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Op-ed: Are these high liquor prices what was promised by Initiative 1183?

UNDER state law, it’s illegal to deceive in trade or commerce. After successive years in which initiative campaigns have spent tens of millions of dollars, it seems our state’s initiative process is all about commerce.

Yet it’s OK to deceive in selling initiatives. The 2011 Initiative 1183 liquor-privatization campaign promised lower prices and higher revenue. This did not happen.

The case was made for lower prices in forum after forum. In response to questioning in a Seattle Times editorial board debate, Initiative 1183’s spokeswoman stated, “The good news is that everyone who is an expert in this area says absolutely prices will not go up.” She made similar statements in other forums, promising “lower liquor prices,” “downward pressure on the price,” and declaring it “absolutely false” for me to say prices would rise.

Even the Initiative 1183 statement in the voter pamphlet promised “better selections and more competitive wine prices for consumers.” More competitive prices?

We know now this was untrue. In fact, it could never have been true — the state analysis relied upon by the Initiative 1183 campaign to sell voters on more revenue showed much-higher prices.

The state’s analysis projected the former state markup of 51.9 percent, due to fall to 39.2 percent next year, would be replaced by a private market markup of 52 to 72 percent. Much of that new markup is a pass-through to consumers to cover higher fees Initiative 1183 imposed at distribution and retail.

Prices are so high that, in a development reminiscent of prohibition days when liquor flowed over the Canadian border, Oregon and Idaho have benefited from Washington shoppers seeking cheaper hooch … from state-run border stores.

For example, in September,sales at the Post Falls, Idaho, store were up 48 percent from a year ago, while sales in tiny Rainier, Ore., (population 1,895) were running $3,912 a day higher. In Washington, liter sales were up only 11.8 percent year-over-year — unimpressive considering liquor is now sold every day until 2 a.m. in more than four times as many places.

The Costco-drafted Initiative 1183 exempted Costco from pre-retail fees it imposed elsewhere. It’s easy to deliver cheaper liquor when you don’t play by rules everyone else does.

Here’s an example: Just before Initiative 1183’s transition, a liter of Washington’s Dry Fly Vodka retailed for $22.51 at a state liquor store. On Nov. 12, that same bottle retailed for slightly less, $21.59, at Tumwater’s Costco. At the adjacent Fred Meyer, its regular price was $26.99, although it was on sale at $23.99. And it was the only Washington craft liquor at either store.

Grocery stores have finite shelf space. Thus space formerly occupied by wine, including Washington’s, now hosts predominantly out-of-state liquor. So much for better selection. Further, small grocers and wine shops have been, unwillingly, pulled into higher wine prices with no offsetting appeal of liquor sales. This is not a free market.

However, a free market has been created in stolen liquor, with one account suggesting weekly losses running into thousands of dollars for some big grocery stores.

It’s not just Washington wineries that are hurting. In the average Costco or grocery store, our state’s craft distillers, beyond well-established Dry Fly, are absent. I don’t reside in Seattle or the Eastside where high-end grocers may carry what was formerly available in my community.

The next entirely foreseeable step is retailers, facing customer backlash, will move toward high-volume wines and liquors. Initiative 1183 allows volume discounting of liquor and wine, which was formerly prohibited. That’s great if you’re Maker’s Mark, but bad if you’re Bainbridge Organic Distillers. It’s a sign of the times when high-volume E.& J. Gallo bought two Washington labels in June.

Expect to see even more of Washington’s small family wineries and craft distillers squeezed off shelves. Was hurting these vital industries really worth voting for Initiative 1183?