the purpose of this section, "nonliquor food and food
12 ingredients" includes all food and food ingredients for human
13 consumption as defined in RCW 82.08.0293 as it exists on July 1, 2004.
14 NEW SECTION. Sec. 111. A new section is added to chapter 66.28
15 RCW to read as follows:
16 Notwithstanding any other provision of law:
17 (1) A spirits manufacturer or distiller, whether resident or
18 nonresident, may not possess any interest, direct or indirect, in a
19 spirits distributor license or liquor importer's license, or in any
20 entity that possesses a spirits distributor license or liquor
21 importer's license; and
22 (2) No spirits retailer licensee may possess any interest, direct
23 or indirect, in a spirits distributor license or liquor importer's
24 license, or in any entity that possesses a spirits distributor license
25 or liquor importer's license.
26 Sec. 112. RCW 66.04.010 and 2009 c 373 s 1 and 2009 c 271 s 2 are
27 each reenacted and amended to read as follows:
28 In this title, unless the context otherwise requires:
29 (1) "Alcohol" is that substance known as ethyl alcohol, hydrated
30 oxide of ethyl, or spirit of wine, which is commonly produced by the
31 fermentation or distillation of grain, starch, molasses, or sugar, or
32 other• substances including all dilutions and mixtures of this
33 substance. The term "alcohol" does not include alcohol in the
34 possession of a manufacturer or distiller of alcohol fuel, as described
35 in RCW 66.12.130, which is intended to be denatured and used as a fuel
Code Rev /JA :ean 12 1-- 2326.1/10 97
1 for use in motor vehicles, farm implements, and machines or implements
2 of husbandry.
3 (2) "Authorized representative" means a person who:
4 (a) Is required to have a federal basic permit issued pursuant to
5 the federal alcohol administration act, 27 U.S.C. Sec. 204;
6 (b) Has its business located in the United States outside of the
7 state of Washington;
8 (c) Acquires ownership of spirits, beer, or wine for transportation
9 into and resale in the state of Washington; and which spirits. beer or
10 wine is produced by a distillery, brewery or winery in the United
11 States outside of the state of Washington; and
12 (d) Is appointed by the distillery. brewery or winery referenced
13 in (c) of this subsection as its authorized representative for
14 marketing and selling its products within the United States in
15 accordance with a written agreement between the authorized
16 representative and such distillery, brewery,. or winery pursuant to this
17 title.
18 (3) "Beer" means any malt beverage, flavored malt beverage, or malt
19 liquor as these, terms are defined in this chapter.
20 (4) "Beer distributor" means a person who buys beer from a domestic
21 brewery, microbrewery, beer certificate of approval holder, or beer
22 importers, or who acquires foreign produced beer from a source outside
23 of the-United States, for the purpose of selling the same pursuant to
24 this title, or who represents such brewer or brewery as agent.
25 (5) "Beer importer" means a person or business within Washington
26 who purchases beer from a beer certificate of approval holder or who
27 acquires foreign produced beer from a source outside of the United
28 States for the purpose of selling the same pursuant to this title.
29 (6) "Board" means the liquor control board, constituted under this
30 title.
31 (7) "Brewer" or "brewery" means any person engaged in the business
32 of manufacturing beer and malt liquor. Brewer includes a brand owner
33 of malt beverages who holds a brewer's notice with the federal bureau
34 of alcohol, tobacco, and firearms at a location outside the state and
35 whose malt beverage is contract produced by a licensed in -state
36 brewery, and who may exercise within .the state, under a domestic
37 brewery license, only the privileges of storing, selling to licensed
38 beer distributors, and exporting beer from the state.
98 Code Rev /JA:ean 13 I- 2326.1/10
1 (8) "Club" means an organization of persons, incorporated or
2 unincorporated, operated solely for fraternal, benevolent, educational,
3 athletic or social purposes, and not for pecuniary gain.
4 (9) "Confection" means a preparation of sugar, honey, or other
5 natural or artificial sweeteners in, combination with chocolate, fruits,
6 nuts, dairy products, or flavorings, in the form of bars, drops, or
7 pieces.
8 (10) "Consume" includes the putting of liquor to any use, whether
9 by drinking or otherwise.
10 (11) "Contract liquor store" means a business that sells liquor on
11 behalf of the board through a contract with a contract liquor store
12 manager.
13 (12) "Craft distillery" means a distillery that pays the reduced
14 licensing fee under RCW 66.24.140.
15 (13) "Dentist" means a practitioner of dentistry duly and regularly
16 licensed and engaged in the practice of his profession within the state
17 pursuant to chapter 18.32 RCW.
18 (14) "Distiller" means a person engaged in the business of
19 distilling spirits.
20 (15) "Domestic brewery" means a place where beer and malt liquor
21 are manufactured or produced by a brewer within the state.
22 (16) "Domestic winery" means a place where wines are manufactured
23 or produced within the state of Washington.
24 (17) "Drug store" means a place whose principal business is, the
25 sale of drugs, medicines and pharmaceutical preparations and maintains
26 a regular prescription department and employs a registered pharmacist
27 during all hours the drug store is open.
28 (18) "Druggist" means any person who holds a valid certificate and
29 is a registered pharmacist and is duly and regularly engaged in
30 carrying on the business of pharmaceutical chemistry pursuant to
31 chapter 18.64 RCW.
32 (19) "Employee" means any person employed by the board.
33 (20) "Flavored malt beverage" means:
34 (a) A malt beverage containing six percent or less alcohol by
35 volume to which flavoring or other added nonbeverage ingredients are
36 added that contain distilled spirits of not more than forty -nine
37 percent of the beverage's overall alcohol content; or
Code Rev /JA:ean 14 T- 2326.1/10 99
1 (b) A malt beverage containing more than six percent alcohol by
2 volume to which flavoring or other added nonbeverage ingredients are
3 added that contain distilled spirits of not more than one and one -half
4 percent of the beverage's overall alcohol content.
5 (21) "Fund" means 'liquor revolving fund.'
6 (22) "Hotel" means buildings, structures, and grounds, having
7 facilities for preparing, cooking, and serving food, that are kept,
8 used, maintained, advertised, or held out to the public to be a place
9 where food is served and sleeping accommodations are offered for pay to
10 transient guests, in which twenty or more rooms are used for the
11 sleeping accommodation of such transient guests. The buildings,
12 structures, and grounds must be located on adjacent property either
13 owned or leased by the same person or persons.
14 (23)
15
16 1441-titer L. to tic c. -t- tc for oatc t.hc board or for =port.
17 (24)).) "Imprisonment" means confinement in the county jail.
18 (((25))) (24) "Liquor" includes the four varieties of liquor herein
19 defined (alcohol, spirits, wine and beer), and all fermented,
20 spirituous, vinous, or malt liquor, or combinations thereof, and mixed
21 liquor, a part of which is fermented, spirituous, vinous or malt
22 liquor, or otherwise intoxicating; and every liquid or solid or
23 semisolid or other substance, patented or not, containing alcohol,
24 spirits, wine or beer, and all drinks or drinkable liquids and aiY'
25 preparations or mixtures capable of human consumption, and any liquid,
26 semisolid, solid, or other substance, which contains more than one
27 percent of alcohol by weight shall be conclusively deemed to be
28 intoxicating. Liquor does not include confections or food products
29 that contain one percent or less of alcohol by weight.
30 ((.(2G))) (25) "Malt beverage" or "malt liquor" means any beverage
31 such as beer, ale, lager beer, stout, and porter obtained by the
32 alcoholic fermentation of an infusion or decoction of pure hops, or
33 pure extract of hops and pure barley malt or other wholesome grain or
34 cereal in pure water containing not more than eight percent of alcohol
35 by weight, and not less than one -half of one percent of alcohol by
36 volume. For the purposes of this title, any such beverage containing
37 more than eight percent of alcohol by weight shall be referred to as
38 "strong beer."
10OCode Rev /JA:ean 15 I- 2326.1/10
1 (((27))) (26) "Manufacturer" means a person engaged in the
2 preparation of liquor for sale, in any form whatsoever.
3 28)-)) (27) "Nightclub" means an establishment that provides
4 entertainment and has as its primary source of revenue (a) the sale of
5 alcohol for consumption•on the premises, (b) cover charges, or (c)
6 both, and has an occupancy load of one hundred or more.
7 (((29))) (28) "Package" means any container or receptacle used for
8 holding liquor.
9 ((43 -0-))) (29) "Passenger vessel" means any boat, ship, vessel,
10 barge, or other floating craft of any kind carrying passengers for
11 compensation.
12 (((31))) (30) "Permit means a permit for the purchase of liquor
13 under this title.
14 (((32))) (31) "Person" means an individual, copartnership,
15 association, or corporation.
16 (((33))) (32) "Physician" means a medical practitioner duly and
17 regularly licensed and engaged in the practice of his profession within
18 the state purst,Fant to chapter 18.71 RCW.
19 (((34))) ('33) "Prescription" means a memorandum signed by a
20 physician and given by him to a patient for the obtaining of liquor
21 pursuant to this title for medicinal purposes.
22 (((35))) (34) "Public place" includes streets and alleys of
23 incorporated cities and towns; state or county or township highways or
24 roads; buildings and grounds used for school purposes; public dance
25 halls and grounds adjacent thereto; those parts of establishments where
26 beer may be sold under this title, soft drink establishments, public
27 buildings, public meeting halls, lobbies, halls and dining rooms of
28 hotels, restaurants, theatres, stores, garages and filling stations
29 which are open to and are generally used by the public and to which the
30 public is peLmitted to have unrestricted access; railroad trains,
31 stages, and other public of all kinds and character, and
32 the depots and waiting rooms used in conjunction therewith which are
33 open to unrestricted use and access by the public; publicly owned
34 bathing beaches, parks, and /or playgrounds; and all other places of
35 like or similar nature to which the general public has unrestricted
36 right of access, and which are generally used by the public.
37 (((3G))) (35) "Regulations" means regulations made by the board
38 under the powers conferred by this title.
Code Rev /JA:ean 16 I-- 2326.1/10 101
1 (((37+)) (36) "Restaurant" means any establishment provided with
2 special space and accommodations where, in consideration of payment,
3 food, without lodgings, is habitually furnished to the public, not
4 including drug stores and soda fountains.
