UPDATED 2:30 P.M. WITH DISTRIBUTORS’ COMMENTS
Restaurants say there are two obstacles keeping them from buying liquor at grocery stores. One of them could be removed in a special session of the Legislature that starts May 13. A judge on Monday ordered removal of the other one.
Thurston County Superior Court Judge Erik Price sided with Costco, groceries and restaurants in invalidating the state Liquor Control Board’s rule limiting groceries’ sales of liquor and wine to restaurants and bars to 24 liters a day.
The rule was the liquor board’s interpretation of the 2011 voter-approved liquor-privatization law, which had limited those purchases to 24 liters for any single sale. The board decided that had to be a daily limit to mean anything — or stores could simply ring up many “single sales” at the same time.
The judge agreed the board’s rule made the restriction more meaningful. But “it is not the Board’s place, nor this Court’s, to infuse a policy into statutory language that is not there, even if that policy improves the statute,” he wrote.
An assistant attorney general said she hasn’t yet talked to the board about whether to appeal the ruling, which also found fault with procedural aspects of the board’s rulemaking but declined to overturn any other rules.
The 24-liter limit does not apply to stores that were contract liquor stores under the state-run system. More crucially, it does not apply to wholesalers. That is one reason two large distributors, Southern Wine and Spirits and Young’s Market Co., have kept a key role in the new, less regulated market — even though they spent millions of dollars opposing Initiative 1183 that created it.
“There are two distributors with 94 percent of the business out there,” Washington Restaurant Association lobbyist Bruce Beckett said.
The Association of Washington Spirits and Wine Distributors said in a statement it is reviewing options including an appeal.
“If the court’s conclusion is correct, then Costco snookered voters by including a meaningless restriction in the language of the initiative,” John Guadnola, executive director of the distributors group, said in a statement.
Another reason wholesalers continue to have an advantage is that while they must pay fees, they do not have to pay a 17 percent fee that retailers have to charge under the law. The liquor board has interpreted the law to mean that stores must pay the fee even for sales to restaurants and bars.
Beckett argues the fee was never meant to apply to sales for resale and has asked state lawmakers to exempt them. Bills to do that have support in all four of the partisan caucuses of the Legislature, he said, but didn’t pass within the 105-day regular session. Beckett said he’s confident they will be a topic of special session starting in mid-May — but acknowledges they will probably need two-thirds supermajorities to pass because they would change an initiative in its first two years.
He said rural restaurants especially would benefit from being able to buy from their local store rather than relying on distributors that may have limited delivery schedules in those areas. And he said the distributors will still have advantages like their ability to deliver. ”The distributors are going to be in all likelihood still the primary supplier,” he said.
But distributors have said the measure and the court ruling would both allow big retailers like Issaquah-based Costco to act much like distributors without paying the fees paid by distributors.
The distributors have a competing proposal that would only exempt former state and contract liquor stores from the 17 percent fee — not the larger grocery stores. It would lower some taxes paid by restaurants, allow grocery stores to pool together for central warehousing of liquor and wine, and leave the distributors themselves paying higher fees — addressing a number of competitive hurdles that have left some businesses complaining about I-1183.