Corks, Kegs and Commentary

Events, news and musings from the crew at Hayden Beverage Company. Information on beer, wine and events in the state of Idaho

Idaho Privatizing Liquor? Don't hold your breath.

Dodds Hayden - Wednesday, February 15, 2012

Newspapers and the net have been buzzing about the possibility of Idaho doing away with the state-run Liquor Dispensary system and going private. Here is the Skinny.

Neighboring Washington voted last year, by way of a CostCo-driven ballot initiative, to dismantle their state liquor store system and move liquor into the distributor tier and into Grocery/Box stores (a retail licensee has to have at least 10,000 square feet). The initiative also did away with a number of regulatory mechanisms such as quantity discount prohibition, direct shipment, retailer to retailer sales, and others. They marketed the move as providing “more accessibility, lower price” of spirits. From what I have gleaned, it sounds like accessibility will be there, but I believe price will actually be higher in most retail accounts.

Why would this not happen in Idaho, a generally libertarian state that rails against government involving themselves in private enterprise (or anything else, for that matter)? For one, Idaho has a higher per capita LDS population than any other state. And most Mormons are not going to be thrilled about the idea of Vodka and Whiskey being added to the grocery store shelves. Secondly, there is no indication that going private would do anything to augment the state’s income. In fact, a study was conducted last year that stated the state would receive no financial benefit from dismantling.

The state’s legislative make-up is also very strongly LDS. And I doubt LDS legislators would want to be on record as voting to make hard liquor a more ubiquitous beverage.

Lastly, Governor Otter has said that he does not see the Liquor Dispensary as a tax generation system, he sees it as a liquor control system.

Personally, I don’t think the government should be in the liquor business. I think it should be in the regulatory and safety business. I would be fine with the privatization of liquor, and given our partnership with Young’s, it would most likely benefit our business. State revenue would need to be protected, of course. But the consideration that drives my opinion and recommendations is public safety. Our industry was set up to promote a safe marketplace for alcohol when the dangers that led to prohibition were still fresh in the public’s memory. The system works (not in small part to the role of the distributor tier), and maintaining a safe system is my top priority. If liquor is privatized, regulation should be increased (not relaxed, as it was in Washington).

There were rumors of CostCo/Fred Meyers/WinCo/Alberstons bringing a ballot initiative to Idaho this November. They have decided not to do that, but they might make a run at legislation next year. There is a ballot initiative proposed by the Idaho Reagan Republicans, but it seems unlikely they will get the required 47,000 signatures to get on November’s ballot. I am certain we have not heard the last of the liquor issue.

Notes: A) CostCo spent over $22,000,000 to get the WA initiative passed. B) The ID Attorney General is looking into the constitutionality of a privatization initiative in Idaho since our state constitution dictates that liquor regulation is to be decided by the legislature. C) Idaho liquor dispensary sales were approx. $140 million last year and delivered about $50 million to the state budget.

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