5 ((-E3 -8}-)) (37) "Sale" and "sell' include exchange, barter, and
6 traffic; and also include the selling or supplying or distributing, by
7 any means whatsoever, of liquor, or of any liquid known or described as
8 beer or by any name whatever commonly used to describe malt or brewed
9 liquor or of wine, by any person to any person; and also include a sale
10 or selling within the state to a foreign consignee or his agent in the
11 state. "Sale" and "sell" shall not include the giving, at no charge,
12 of a reasonable amount of liquor by a person not licensed by the board
13 to a person not licensed by the board, for personal use only. "Sale"
14 and "sell" also does not include a raffle authorized under RCW
15 9.46.0315((. PROVIDED, That)). if the nonprofit organization
16 conducting the raffle has obtained the appropriate permit from the
17 board.
18 (38) "Soda fountain" means a place especially equipped
19 with apparatus',for the purpose of dispensing soft drinks, whether mixed
20 or otherwise.
21 (((40))) (39) "Spirits" means any beverage which contains alcohol
22 obtained by distillation, except flavored malt beverages, but including
23 wines exceeding twenty -four percent of alcohol by volume.
24 (((41) "Store" means a otat,T. liquor store
25 title)) (40) "Spirits distributor" means a person who buys spirits from
26 a domestic distiller_ manufacturer. supplier. or spirits importer. or
27 who acquires foreian produced spirits from a source outside of the
28 United States. for the purpose of sellina the same not in violation of
29 this title. or who represents such distiller as aaent.
30 (41) "Spirits importer" means a person who buys distilled spirits
31 from a distiller outside the state of Washinaton and imports such
32 spirits into the state for sale or for export.
33 (42) "Tavern" means any establishment with special space and
34 accommodation for sale by the glass and for consumption on the
35 premises, of beer, as herein defined.
36 (43)(a) "Wine" means any alcoholic beverage obtained by
37 fermentation of fruits (grapes, berries, apples, et cetera) or other
38 agricultural product containing sugar, to which any saccharine
102Code Rev /JA:ean 17 I- 2326.1/10
1 substances may have been added before, during or after fermentation,
2 and containing not more than twenty -four percent of alcohol by volume,
3 including sweet wines fortified with wine spirits, such as port,
4 sherry, muscatel and angelica, not exceeding twenty -four percent of
5 alcohol by volume and not less than one -half of one percent of alcohol
6 by volume. For purposes of this title, any beverage containing no more
7 than fourteen percent of alcohol by volume when bottled or packaged by
8 the manufacturer shall be referred to as "table wine," and any beverage
9 containing alcohol in an amount more than fourteen percent by volume
10 when bottled or packaged by the manufacturer shall be referred to as
11 "fortified wine." However, "fortified wine" shall not include: (i)
12 Wines that are both sealed..or capped by cork closure and aged two years
13 or mere; and (ii) wines that contain more than fourteen percent alcohol
14 by volume solely as a result of the natural fermentation process and
15 that have not been produced with the addition of wine spirits, brandy,
16 or alcohol.
17 (b) This subsection shall not be interpreted to require that any
18 wine be labeled with the designation "table wine" or "fortified wine."
19 (44) "Wine distributor" means a person who buys wine from a
20 domestic winery, wine certificate of approval holder, or wine importer,
21 or who acquires foreign produced wine from a source outside of the
22 United States, for the purpose of selling the same not in violation of
23 this title, or who represents such vintner or winery as agent.
24 (45) "Wine importer" means a person or business within Washington'
25 who purchases wine from a wine certificate of approval holder or who
26 acquires foreign produced wine from a source outside of the United
27 States for the purpose of selling the same pursuant to this title.
28 (46) "Winery" means a business conducted by any person for the
29 manufacture of wine for sale, other than a domestic winery.
30 PART 1I
31 LIQUOR CONTROL HOARD REMOVAL FROM RETAIL SALES TECHNICAL CHANGES
32 Sec. 201. RCW 66.08.020 and 1933 ex.s. c 62 s 5 are each amended
33 to read as follows:
34 The administration of this title((, including the ycncral cv trc1-
35 management a.: al-lal-l--b e)) is vested
36 in the liquor control board, constituted under this title.
Code Rev /JA:ean 18 1- 2326.1/10 103
1 Sec. 202. RCW 66.08.026 and 2008 c 67 s 1 are each amended to read
2 as follows:
3 Administrative expenses of the board shall be appropriated and paid
4 from the liquor revolving fund. These administrative expenses shall
5 include, but not be limited to: The salaries and expenses of the board
6 and its employees, ((the cc -t :.f opening additional stato liquor stores
7 ane %.archou3c3,)) legal services, pilot projects, annual or other
8 audits, and other general costs of conducting the business of the
9 board. ((Th3 administrative expersos shall not include c3st3 of liquor
10 and lottery tickets purchased, th0 comet of transportation and delivery
11 point of distribution, thc osa-t of operating, ;maintaining,
12 cating, a 1c.a::.ing state liquor stores and warehouses., ether :233 s-
13 pertaining to t--ho acquisition and receipt of 1-i -guar and lottery
14 tickets, acy commissions for contract liquor stores, transaction
15 .fc.c.s assw,ciatcd with credit or debit c a. .=—or in state
16
17 and GG.1G.041, on-lea—tax, and thoca amounts distributed pursuant tc RCW
18 G6 08 10C, vG. GF .19C, GG .08.20C, G6. 00.210 and GG.00.222. AgeneY
19 commissions fdr contract liquor stores shall b: c3tablishcd by the
20 liquor with and approval by the
21 ell Dote- of th o oa of financial management.)) All expenditures and
22 payment of obligations authorized by this section are subject to the
23 allotment requirements of chapter 43.88 RCW.
24 Sec. 203. RCW 66.08.030 and 2002 c 119 s 2 are each amended to
25 read as follows:
26 (1) For the purpose of carrying into effect the provisions of this
27 title according to their true intent or of supplying any deficiency
28 therein, the board may make such regulations not inconsistent with the
29 spirit of this title as are deemed necessary or advisable. All
30 regulations so made shall be a public record and shall be filed in the
31 office of the code reviser, and thereupon shall have the same force and
32 effect as if incorporated in this title. Such regulations, together
33 with a copy of this title, shall be published in pamphlets and shall be
34 distributed as directed by the board.
35 (2) Without thereby limiting the generality of the provisions
36 contained in subsection (1) of this section, it is declared that the
10 4ode Rev /JA :ean 19 1- 2326.1/10
2 power of the board to make regulations in the manner set out in that
2 subsection shall extend to
3 (a) ((regulating the equipment and management of
4 warchouJc3 in which otatc liquor i3 Gold or hapt, and prescribing the
5 books and racords to I.0 kept therein and the rcport3 to b:, nadc thereon
6 to th
4v b. a_
7 (b))) Prescribing the duties of the employees of the board, and
8 regulating their conduct in the discharge of their duties;
9 (-(-e ovcrning thc purcha3c of liquor by S o tat and the
10 furnishing of liquor iN title;
11 (d) determining the cla3oc and brand of liquor to e
12 kcpt for sale at any of.orc
13 (e) prescribing, Subject to CW 6G.1C.9-83, -e hour3 during which
14 :c ctatc liquor 3 cc .hall be kept °pen for the -a-10 of liquor,
15 (f) providing for tha i33uing and distributing of pricc lints
16 ahowing the prico tO by ,paid by pbirrchaaers for each variety cf liquor
17 kept f‘
18 (g))) (b) Prescribing an official seal and official labels and
19 stamps and determining the manner in which they shall be attached to
20 every package of liquor sold or sealed under this title, including the
21 prescribing of different official seals or different official. labels
22 for different classes of liquor;
23 '..c p7.ymcnt 2:/y t.hc board in :,1 =13 3r in pa of
24 thc -'a=-
�xpres3,
25 (i))) (c) Prescribing forms to be used for purposes of this title
26 or the regulations, and the terms and conditions to be contained in
27 permits and licenses issued under this title, and the qualifications
28 for receiving a permit or license issued under this title, including a
29 criminal history record information check_ The board may submit the
30 criminal history record' information check to the Washington state
31 patrol and to the identification division of the federal bureau of
32 investigation in order that these agencies may search their records for
33 prior arrests and convictions of the individual or individuals who
34 filled out the forms. The board shall require fingerprinting of any
35 applicant whose criminal history record information check is submitted
36 to the federal bureau of investigation;
37 (((j))) (d) Prescribing the fees payable in respect of permits and
Code Rev /JA:ean 20 I- 2326.1110 105
1 licenses issued under this title for which no fees are prescribed in
2 this title, and prescribing the fees for anything done or permitted to
3 be done under the regulations;
4 (((k))) (e) Prescribing the kinds and quantities of liquor which
5 may be kept on hand by the holder of a special permit for the purposes
6 named in the permit, regulating the manner in which the same shall be
7 kept and disposed of, and providing for the inspection of the same at
8 any time at the instance of the board;
9 (((1))) (f) Regulating the sale of liquor kept by the holders of
10 licenses which entitle the holder to purchase and keep liquor for sale;
11 (-rn*)) (g1 Prescribing the records of purchases or sales of liquor
12 kept by the holders of licenses, and the reports to be made thereon to
13 the board, and providing for inspection of the records so kept;
14 (((n))) (h) Prescribing the kinds and quantities of liquor for
15 which a prescription may be given, and the number of prescriptions
16 which may be given to the same patient within a stated period;
17 (((o))) (i) Prescribing the manner of giving and serving notices
18 required by this title or the regulations, where not otherwise provided
19 for in this title;
20 (((p))) (1) Regulating premises in which liquor is kept for export
21 from the state, or from which liquor is exported, prescribing the books
22 and records to be kept therein and the reports to be made thereon to
23 the-board, and providing for the inspection of the premises and the
24 books, records and the liquor so kept;
25 (k) Prescribing the conditions and qualifications requisite
26 for the obtaining of club licenses and the books and records to be kept
27 and the returns to be made by clubs, prescribing the manner of
28 licensing clubs in any municipality or other locality, and providing
29 for the inspection of clubs;
30 (((r))) (1) Prescribing the conditions, accommodations and
31 qualifications requisite for the obtaining of licenses to sell beer
32 wines, and spirits and regulating the sale of beer
33 wines. and spirits, thereunder;
34 (((s))) (m) Specifying and regulating the time and periods when,
35 and the manner, methods and means by which manufacturers shall deliver
36 liquor within the state; and the time and periods when, and the manner,
37 methods and means by which liquor may lawfully be conveyed or carried
38 within the state;
10 (fode Rev /JA:ean 21 I- 2326.1/10
1 (((t))) (n) Providing for the making of returns by brewers of their
2 sales of beer shipped within the state, or from the state, showing the
3 gross amount of such sales and providing for the inspection of brewers'
4 books and records, and for the checking of the accuracy of any such
5 returns;
6 ((-f (o) Providing for the making of returns by the wholesalers
7 of beer whose breweries are located beyond the boundaries of the state;
8 (((v))) (p) Providing for the making of returns by any other liquor
9 manufacturers, showing the gross amount of liquor produced or
10 purchased, the amount sold within and exported from the state, and to
11 whom so sold or exported, and providing for the inspection of the
12 premises of any such liquor manufacturers, their books and records, and
13 for the checking of any such return;
14 (((w))) (a) Providing for the giving of fidelity bonds by any or
15 all of the employees of the board((. PROVIDED, That)) However. the
16 premiums therefor shall be paid by the board;
17 (((x))) (r) Providing for the shipment by mail or common carrier of
18 liquor to any ,person holding a permit and residing in any unit which
19 has, by election pursuant to this title, prohibited the sale of liquor
20 therein;
21 -{y-)) (s) Prescribing methods of manufacture, conditions of
22 sanitation, standards of ingredients, quality and identity of alcoholic
23 beverages manufactured, sold, bottled, or handled by licensees and the
24 board; and conducting from time to time, in the interest of the public
25 health and general welfare, scientific studies and research relating to
26 alcoholic beverages and the use and effect thereof;
27 (((z))) (t) Seizing, confiscating and destroying all alcoholic
28 beyerages manufactured, sold or offered for sale within this state
29 which do not conform in all respects to the standards prescribed by
30 this title or the regulations of the board((. PROVIDED,)). However.
