The Washington Legislature seems likely to pass a bill that would make significant changes in the state’s archaic wine and beer laws. But lawmakers have stopped short of proposals by some retailers that would give Washington consumers access to a wider range of wines at potentially lower prices.
Earlier this month, the House overwhelmingly passed HB 2040, which would ease restrictions on cross-ownership between producers, distributors, and retailers that date from the 1930s. It also would relax some pricing rules and let producers and distributors provide retailers with branded promotional products such as corkscrews. The Senate version, SB 5834, has cleared a committee and appears on route to passage.
Big-box retailers such as Costco failed to convince lawmakers to allow volume discounting by producers and distributors. The retailers say they could offer consumers lower prices if they could negotiate discounts for big orders, as they do with other types of products. The state Liquor Control Board warns, however, that this would dangerously increase the public’s consumption of wine and beer.
A separate bill pushed by San Francisco-based online retailer Wine.com to allow out-of-state retailers to sell wine to Washington consumers died. That bill would have licensed and taxed out-of-state retailers, which currently sell online to Washington consumers without the state collecting any tax revenue. The Liquor Control Board supported the bill, but the Washington Beer & Wine Wholesalers Association opposed it.
The current legislation results from years of wrangling between wineries, retailers, distributors, and state regulators. Last year, Costco lost a long antitrust legal battle to roll back the state’s wine and beer regulation system, calling it anticompetitive. Many of Washington’s wineries argue that less regulation would lead to more wine sales. But the Liquor Control Board and distributors contend that anything that lowers price would increase consumption.
The wholesalers are fighting to retain their legally protected middleman-distribution role. They worry about further erosion of the state’s three-tiered distribution system, which was undercut in 2006 when lawmakers permitted both in-state and out-of-state wineries to sell directly to retailers and consumers.
There’s also conflict between a new group representing smaller wineries, Family Wineries of Washington State, and the Washington Wine Institute, the state’s main wine lobby anchored by giant Ste. Michelle Wine Estates. The family wineries group, led by Paul Beveridge, proprietor of Wilridge Winery in Seattle, seeks more sweeping deregulation than the Wine Institute favors.
Even though the current bill doesn’t give all the interest groups everything they want, the relaxation of the cross-ownership rules has strong support. In recent years, these rules got in the way of many budding Washington winemakers, who had to win special exemptions to make wine if they also owned an interest in a business that served alcohol or if they wanted to open a tasting room.
It’s expected that the big-box retailers and other interest groups will be back before the Legislature next year seeking additional changes.
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