31 nothing ((te 'gin ontaincd shall)) in this section may be construed as
32 authorizing the liquor board to prescribe, alter, limit or in any way
33 change the present law as to the quantity or percentage of alcohol used
34 in the manufacturing of wine or other alcoholic beverages.
35 Sec. 204. RCW 66.24.145 and 2010 c 290 s 2 are each amended to
36 read as follows:
37 (1) Any craft distillery may sell spirits of its own production for
Code Rev /JA:ean 22 I- 2326.1/10 107
1 consumption off the premises, up to two liters per person per day.
2 ((6i-r -ts 3c1d under thic subsection must b3
3 and uold at c retail price cstabli3hcd tha board.)) A craft
4 distillery selling spirits under this subsection must comply with the
5 applicable laws and rules relating to retailers.
6 (2) Any craft distillery may contract distill spirits for, and sell
7 contract distilled spirits to, holders of distillers' or manufacturers'
8 licenses, including licenses issued under RCW 66.24.520, or for export.
9 (3) Any craft distillery licensed under this section may provide,
10 free of charge, one -half ounce or less samples of spirits of its own
11 production to persons on the premises of the distillery. The maximum
12 total'per person per day is two ounces. Every person who participates
13 in any manner in the service of samples must obtain a class 12 alcohol
14 server permit. Spirits used for samples must be purchased from the
15 board.
16 (4) The board shall adopt rules to implement the alcohol server
17 permit requirement and may adopt additional rules to implement this
18 section.
19 (5) Distilling is an agricultural practice.
20 Sec. 205. RCW 66.24.160 and 1981 1st ex.s. c 5 s 30 are each
21 amended to read as follows:
22 A liquor importer's license may be issued to any qualified person,
23 firm or corporation, entitling the holder thereof to import into the"'
24 state any liquor other than beer or wine; to store the same within the
25 state, and to sell and export the same from the state; fee six hundred
26 dollars per annum. Such liquor importer's license shall be subject to
27 all conditions and restrictions imposed by this title or by the rules
28 and regulations of the board, and shall be issued only upon such terms
29 and conditions as may be imposed by the board. ((Nc, liqu�.r w
30 lice c shall be required in salvo to. t- .3 Washington otata 2. e-r
31 control board.))
32 Sec. 206. RCW 66.28.060 and 2008 c 94 s 7 are each amended to read
33 as follows:
34 Every distillery licensed under this title shall make monthly
35 reports to the board pursuant to the regulations. ((Ns such distillcry
lO 8ode Rev /JA:ean 23 1-2326.1/10
1 "'ate all- -ma;.c a mil' c yc. of spirits within thc ctatz of Washington .72, to
2 the board and as pro.idcd in RCW
3 Sec. 207. RCW 66.44.120 and 2005 c 151 s 11 are each amended to
4 read as follows:
5 (1) No person other than an employee of the board shall keep or
6 have in his or her possession any official seal prescribed under this
7 title, unless the same is attached to a package which has been
8 purchased from a ((liquor to cont- r -act liquor)) retail store; nor
9 shall any person keep or have in his or her possession any design in
10 imitation of any official seal prescribed under this title, or
11 calculated to deceive by its resemblance thereto, or any paper upon
12 which any design in imitation thereof, or calculated to deceive as
13 aforesaid, is stamped, engraved, lithographed, printed, or otherwise
14 marked.
15 (2)(a) Except as provided in (b) of this subsection, every person
16 who willfully violates this section is guilty of a gross misdemeanor
17 and shall be liable on conviction thereof for a first offense to
18 imprisonment in the county jail for a period of not less than three
19 months nor more than six months, without the option of the payment of
20 a fine, and for a second offense, to imprisonment in the county jail
21 for not less than six months nor more than one year, without the option
22 of the payment of a fine.
23 (b) A third or subsequent offense is a class C felony, punishable
24 by imprisonment in a state correctional facility for not less than one
25 year nor more than two years.
26 NEW SECTION. Sec. 208. The following acts or parts of acts are
27 each repealed:
28 (1) RCW 66.08.070 (Purchase of liquor by board Consignment not
29 prohibited Warranty or affirmation not required for wine or malt
30 purchases) and 1985 c 226 s 2, 1973 1st ex.s. c 209 s 1, 1933 ex.s.
31 c 62 s 67;
32 (2) RCW 66.08.075 (Officer, employee not to represent manufacturer,
33 wholesaler in sale to board) and 1937 c 217 s 5;
34 (3) RCW 66.08.160 (Acquisition of warehouse authorized) and 1947 c
35 134 s 1;
Code Rev /JA:ean 24 I- 2326.1/10 109
1 (4) RCW 66.08.165 (Strategies to improve operational efficiency and
2 revenue) and 2005 c 231 s 1;
3 (5) RCW 66.08.166 (Sunday sales authorized -Store selection and
4 other requirements) and 2005 c 231 s 2;
5 (6) RCW 66.08.167 (Sunday sales -Store selection) and 2005 c 231 s
6 4;
7 (7) RCW 66.08.220 (Liquor revolving fund Separate account-
8 Distribution) and 2009 c 271 s 4, 2007 c 370 s 15, 1999 c 281 s 2,
9 1949 c 5 s 11.;
10 (8) RCW 66.08.235 (Liquor control board construction and
11 maintenance account) and 2005 c 151 s 4, 2002 c 371 s 918, 1997 c 75
12 s 1;
13 (9) RCW 66.16.010 (Board may establish- -Price standards Prices in
14 special instances) and 2005 c 518 s 935, 2003 1st sp.s. c 25 s 928,
15 1939 c 172 s 10, 1937 c 62 s 1, 1933 ex.s. c 62 s 4;
16 (10) RCW 66.16.040 (Sales of liquor by employees Identification
17 cards Permit holders- -Sales for cash Exception) and 2005 c 206 s 1,
18 2005 c 151 s 5, 2005 c 102 s 1, 2004 c 61 s 1, 1996 c 291 s 1, 1995 c
19 16 s 1, 1981 1st ex.s. c 5 s 8, 1979 c 158 s 217, 1973 1st ex.s. c 209
20 s 3, 1971 ex.s. c 15 s 1, 1959 c 111 s 1, 1933 ex.s. c 62 s 7;
21 (11) RCW .66.1.6.041 (Credit and debit card purchases-- Rules
22 Provision, installation, maintenance of equipment by board-
23 Consideration of offsetting liquor revolving fund balance reduction)
24 and 2005 c 151 s 6, 2004 c 63 s 2, 1998 c 265 s 3, 1997 c 148 s 2, VI
25 1996 c 291 s 2;
26 (12) RCW 66.16.050 (Sale of beer and wine to person licensed to
27 sell) and 1933 ex.s. c 62 s 8;.
28 (13) RCW 66.16.060 (Sealed packages may be required, exception) and
29 1943 c 216 s 1 1933 ex.s. c 62 s 9;
30 (14) RCW 66.16.070 (Liquor cannot be opened or consumed on store
31 premises) and 1933 ex.s. c 62 s 10;
32 (15) RCW 66.16.100 (Fortified wine sales) and 1997 c 321 s 42
33 1987 c 386 s 5;
34 (16) RCW 66.16.110 (Birth defects from alcohol Warning required)
35 and 1993 c 422 s 2;
36 (17) RCW 66.16.120 (Employees working on Sabbath) and 2005 c 231 s
37 5;
11Ccode Rev /JA:ean 25 1- 2326.1/10
1 (18) RCW 66.28.045 (Furnishing samples to board Standards for
2 accountability Regulations) and 1975 1st ex.s. c 173 s 9; and
3 (19) RCW 82.08.150 (Tax on certain sales of intoxicating liquors-
4 Additional taxes for specific purposes Collection) and 2009 c 479 s
5 65, 2005 c 514 s 201, 2003 c 167 s 11, 1998 c 126 s 16, 1997 c 321 s
6 55, 1994 sp.s. c 7 s 903, 1993 c 492 s 310, 1989 c 271 s 503, 1983 2nd
7 ex.s. c 3 s 12, 1982 1st ex.s. c 35 s 3, 1981 1st ex.s. c 5 s 25, 1973
8 1st ex.s. c 204 s 1, 1971 ex.s. c 299 s 9, 1969 ex.s. c 21 s 11, 1965
9 ex.s. c 173 s 16, 1965 c 42 s 1, 1961 ex.s. c 24 s 2, 1961 c 15 s
10 82.08.150.
11 PART III
12 MISCELLANEOUS PROVISIONS
13 NEW SECTION. Sec. 301. The office of the code reviser must
14 prepare legislation to be introduced during the firtht session following
15 the 2010 general election that removes all statutory references to the
16 term "state liquor store." The effective date of such legislation must
17 be April 1, 2012.
18 NEW SECTION. Sec. 302. If any provision of this act or its
19 application to any person or circumstance is held invalid, the
20 remainder of the act or the application of the provision to other
21 persons or circumstances is not affected.
22 NEW SECTION. Sec. 303. Nothing in this act shall be construed to
23 affect or diminish the rights of tribes or military installation
24 operated by or for any of the armed forces within the geographical
25 boundaries of the state of Washington with respect to the sale or
26 purchase of spirits. The liquor control board must prepare a report to
27 the legislature by January 1, 2011, on a recommended means to carry out
28 the intent of this section.
29 NEW SECTION. Sec. 304. Sections 201 through 204, 207, and 208 of
30 this act take effect April 1, 2012.
END
Code Rev/JA:ean 26 1-2326.1/10 111
112
Attachment E
State of Washington 2010 General Election
Online Voters' Guide Excerpt Regarding
Initiative 1100
113
Initiative Measure 1100
Ballot Tide
Full Text
Initiative Measure No. 1100 concerns liquor (beer, wine and spirits).
This measure would close state liquor stores; authorize sale, distribution, and importation of
spirits by private parties; and repeal certain requirements that govern the business
operations of beer and wine distributers and producers.
Should this measure be enacted into law?
Yes
No
The Official Ballot Title and the Explanatory Statement were written by the Attorney General
as required by law. The Fiscal Impact Statement was written by the Office of Financial
Management as required by law. The Secretary of State is not responsible for the content of
arguments or statements (WAC 434 381 -180).
Fiscal Impact Statement
Fiscal Impact
Fiscal impact cannot be precisely estimated because the private market will determine
spirits bottle cost and markup. Using a range of assumptions, total state revenues decrease
an estimated $76 million -$85 million and total local revenues decrease an estimated $180
million -$192 million, both over five fiscal years. One -time net state revenue gain of $27.8
million is estimated from sale of the state liquor distribution center. One -time state costs
are estimated at $38.6 million. Ongoing state costs for tax collection are estimated at
$426,000.
General Assumptions
The initiative uses the term "spirits" to describe alcoholic beverages that are distilled
instead of fermented. For purposes of the fiscal impact statement, the term "liquor" is
used for "spirits" to maintain consistent terminology. Beer and wine are not spirits or
liquor.
Estimates are described using the state's fiscal year (FY) of July 1 through June 30.
A new liquor distributor license is available January 1, 2011, and a new liquor retail
license is available June 1, 2011; licensees can begin making sales of liquor on these
dates. There is no limit on the number of licenses that can be issued.
By June 15, 2011, the state will no longer operate the state liquor distribution center
or state liquor stores.
Estimates assume 3,357 licensed liquor retailers, based on the January 2010 State
Government Performance Review by the Washington State Auditor (State Auditor
review). Estimates assume 177 licensed liquor distributors based on the number of
current Washington State Liquor Control Board (LCB) licensed beer and wine
distributors.
Estimates of impacts are measured against the June 2010 LCB revenue forecast
(forecast).
Retail liquor liter sales are estimated to grow 5 percent from increased access to
liquor. This assumption is based on an academic study and growth experienced in
Alberta, Canada, after converting from state liquor stores to private liquor stores.
Additional growth in liquor liter sales is estimated using the forecast price elasticity
assumption of 0.49 percent. Price elasticity is a method used to calculate the change in
consumption of a good when price increases or decreases. For every 1 percent
increase /decrease in price, liquor liter sales increase /decrease 0.49 percent. Growth
from increased access and price elasticity is in addition to normal 3 percent growth in
liquor liter sales assumed in the forecast.
114
State and Local Revenues
Actual fiscal impacts depend on liquor bottle cost in the private market and the markup
applied by both private liquor distributors and retailers. Therefore, there is a wide range of
potential fiscal impacts. Using the LCB forecast's average bottle price for a liter of liquor
(before taxes and markup) and a range of total private distributor /retailer markup (at 25
percent, 39.2 percent and 45 percent), a range of potential state and local revenue impacts
is estimated.
The range of markup was selected from the following sources:
25 percent is based on U.S. Internal Revenue Service data (sales revenue minus cost
of goods) of retail food, beverage and liquor stores throughout the United States.
39.2 percent is forecasted state markup beginning July 1, 2011.
45 percent is the total liquor markup contained in the State Auditor review and is
based on information from the Distilled Spirits Council of the United States.
Over five fiscal years, total state revenues are estimated to decrease in the range of $76
million to $85 million, as shown in the table below.
Total State Revenues
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
State
Revenue
Revenue ($2,633,000) ($20,731,000) ($16,410,000) ($20,350,000) ($24,481,000) ($84,605,000)
Markup
State
Revenue
39.20/0 ($2,231,000) ($17,264,000) ($15,669,000) ($19,458,000) ($23,427,000) ($78,049,000)
Markup
State
Revenue
Revenue ($15,983,000) ($15,538,000) ($19,274,000) ($23,187,000) ($76,049,000)
Markup
Under current law, counties and cities receive a share of state liquor board profits and state
liquor excise tax collections. Therefore, counties and cities will also experience revenue
decreases estimated in the range of $180 million to $192 million over five fiscal years, as
shown below.
Total Local Revenues
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
Local
Revenue
Revenue ($6,319,000) ($41,361,000) ($43,675,000) ($48,118,000) ($52,774,000) ($192,247,000)
Markup
Local
Revenue
39.20/0 ($6,183,000) ($39,041,000) ($41,576,000) ($45,914,000) ($50,458,000) ($183,172,000)
Markup
Local
Revenue
ven ($6,127,000) ($38,139,000) ($40,786,000) ($45,084,000) ($49,586,000) ($179,722,000)
Markup
11 5
The range of Total State Revenues and Total Local Revenues is the sum of revenue gains,
revenue losses or no revenue impact from the following assumptions:
The initiative sets a $2,000 annual liquor distributor license fee and a $1,000 annual
liquor retailer license fee. The number of licenses is assumed to be constant for each
fiscal year.
Liquor distributor licensees are assumed to be subject to the wholesaling business and
occupation (B &O) tax. Liquor retailer licensees are assumed be subject to the retailing
B &O tax.
Liquor liter taxes and liquor sales taxes are not amended by the initiative, However, a
10 percent tax on the selling price of liquor to restaurant licensees and an additional
1.4 percent tax on the same sales are effectively repealed with the closure of the
state's liquor distribution center and state liquor stores. The initiative includes a 10
percent tax on the same sales through licensed liquor distributors and retailers, and is
assumed to replace a portion of these taxes.
Except for the loss of sales in state liquor stores, estimates do not assume any change
in pricing or volume of sales of beer and wine.
State liquor stores sell Washington State Lottery products to the public. The estimate
assumes 25 percent of these sales will be lost and remaining sales will occur in other
outlets selling Washington State Lottery products.
Estimates of sales by current restaurant licensees who sell liquor at retail are limited to
changes from price elasticity and the Toss of the state's 15 percent quantity price
discount to these licensees.
Estimates do not assume any change in sales by liquor stores operated on military
bases. Such sales are assumed not to be subject to liquor liter taxes, liquor sales taxes
or B &O tax.
Estimates do not assume any change in sales by liquor stores operated by tribes. Such
sales are assumed to be subject to liquor liter taxes and liquor sales taxes based on
current agreements between tribes and LCB, but are not subject to B &O tax.
No additional change is assumed for tax avoidance /non compliance by consumers or
migration of sales in and out of state by consumers. These items are assumed in the
forecast price elasticity assumption.
Revenue from the state markup used to pay for the state liquor distribution center and
state liquor store costs are netted to zero. The initiative eliminates both the revenue
(markup) and the costs (state liquor distribution center and state liquor stores), which
results in no additional revenue to the state.
Total amounts include other decreased distributions from the Liquor Revolving Fund.
Approximately 38 cities and towns impose a local B &O tax. Because it is not known
where liquor distributor and liquor retailer licensees will locate, the amount of revenue
generated from local B &O tax is indeterminate and not included in the estimate.
The sale of the state liquor distribution center is estimated to generate a potential net $27.8
million in revenue. Because sale date cannot be precisely determined, this revenue is stated
separately and excluded from the Total State Revenue estimates above. The value of the
state liquor distribution center is estimated to be $20.8 million, based on King County
Assessor's Office 2010 assessed value of the property. The sale of the equipment in the
state liquor distribution center is estimated to be $8 million, based on the Washington State
Auditor review, which assumed the sale of $16 million in assets would return about $8
million. Costs to sell the state liquor distribution center are estimated to total $1 million at
the time of sale.
State and Local Expenditures
Total state revenues will be deposited into two state accounts: the State General Fund and
the State Opportunity Pathways Account. Below are tables that show the estimated net
revenue loss to each account by fiscal year. Revenue to the State Opportunity Pathways
116
Account is not dependent on the total private liquor distributor /retailer markup, and
therefore, the estimated revenue Toss to this account will not vary.
In addition to revenue from liquor board profits and liquor excise taxes, revenue from beer,
wine and other business enterprise activities are deposited into the Liquor Revolving Fund.
A portion of revenues in the Liquor Revolving Fund in excess of LCB expenses are deposited
into the State General Fund according to a statutory formula. The impact to the State
General Fund shown in the table below exceeds Total State Revenues because distributions
that would otherwise be deposited into the State General Fund are assumed to remain in
the Liquor Revolving Fund for LCB expenses. The amount is estimated at $10 million for
each fiscal year beginning in FY 2012. State General Fund revenue can be used for any
governmental purpose, and therefore, the impact of decreased revenue on state
expenditures will be determined by the Legislature.
State General Fund Impact
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
State
General
Fund ($2,620,000) ($30,410,000) ($26,089,000) ($30,019,000) ($34,140,000) ($123,278,000)
25%
Markup
State
General
Fund ($2,218,000) ($26,943,000) ($25,348,000) ($29,127,000) ($33,086,000) ($116,722,000)
39.2%
Markup
State
General
Fund ($2,054,000) ($25,662,000) ($25,217,000) ($28,943,000) ($32,846,000) ($114,722,000)
45%
Markup
Washington State Lottery proceeds in excess of expenses are deposited into the State
Opportunity Pathways Account to support programs such as State Need Grant, State Work
Study awards, Washington Scholars and Washington Award for Vocational Excellence. Funds
from the account may also be used to support early learning programs. Over five fiscal
years, it is estimated that funds to this account will decrease $1,327,000.
State Opportunity Pathways Account Impact
Fiscal Year 1 2011 1 2012 1 2013 1 2014 1 2015 1 TOTAL 1
State
Opportunity ($13,000) ($321,000) ($321,000) ($331,000) ($341,000) ($1,327,000)
Pathways
Account
The initiative requires liquor license revenue to be used only for purposes of the
administration and enforcement of liquor licenses and reducing underage or abusive
consumption. Therefore, an estimated $3.7 million each fiscal year is assumed to be spent
on LCB liquor license administration and enforcement activities.
Like the State General Fund, counties and cities receive a share of revenue from the Liquor
Revolving Fund. Therefore, in addition to decreased liquor profits and liquor excise taxes,
other reduced distributions from the Liquor Revolving Fund affect counties and cities. The
amount is estimated at $10 million for each fiscal year beginning in FY 2012. RCW
70.96A.087 requires each county and city to spend 2 percent of its share of state liquor
board profits and state liquor excise taxes on alcohol and chemical dependency services,
and these expenditures will decrease. The remaining revenue can be used for any allowable
117
local government purpose. Therefore, the impact of decreased revenue on local government
expenditures will be determined at the local level.
Total Local Impact
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
Local
Revenue
250/0 ($6,319,000) ($41,361,000) ($43,675,000) ($48,118,000) ($52,774,000) ($192,247,000)
Markup
Local
Revenue
39.20/0 ($6,183,000) ($39,041,000) ($41,576,000) ($45,914,000) ($50,458,000) ($183,172,000)
Markup
Local
Revenue
450/0 ($6,127,000) ($38,139,000) ($40,786,000) ($45,084,000) ($49,586,000) ($179,722,000)
Markup
State and Local Cost Estimate Assumptions
This fiscal impact statement does not estimate state costs or state savings due to social
impacts from approval of the initiative.
One -Time Costs
Assuming a closure date of June 15, 2011, LCB will incur one -time state costs associated
with managing the closure of the state liquor distribution center and state liquor stores.
There will be additional one -time costs for issuing new licenses. These state costs are
estimated to total $30 million during FYs 2011 and 2012:
Unemployment, sick leave and vacation buyout costs for state employees
estimated at $11.8 million.
Information technology changes and staff to issue new licenses estimated at $4.7
million.
Staffing costs to coordinate the sale of existing inventory, termination of contract
store leases, and to surplus store fixtures estimated at $10.2 million.
Final audits of each state and contract liquor store estimated at $1.9 million.
Project management and additional human resource staff estimated at $1.4
million.
The Washington State Department of Revenue will assume administration of the liquor
excise tax collection from 3,534 licensed liquor distributors and retailers. Costs include
additional staff, information technology changes, rule making and policy activities, taxpayer
mailings and workshops, supplies and materials. Total one -time state costs are estimated to
total $313,000 during FYs 2011 and 2012.
There is $8.32 million in debt service costs for a Certificate of Participation bond for the
state liquor distribution center that is scheduled to be paid by December 1, 2013. This one-
time state cost is assumed in FY 2012.
Ongoing Costs
The LCB costs at current levels for the licensing, enforcement and administration for all
entities licensed by LCB are assumed to be paid from other revenue sources deposited into
the Liquor Revolving Fund. No state costs from increased enforcement activities are
assumed in the estimate.
State costs associated with the state liquor distribution center and state liquor stores
operations are not assumed as savings because the revenue source (state markup) used to
118
pay these costs is eliminated by the initiative. These costs are netted out of the revenue
impacts.
The Washington State Department of Revenue will have ongoing costs related to liquor
excise tax collection duties that are estimated to total $426,000 for FYs 2013 -2015. No
costs or savings for tax collection are assumed for local governments.
_!Explanatory Statement
The Law As It Presently Exists
Currently, the state controls the sale and distribution of spirits in Washington. The term
"spirits" refers to the alcoholic beverages commonly called "hard liquor" (whiskies, vodka,
gin, etc.), any beverage containing distilled alcohol (except flavored malt beverages), and
wines exceeding twenty -four percent alcohol by volume. Spirits are sold at retail by state
liquor stores and contract liquor stores (which are businesses selling liquor on behalf of the
state through a contract with the state). Spirits are distributed within Washington by the
state Liquor Control Board. The Board purchases spirits from manufacturers, distillers, and
suppliers, furnishes spirits to state liquor stores, and sells spirits directly to authorized
purchasers, such as restaurants. Spirits manufacturers, distillers, and suppliers may sell
spirits within the state only to the Board.
The Liquor Control Board is responsible for the general control, management, and
supervision of all state liquor stores and contract stores, as well as the state's spirits
distribution operation. The Board regulates the kind, character, and location of liquor
advertising. The Board is not authorized to advertise its sales of spirits.
The Liquor Control Board sets prices for spirits based on wholesale cost, a markup by the
Board, and taxes. The net proceeds from the markup on the sales of spirits are distributed
to the state, cities, and counties, according to formulas set by state law. A variety of taxes
are imposed on the retail sale of spirits. The generally applicable retail sales tax does not
apply to spirits. The tax revenues from sales of spirits are distributed to the state, cities,
counties, and to fund specific state and local programs, according to formulas established by
state law.
Under existing law, private parties who are licensed may sell and distribute beer and wine
not exceeding twenty -four percent alcohol by volume. Private beer and wine license holders
operate under a "three -tier system Under the three -tier system, there are separate
licenses for (1) manufacturing, (2) distributing, and (3) retailing of beer and wine. The
three -tier system regulates the financial relationships and business transactions between
licensed parties in the three tiers. Retailers are allowed to purchase beer and wine only from
licensed distributors, with certain exceptions, and licensed distributors are allowed to
purchase only from licensed manufacturers, with certain exceptions. The licensed
distributors and manufacturers are required to maintain and adhere to published price lists
and to offer uniform pricing to all customers on a statewide basis. Uniform pricing precludes
a distributor from selling spirits at a discount to individual retailers if the same price is not
available to other retailers, and similarly precludes a manufacturer from making discounted
sales to individual wholesalers.
The Effects Of The Proposed Measure If Approved
If approved, Initiative 1100 would direct the Liquor Control Board to close all state liquor
stores, to terminate contracts with the private contract liquor stores, and to shut down the
state's spirits distribution operation. It would allow licensed private parties to sell spirits as
retailers or distributors, and it would terminate the state's authority to sell spirits. This
would eliminate the net proceeds from the Board's markup on sales of spirits at state liquor
stores and contract liquor stores, which are distributed to the state, cities, and counties.
Initiative 1100 would retain existing taxes on the sales of spirits, with minor modifications.
11
Initiative Measure 1100 would change the Liquor Control Board's powers. It would eliminate
the Board's authority to manage liquor stores, distribute spirits, set spirit prices, and require
the Board to close state stores by December 31, 2011. The measure would limit the Board's
rulemaking powers to regulation of licensing matters, taxation, and the prevention of
abusive consumption and underage drinking. The Board's authority to regulate the kind,
character, and location of advertising of liquor would be subject to new limitations.
Initiative 1100 would authorize the Board to license private entities to sell spirits at retail, to
distribute spirits to retailers, and to manufacture or import spirits in Washington. With
exceptions, license holders would pay annual licensing fees. The licensing fees would be
used for the costs of administration, for enforcement of licensing laws, and to reduce
abusive consumption of alcohol and underage drinking.
Under Initiative 1100, a "general liquor retailer's license" would allow the license holder to
sell spirits, beer, and wine at retail. This retailing license would be available to any person
who applies for the license, meets requirements, and pays the necessary licensing fee. In
addition, any grocery store or specialty store with a beer and /or wine license in good
standing could pay a fee and obtain a general liquor retailer's license, which would allow
sales of spirits. All of the stores that formerly sold spirits under a contract with the state
could obtain a general liquor retailer's license without paying a fee.
A "general liquor distributor's license" would allow the license holder to distribute beer,
wine, and spirits obtained from authorized sources, such as licensed manufacturers and
importers. Current holders of a beer or wine distributor license could obtain a general liquor
distributor's license allowing distribution of spirits by paying a licensing fee. A person could
also obtain a spirits distributor license to distribute only spirits. A licensed distillery or
manufacturer could act as a distributor and retailer of its own products.
Under Initiative 1100, spirits could be produced under a distillery license or manufacturer's
license, subject to regulation by the Board. A license for spirits importers would allow the
import and export of spirits, subject to regulation by the Board. Other licenses or certificates
of approval would allow a distiller or manufacturer of spirits outside the state to sell and
ship spirits into the state.
Initiative 1100 also changes the laws that regulate the importation, distribution, delivery,
and retail sales of beer and wine. Initiative Measure 1100 would eliminate the existing
three -tier regulatory system for beer and wine that, in general, requires licensed
manufacturers to sell only to licensed distributors, and licensed distributors to sell only to
licensed retailers. It would repeal the uniform pricing requirement that requires each
manufacturer to offer beer or wine at a uniform price to all distributors and requires each
distributor to offer beer and wine at a uniform price to all retailers.
.;Statements For and Against
Statement For Statement Against
I -1100: The best way to end the state Initiative 1100 completely deregulates sales
liquor monopoly and enforcement of hard liquor, beer and
As part of a modernization of law concerning wine, threatening public safety and costing
beer, wine and liquor, I -1100 ends the taxpayers millions.
state's monopoly on liquor sales, in the best
interests of consumers. It directs the Liquor More Hard Liquor Consumption, More
Board to concentrate on enforcement of Problems
liquor laws, such as prohibiting underage Under this scheme hard liquor outlets will
drinking, rather than devote its time and explode from 315 to 3,300, three times more
financial resources to marketing distilled per person than California. More than 2,000
spirits. The state has no business promoting convenience stores, neighborhood mini
120
and profiting from the sale of liquor. marts, and gas stations many near
schools and in high crime areas will sell
I -1100 stops the state's 51.9 percent liquor until 2 am. More consumption means
mark -up more drunk driving, underage drinking and
Washington has the highest liquor taxes in crime.
the nation. In addition to high taxes, the
state also charges a profit margin of 51.9 1100 Goes Too Far
percent on each liter of alcohol it sells. I- I -1100 threatens public safety, wiping out
1100 will end the monopoly profits that alcohol regulation, including enforcement,
make ours the most expensive liquor in the making Washington the most deregulated
country. I -1100 would allow retailers to state in the country. Washington currently
purchase directly from manufacturers rather ranks #1 in keeping hard liquor out of the
than accepting additional costs of a hands of minors, but private outlets like
middleman. mini -marts are 400% more likely to sell
liquor to minors, according to Liquor Control
I -1100 creates private sector jobs Board data.
Closing state liquor stores creates hundreds
of new private sector jobs. 1100 Costs Taxpayers
State sales generate over $350 million
I -1100 improves competition annually, funding for local schools, health
Old laws protect distributors from care, police, firefighters, and alcohol and
competition and stifle innovation. 1100 ends drug abuse prevention. 1100 will wipe out
Prohibition era laws, improving competition much of that revenue, meaning fewer
for consumers. services, higher taxes, or both. Given our
budget crisis now isn't the time to lose these
Ending state liquor sales and making resources.
enforcement of liquor laws the primary
responsibility of the Liquor Control Board is And 1100 makes it harder for Washington's
the best way to protect our kids and ensure small businesses to compete. Big out -of-
fair competition. Please vote yes on I -1100. state corporations will be given an unfair
competitive advantage over our local craft
breweries and wineries costing us jobs
when we can least afford it.
The Washington State Firefighters,
Washington Association of Churches, law
enforcement leaders and many others agree:
Vote no on I -1100.
Rebuttal of Statement Against Rebuttal of Statement For
Opposition is really about money, not public
safety. I -1100 closes state liquor stores and 1100 creates an explosion of liquor outlets,
returns state's focus where it belongs: to 3,300. Hard liquor will be available at
enforcement of liquor laws. I -1100 provides convenience stores and mini marts, which
choice and convenience to consumers and are 400% more likely to sell to kids. It wipes
grows private sector jobs. Taxes remain but out enforcement funding, and an
price gouging ends. Local zoning controls independent analysis found 1100 slashes
where stores are located. California has $275 million from services like schools and
private liquor sales and fewer alcohol related public safety. Washington's craft brewers and
driving deaths per capita than Washington. winemakers oppose, because it threatens
The facts are clear; wild opposition claims their ability to compete and create jobs.
are baseless. I -1100 makes sense. 1100: too risky, goes too far. Vote no.
Statement Prepared By Statement Prepared By
Jim Siinegal, CEO, Costco Wholesale Jim Cooper, Washington Association for
121
Corporation; Anthony Anton, Substance Abuse and Violence Prevention;
President /CEO of 5000 Member Washington Alice Woldt, Executive Director, Washington
Restaurant Association; Paul Beveridge, Association of Churches; Kelly Fox,
President, Family Wineries of Washington, President, Washington State Council of
Owner, Wildridge Winery. Firefighters; John Lovick, Snohomish
County Sheriff, Sharon Ness, RN, Acute
For more information: Care Nurse, Craig Sousie, Emergency
(206) 381 -5396 Medical Technician, Renton Fire and
www.vesto1100.com/ Emergency Services.
For more information:
info @.orotectourcommunities.com
www.orotectourcommunities.com/
122
Attachment F
State of Washington 2010 General Election
Online Voters' Guide Excerpt Regarding
Initiative 1105
123
Initiative Measure 1105
Ballot Title
Full Text
Initiative Measure No. 1105 concerns liquor (beer, wine and spirits).
This measure would close all state liquor stores and license private parties to sell or
distribute spirits. It would revise laws concerning regulation, taxation and government
revenues from distribution and sale of spirits.
Should this measure be enacted into law?
Yes
No
The Official Ballot Title and the Explanatory Statement were written by the Attorney General
as required by law. The Fiscal Impact Statement was written by the Office of Financial
Management as required by law. The Secretary of State is not responsible for the content of
arguments or statements (WAC 434 381 -180).
_-"Fiscal Impact Statement
Fiscal Impact
Fiscal impact cannot be precisely estimated because the private market will determine
spirits bottle cost and markup. Using a range of assumptions, total state revenues decrease
an estimated $486 million -$520 million and total local revenues decrease an estimated
$205 million -$210 million, both over five fiscal years. One -time net state revenue gain of
$27.8 million is estimated from sale of the state liquor distribution center. One -time state
costs are estimated at $39.2 million.
General Assumptions
The initiative uses the term `spirits" to describe alcoholic beverages that are distilled
instead of fermented. For purposes of the fiscal impact statement, the term `liquor" is
used for "spirits" to maintain consistent terminology. Beer and wine are not spirits or
liquor.
Estimates are described using the state's fiscal year (FY) of July 1 through June 30.
A new liquor distributor license is available October 1, 2011, and a new liquor retail
license is available November 1, 2011; licensees can begin making sales of liquor on
these dates. There is no limit on the number of licenses that can be issued.
By November 15, 2011, the state will no longer operate the state liquor distribution
center or state liquor stores.
Estimates assume 3,357 licensed liquor retailers, based on the January 2010 State
Government Performance Review by the Washington State Auditor (State Auditor
review). Estimates assume 177 licensed liquor distributors based on the number of
current Washington State Liquor Control Board (LCB) licensed beer and wine
distributors.
Estimates of impacts are measured against the June 2010 LCB revenue forecast
(forecast),
Retail liquor liter sales are estimated to grow 5 percent from increased access to
liquor. This assumption is based on an academic study and growth experienced in
Alberta, Canada, after converting from state liquor stores to private liquor stores.
Additional growth in liquor liter sales is estimated using the forecast price elasticity
assumption of 0.49 percent. Price elasticity is a method used to calculate the change in
consumption of a good when price increases or decreases. For every 1 percent
increase /decrease in price, liquor liter sales increase /decrease 0.49 percent. Growth
from increased access and price elasticity is in addition to normal 3 percent growth in
liquor liter sales assumed in the forecast.
124
State and Local Revenues
Actual fiscal impacts depend on liquor bottle cost in the private market and the markup
applied by both private liquor distributors and retailers. Therefore, there is a wide range of
potential fiscal impacts. Using the LCB forecast's average bottle price for a liter of liquor
(before taxes and markup) and a range of total private distributor /retailer markup (at 25
percent, 39.2 percent and 45 percent), a range of potential state and local revenue impacts
is estimated.
The range of markup was selected from the following sources:
25 percent is based on U.S. Internal Revenue Service data (sales revenue minus cost
of goods) of retail food, beverage and liquor stores throughout the United States.
39.2 percent is forecasted state markup beginning July 1, 2011.
45 percent is the total liquor markup contained in the State Auditor review and is
based on information from the Distilled Spirits Council of the United States.
State Revenue
Over five fiscal years, total state revenues are estimated to decrease in the range of $486
million to $520 million.
Total State Revenues
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
State
Revenue
Revenue ($25,076,000) ($156,695,000) ($164,793,000) ($173,204,000) ($519,768,000)
Markup
State
Revenue
39.2 ($0) ($21,257,000) ($150,120,000) ($157,886,000) ($165,947,000) ($495,210,000)
Markup
State
Revenue
Revenue ($0) ($19,731,000) ($147,640,000) ($155,281,000) ($163,210,000) ($485,862,000)
Markup
Local Revenue
Under current law, counties and cities receive a share of state liquor board profits, state
liquor excise tax collections. The initiative eliminates these revenue sources on April 1,
2012. Beginning April 1, 2012, retail sales tax would apply to sales of liquor. Many local
governments are authorized to impose a local sales tax. Local sales tax will offset some of
the revenue lost to counties and cities from the elimination of LCB profits and state liquor
excise tax sharing. Other local governments authorized to impose a local sales tax, such as
transit districts and public facilities districts, will gain new revenue. Below is a table that
shows the net revenue impact to local governments statewide:
Total Local Revenues
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
Local
Revenue
Revenue ($0) ($29,227,000) ($55,095,000) ($60,257,000) ($65,667,000) ($210,246,000)
Markup
Local
Revenue
39.2 ($0) ($28,897,000) ($53,989,000) ($59,095,000) ($64,446,000) ($206,427,000)
Markup
Local
Revenue
Revenue ($0) ($28,765,000) ($53,571,000) ($58,656,000) ($63,985,000) ($204,977,000)
Markup
125
Below are tables that show the impacts by revenue source. Because it is not known where
liquor distributor and retailer licensees will locate, the amount of revenue generated from
local sales tax cannot be determined by local jurisdiction. Local revenues are a statewide
estimate based on an assumption of a 2.392 percent statewide average local sales tax rate
with county sales tax representing 33 percent of the rate, cities representing 34 percent of
the rate and other jurisdictions authorized to impose a sales tax representing 33 percent of
the rate. Sales tax revenue is dependent on volume of liquor liter sales. Therefore, the
revenue impact to each local jurisdiction will vary depending on the total markup applied by
both liquor distributors and retailers.
City and County Revenues from Liquor Profits, Liquor Excise Tax and other Revenue
Fiscal Year 1 2011 1 2012 1 2013 I 2014 1 2015 1 TOTAL 1
City /County ($0) ($32,646,000) ($70,877,000) (76,826,000) ($83,063,000) ($263,412,000)
Revenues
Local Retail Sales Tax Revenues
Fiscal Year 1 2011 1 2012 1 2013 1 2014 1 2015 1 TOTAL 1
Local
Revenue ($0) $3,419,000 $15,782,000 $16,569,000 $17,396,000 $53,166,000
25% Markup
Local
Revenue
39.2% ($0) $3,749,000 $16,888,000 $17,731,000 18,617,000 $56,985,000
Markup
Local
Revenue ($0) $3,881,000 $17,305,000 $18,170,000 $19,078,000 $58,434,000
45% Markup
Additional State and Local Revenue Assumptions
The range of Total State Revenues and Total Local Revenues is the sum of revenue gains,
revenue losses or no revenue impact from the following assumptions:
The initiative provides that LCB must set a reasonable annual license fee for liquor
distributors and liquor retailers. For purposes of this fiscal impact statement, the fee is
assumed to be $4,000 for a liquor distributor license and $2,000 for a liquor retailer
license. The number of licenses is assumed to be constant for each fiscal year.
Liquor distributor licensees are assumed to be subject to the wholesaling business and
occupation (B &O) tax. Liquor retailer licensees are assumed to be subject to the
retailing B &O tax.
Liquor liter taxes and liquor sales taxes are repealed by the initiative on April 1, 2012.
It is assumed that liquor retailer licensees will collect and remit liquor liter taxes and
liquor sales tax until March 31, 2012. Beginning April 1, 2012, liquor sales will be
subject to state and local retail sales tax.
Each liquor distributor licensee must agree to pay, for deposit into the State General
Fund, an amount equivalent to 1 percent of the licensee's gross annual liquor sales for
a five -year period commencing on the date of the licensee's first sale of liquor.
Likewise, each liquor retailer licensee must agree to pay, for deposit into the State
General Fund, an amount equivalent to 6 percent of the licensee's gross annual liquor
sales for a five -year period commencing on the date of the licensee's first sale of
liquor.
Except for the loss of sales in state liquor stores, estimates do not assume any change
in pricing or volume of sales of beer and wine.
State liquor stores sell Washington State Lottery products to the public. The estimate
assumes 25 percent of these sales will be lost and remaining sales will occur in other
outlets selling Washington State Lottery products.
Estimates of sales by current restaurant licensees who sell liquor at retail are limited to
changes from price elasticity and the loss of the state's 15 percent quantity price
discount to these licensees.
126
Estimates do not assume any change in sales by liquor stores operated on military
bases. Such sates are assumed not to be subject to liquor liter taxes, liquor sales taxes
or B &O tax.
Estimates of sales by liquor stores operated by tribes are limited to changes from price
elasticity. Such sales are assumed to be subject to liquor liter taxes and liquor sales
taxes based on current agreements between tribes and LCB. Sales to non tribal
members are subject to retail sales tax. All sales are not subject to B &O tax.
No additional change is assumed for tax avoidance /non compliance by consumers or
migration of sales in and out of state by consumers. These items are assumed in the
forecast price elasticity assumption.
Revenue from the state markup used to pay for the state liquor distribution center and
state liquor store costs are netted to zero. The initiative eliminates both the revenue
(markup) and the costs (state liquor distribution center and state liquor stores), which
results in no additional revenue to the state.
Totals amount includes other decreased distributions from the Liquor Revolving Fund.
Approximately 38 cities and towns impose a local B &O tax. Because it is not known
where liquor distributor and liquor retailer licensees will locate, the amount of revenue
generated from local B &O tax is indeterminate and not included in the estimate.
The sale of the state liquor distribution center is estimated to generate a potential net $27.8
million in revenue. Because sale date cannot be precisely determined, this revenue is stated
separately and excluded from the Total State Revenue estimates above. The value of the
state liquor distribution center is estimated to be $20.8 million, based on King County
Assessor's Office 2010 assessed value of the property. The sale of the equipment in the
state liquor distribution center is estimated to be $8 million, based on the Washington State
Auditor report, which assumed the sale of $16 million in assets would return about $8
million. Costs to sell the state liquor distribution center are estimated to total $1 million at
the time of sale.
State and Local Expenditures
Total state revenues will be deposited into three state accounts: the State General Fund,
the State Opportunity Pathways Account and the Performance Audits of Government
Account. The revenue gain to the Performance Audits of Government Account is expected to
be minimal, and therefore is not included in the estimates. The following tables show the
estimated net revenue impact to the State General Fund and the State Opportunity
Pathways Account. Revenue to the State Opportunity Pathways Account is not dependent on
the total private liquor distributor /retailer markup, and therefore the estimated revenue loss
to this account will not vary.
In addition to revenue from liquor board profits and liquor excise taxes, revenue from beer,
wine and other business enterprise activities are deposited into the Liquor Revolving Fund.
A portion of revenues in the Liquor Revolving Fund in excess of LCB expenses are deposited
into the State General Fund according to a statutory formula. The impact to the State
General Fund shown in the table below exceeds Total State Revenues because distributions
that would otherwise be deposited into the State General Fund are assumed to remain in
the Liquor Revolving Fund for LCB expenses. The amount is estimated at $7 million for each
fiscal year beginning in FY 2012. State General Fund revenue can be used for any
governmental purpose, and therefore, the impact of decreased revenue on state
expenditures will be determined by the Legislature.
127
State General Fund Impact
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
State
General
Fund ($0) ($31,875,000) ($163,373,000) ($171,462,000) ($179,863,000) ($546,573,000)
25%
Markup
State
General
Fund ($0) ($28,056,000) ($156,799,000) ($164,555,000) ($172,606,000) ($522,016,000)
39.2%
Markup
State
General
Fund ($0) ($26,530,000) ($154,319,000) ($161,950,000) ($169,869,000) ($512,668,000)
45%
Markup
The initiative requires liquor license revenue to be used only for purposes of the
administration and enforcement of liquor licenses and reducing underage or abusive
consumption. Therefore, an estimated $7.4 million each fiscal year is assumed to be spent
on LCB liquor license administration and enforcement activities.
Washington State Lottery proceeds in excess of expenses are deposited into the State
Opportunity Pathways Account to support programs such as State Need Grant, State Work
Study awards, Washington Scholars and Washington Award for Vocational Excellence. Funds
from the account may also be used to support early learning programs. Over five fiscal
years, it is estimated that funds to this account will decrease $1,194,000.
State Opportunity Pathways Account Impact
Fiscal Year 1 2011 1 2012 1 2013 1 2014 1 2015 1 TOTAL 1
State
Opportunity ($0) ($201,000) ($321,000) ($331,000) ($341,000) ($1,194,000)
Pathways
Account
Like the State General Fund, counties and cities receive a share of revenue from the Liquor
Revolving Fund. Therefore, in addition to decreased liquor profits and liquor excise taxes,
other reduced distributions from the Liquor Revolving Fund affect counties and cities. The
amount is estimated at $7 million for each fiscal year beginning in FY 2012. RCW
70.96A.087 requires each county and city to spend 2 percent of its share of state liquor
board profits and state liquor excise taxes on alcohol and chemical dependency services,
and these expenditures will decrease. The remaining revenue from state liquor profits and
state liquor excise tax sharing can be used for any allowable local government purpose.
Local sales tax must be used as allowed by state law. Therefore, the impact on local
government expenditures will be determined at the local level or by state law.
Total Local Impact
Fiscal 2011 2012 2013 2014 2015 TOTAL
Year
Local
Revenue
Revenue ($0) ($29,227,000) ($55,095,000) ($60,257,000) ($65,667,000) ($210,246,000)
Markup
Local
Revenue
39.2 ($0) ($28,897,000) ($53,989,000) ($59,095,000) ($64,446,000) ($206,427,000)
Markup
Local
Revenue
Revenue ($28,765,000) ($53,571,000) ($58,656,000) ($63,985,000) ($204,977,000)
12R Markup
State and Local Cost Estimate Assumptions
This fiscal impact statement does not estimate state costs or state savings due to social
impacts from approval of the initiative.
One -Time Costs
Assuming a closure date of November 15, 2011, LCB will incur one -time state costs
associated with managing the closure of the state liquor distribution center and state liquor
stores. There will be additional one -time costs for issuing new licenses and revenue
collection activities. These state costs are estimated to total $30.6 million during FYs 2012
and 2013:
Unemployment, sick leave and vacation buyout costs are estimated at $11.8 million.
Staff and information technology changes to issue new licenses and collect revenues
estimated at $5.3 million.
Staffing costs to coordinate the sale of existing inventory, termination of contract store
leases, and to surplus store fixtures estimated at $10.2 million.
Final audits of each state and contract liquor store estimated at $1.9 million.
Project management and additional human resource staff estimated at $1.4 million.
The Washington State Department of Revenue will assume administration of the liquor
excise tax collection from 3,534 licensed liquor distributors and retailers through April 1,
2012. Costs include additional staff, information technology changes, rule making and policy
activities, taxpayer mailings and workshops, supplies and materials. Total state costs are
estimated at $313,000 during fiscal years 2011 and 2012.
There is $8.32 million in debt service costs for a Certificate of Participation bond for the
state liquor distribution center that is scheduled to be paid by December 1, 2013. This one-
time state cost is assumed in FY 2012.
Ongoing Costs
The LCB costs at current levels for the licensing, enforcement and administration for all
entities licensed by LCB are assumed to be paid from other revenue sources deposited into
the Liquor Revolving Fund. No state costs from increased enforcement activities are
assumed in the estimate.
State costs associated with the state liquor distribution center and state liquor stores
operations are not assumed as savings because the revenue source (state markup) used to
pay these costs is eliminated by the initiative. These costs are netted out of the revenue
impacts.
The Washington State Department of Revenue will have no additional ongoing costs from
the initiative. Local governments will incur costs for local sales tax collection. The
Washington State Department of Revenue collects sales tax for local governments, and is
allowed to deduct 1 percent of local sales tax collections for this service for deposit in the
State General Fund.
i.° Explanatory Statement
The Law As It Presently Exists
Currently, the state controls the sale and distribution of spirits in Washington. The term
"spirits" refers to the alcoholic beverages commonly called "hard liquor" (whiskies, vodka,
gin, etc.), any beverage containing distilled alcohol (except flavored malt beverages), and
wines exceeding twenty -four percent alcohol by volume. Spirits are sold at retail by state
liquor stores and contract liquor stores (which are businesses selling liquor on behalf of the
state through a contract with the state). Spirits are distributed within Washington by the
state Liquor Control Board. The Board purchases spirits from manufacturers, distillers, and
suppliers, furnishes spirits to state liquor stores, and sells spirits directly to authorized
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purchasers, such as restaurants. Spirits manufacturers, distillers, and suppliers may sell
spirits within the state only to the Board.
The Liquor Control Board is responsible for the general control, management, and
supervision of all state liquor stores and contract stores, as well as the state's spirits
distribution operation. The Board regulates the kind, character, and location of liquor
advertising. The Board is not authorized to advertise its safes of spirits.
The Liquor Control Board sets prices for spirits based on wholesale cost, a markup by the
Board, and taxes. The net proceeds from the markup on the sales of spirits are distributed
to the state, cities, and counties, according to formulas set by state law. A variety of taxes
are imposed on the retail sale of spirits. The generally applicable retail sales tax does not
apply to spirits. The tax revenues from sales of spirits are distributed to the state, cities,
counties, and to fund specific state and local programs, according to formulas established by
state law.
The Effects Of The Proposed Measure If Approved
If approved, Initiative 1105 would direct the Liquor Control Board to close all state liquor
stores and to shut down the state's spirits distribution operation. It would allow licensed
private parties to sell spirits as retailers or distributors, and it would terminate the state's
authority to sell spirits. This would eliminate the net proceeds from the Board's markup on
sales of spirits at state liquor stores and contract liquor stores, which are distributed to the
state, cities, and counties. The measure would generate new proceeds by requiring private
spirits retailers and distributors to pay the state a percentage of their gross sales for five
years. The measure would eliminate existing taxes on the retail sale of spirits, and would
direct the Board to recommend to the legislature a new tax on the sale of spirits to spirits
distributors.
Initiative 1105 would change the Liquor Control Board's powers. It would eliminate the
Board's authority to manage liquor stores, distribute spirits, and set spirits prices. It would
require the Board to close state liquor stores by April 1, 2012, and to make a good -faith
effort to sell its liquor store inventory and assets by that time. It would authorize the Board
to issue licenses allowing private parties to sell or distribute spirits, and to regulate the sale
of spirits under those licenses.
Under Initiative 1105, a "spirits retailer license" would allow the license holder to sell spirits at
retail in original containers, beginning November 1, 2011. The Board would establish license
criteria, making spirits retailer licenses available to applicants who could provide the same
degree of safety and security as current state operated stores. The measure encourages the
Board to make spirits retailer licenses available to existing contract stores. Spirits retailer
license holders would pay an annual license fee. They would also pay the state six percent
of their gross annual spirits sales during their first five years of sales, to be deposited into
the state general fund.
Under Initiative 1105, a "spirits distributor license" would allow spirits distributors to buy
spirits from manufacturers, distillers, and suppliers, and to sell spirits to any person holding
a license to sell spirits in Washington, beginning October 1, 2011. The Board would make
spirits distributor licenses available to all applicants who are appointed by, or agents of,
spirits manufacturers, distillers, or suppliers, unless the Board determined that issuing a
license to a particular applicant would not be in the public interest. Spirits distributors would
pay an annual license fee. They would also pay the state one percent of their gross annual
spirits sales during their first five years of sales, to be deposited into the state general fund.
The Board would no longer set prices for spirits. Each licensed spirits distributor, and each
manufacturer, distiller, and importer, would be required to maintain and adhere to its
published price list and to offer uniform pricing to all customers on a statewide basis. Price
discrimination would be prohibited. Quantity discounts on spirits would be allowed.
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Initiative 1105 would establish a three -tier system for the spirits industry. The three -tier
system would separate manufacturing, distributing, and retailing of spirits, and regulate the
financial relationships and business transactions among entities in these tiers. Under the
three -tier system, licensed spirits retailers would be allowed to purchase spirits only from
duly licensed spirits distributors, with certain limited exceptions. Spirits manufacturers and
distillers, and licensed spirits retailers, would not be permitted to have any interest in a
spirits distributor license or in any entity that has a spirits distributor license.
Initiative 1105 would repeal existing taxes on the retail sale of spirits. It would direct the
Board to recommend to the legislature a new tax that would be paid by licensed spirits
distributors on all spirits they purchase. The measure would direct the Board to recommend
a tax rate projected to generate, in combination with other spirits related revenues, at least
the same annual revenue for state and local governments as the current state controlled
system of spirits sales and distribution, plus at least an additional one hundred million
dollars net over the five -year period beginning November 1, 2011.
c Staternents For and Against
Statement For Statement Against
Get state government out of the liquor Initiative 1105 will increase taxes and
business. Vote yes on I -1105 to close state decrease public safety.
liquor stores and let qualified retailers sell
spirits safely and responsibly. More Hard Liquor Consumption, More
Problems
Support Local Firefighters and Law I -1105 allows hard liquor stores to explode
Enforcement from 315 to more than 3,300: three times
Yes on I -1105 creates more revenue for local more per person than California. More than
firefighters and police protection in cities and 2,000 convenience stores, neighborhood
counties across the state. Local jurisdictions mini marts, and gas stations near schools,
rely on revenue from liquor sales for services churches, and in high crime areas will sell
like public safety. I -1105 will "generate at hard liquor, until 2 am. More consumption
least the same annual revenue for the state means more drunk driving, more underage
and local jurisdictions...as well as an drinking, and more crime. Using California's
additional $100 million." rate of binge drinking as an example we can
expect 40,000 more irresponsible drinkers in
I -1105 is Responsible our state.
I -1105 responsibly privatizes liquor sales the
way 32 other states currently allow the 1105 Wipes Out All Liquor Taxes
private sector to operate liquor sales. I -1105 1105 repeals all state liquor taxes and
will ensure all taxes are paid and there is a directs the legislature make up the difference
paper trail documenting all liquor sales in the with new taxes. That means more taxes on
state. Under I -1105, applicants for retail the middle class. We can't trust the Olympia
licenses must be qualified to self spirits and politicians to get this right.
prove they meet certain safety and security
standards. The current system generates $350 million
annually to pay for schools, health care,
Protects Against Underage Drinking police, firefighters, and alcohol prevention.
A yes vote on I -1105 will allow the Liquor 1105 will eliminate all that revenue. The
Control Board to focus on preventing state has a huge budget shortfall now is
underage drinking, over consumption and not the time to make it worse.
making sure there isn't an explosion of liquor
stores. Any license holder caught selling to a 1105 Puts Public Safety at Risk
minor would immediately lose their license. Washington currently ranks #1 nationally in
keeping hard liquor away from minors, but
Better for Consumers and Jobs private outlets like mini -marts are 400%
I -1105 offers consumers convenience, more more likely to sell alcohol to minors
variety and more affordable prices while according to Liquor Control Board data. Let's
keeping public health and safety standards not make it easier for kids and drunk drivers
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intact. I -1105 provides for the training and to get liquor.
placement of displaced liquor store
employees into new jobs in the private The Washington State Council of Firefighters,
sector. Washington Association of Churches, law
enforcement leaders and community leaders
agree: Vote no on 1-1105.
Rebuttal of Statement Against Rebuttal of Statement For
Initiative 1105 is clear. It will "generate at The big corporations funding this initiative
least the same annual revenue for the state have gone too far. 1105 harms community
and local jurisdictions as under the current services, costs taxpayers and cost jobs. It
state control system, as well as at least an eliminates enforcement funding for underage
additional one hundred million dollars." purchases and all liquor taxes and leaves it
to the legislature to make up the difference.
That's more money for local firefighters, An independent analysis found that 1105 will
police officers, and teachers in our reduce revenue by over $700 million,
neighborhoods. slashing funding from schools and public
safety. That's why small businesses,
Vote yes on I -1105 to responsibly get the teachers, and law enforcement leaders say:
state out of the liquor business and let vote no.
qualified businesses in the private sector sell
spirits safely.
Statement Prepared By Statement Prepared By
Jack Rabourn, Former Washington State Jim Cooper, Washington Association for
Liquor Control Board Member; Al O'Brien, Substance Abuse and Violence Prevention;
State Representative, former Criminal Justice Alice Woldt, Executive Director, Washington
Committee Chairman; Ken Oplinger, Association of Churches; Kelly Fox,
Bellingham /Whatcom Chamber of Commerce President, Washington State Council of
Industry President; Tom Pierson, Federal Firefighters; John Lovick, Snohomish
Way Chamber of Commerce CEO; Po County Sheriff, Sharon Ness, RN, Acute
Chang, President of Summa Foods; Charlie Care Nurse, Craig Sousie, Emergency
James, African American Business and Medical Technician, Renton Fire and
Employment Activist and Columnist. Emergency Services.
For more information: For more information:
(877) YES -1105 info( orotectourcommunities.com
infona.Iiauorreform.ora www.orotectourcommunities.com
www.liauorreform.ora/
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Attachment G
Draft Resolution in Opposition
of Both Measures
133
DRAFT
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, EXPRESSING ITS .COLLECTIVE POSITION OPPOSING
WASHINGTON STATE INITIATIVES 1100 AND 1105.
WHEREAS, Washington State Initiatives 1100 (I -1100) and 1105 (I -1105) will be on
the November 2, 2010, state election ballot; and
WHEREAS, I -1100 would close the state liquor stores and allow the selling of spirits
in grocery and convenience stores; and
WHEREAS, I -1105 would license private parties to sell or distribute spirits and
revise laws concerning regulation, taxations and government revenues; and
WHEREAS, general fund revenue is benefited from the excise tax and the per capita
distribution of state owned liquor store profits; and
WHEREAS, the general fund revenue received from excise tax and profits directly
affects the governmental and emergency services the City of Tukwila provides to our
citizens; and
WHEREAS, alcohol has been identified as a contributing factor to crime in the City
of Tukwila and availability of alcohol in grocery stores and convenience stores has the
potential to impact crime rates in the City of Tukwila by increasing availability; and
WHEREAS, prior to adoption of this resolution, the official ballot titles of Initiatives
1100 and 1105 were included on the Council agendas, and the public was afforded
equal opportunity at the meetings for any person to express an opposing view;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
The Tukwila City Council has, by majority vote, hereby express opposition to
Initiatives 1100 and 1105.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of 2010.
ATTEST/ AUTHENTICATED
Dennis Robertson, Council President
Christy O'Flaherty, CMC, City Clerk
APPROVED AS TO FORM BY
Filed with the City Clerk:
Passed by the City Council.
Office of the City Attorney Resolution Number
W Word Processing Opposition to Initiatives 1100 and 1105
VS: nrh Page 1 of 1
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o Syc
City Of Tukwila
a
J Finance and Safety Committee
FINANCE AND SAFETY COMMITTEE
Meeting Minutes
October 5, 2010 5:00 p.m.; Conference Room #3
PRESENT
Councilmembers: De' Sean Quinn, Chair; Allan Ekberg and Kathy Hougardy
Staff: Shawn Hunstock, Jack Pace, Mike Villa, Peggy McCarthy, Mayor Haggerton, Steve Lancaster
and Kimberly Matej
Guest: Chuck Parrish
CALL TO ORDER: Chair Quinn called the meeting to order at 4:59 p.m.
L PRESENTATIONS
No presentations.
II. BUSINESS AGENDA
A. Resolution Regarding Annual Cancellation for Accounts Receivable
Staff is seeking full Council approval of an annual resolution to cancel (write -off) account receivables
deemed uncollectible. This year's annual account receivable write -off totals $56,683.18. Staff
reviewed the process by which accounts receivable determines items as uncollectible.
Committee members asked for more clarity on page 7 of the agenda packet regarding special
inspection fees for Westfield MaII. Staff explained that this item and negotiation of reduced fees was
due to a misunderstanding and lack of specificity in a contract between the City and Westfield. This
error is well -noted and will not happen in future contracts. UNANIMOUS APPROVAL.
FORWARD TO OCTOBER 11 COW FOR DISCUSSION.
B. Resolution Opposing Initiatives 1100 and 1105
This item is sponsored by Councilmember Verna Seal, who is unable to attend the meeting to answer
questions regarding the initiatives, as four Councilmembers at the Committee would constitute a quorum.
Councilmember Seal has requested Council consideration of a resolution in opposition to Initiatives 1100
and 1105. Both initiatives concern liquor (beer, wine and spirits), and propose to close state liquor stores
and privatize the sale and distribution of liquor.
Committee members discussed the initiatives among themselves, and asked staff is there was any way to
Y Y
predict revenue levels that would come to the City if one or both of the initiatives pass. Staff replied that
the revenue information is not currently quantifiable.
Committee Member Hougardy stated that she believes that a resolution of Council opposition to these
initiatives will serve well in representing her constituents. Based on the current state of economy and after
reviewing financial impact statements, Chuck Parrish mentioned that he felt this was not the time to take
on this type of measure and commended the Committee on opposition. Since the writing of the
informational memo, the draft resolution has been reviewed and approved by the City Attorney's office.
UNANIMOUS APPROVAL. FORWARD TO OCTOBER 11 COW FOR DISCUSSION.
C. King County Criminal Justice Sales Tax
Committee Chair Quinn requested this item be put on the Committee agenda for discussion, and possible
recommendation of a Council resolution in support of the tax. He introduced the item and reviewed
information that was included in the Committee packet.
Conversation ensued in detail about the benefits and consequences that implementation of this tax could
have on City revenues as well as the Tukwila community. Unfortunately, as required by State law, ant 3 5
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