March 21, 2012 in City

Liquor board issues 8 distributor licenses in area; Costco hasn’t applied

By The Spokesman-Review
 

OLYMPIA – For two years, Washington’s beer and wine distributors fought Costco-backed initiatives to get the state out of the liquor business.

They won in 2010 but lost in 2011. Now some of the biggest distributors are using the new law and receiving licenses to set up liquor distribution warehouses around the state.

Meanwhile, despite spending more than $27 million over those two years to change state liquor laws, Costco hasn’t filed for a distributor license, focusing instead on selling liquor to retail customers.

As of this week, 74 distributor licenses have been issued by the Liquor Control Board, with most going to companies that already distribute beer and wine. Four each were issued for Spokane and Spokane Valley.

Under state law, each warehouse requires its own license, so the biggest distributors need licenses for facilities around the state. Divisions of The Odom Co. have 23 licenses, Columbia Distributing has nine and Young’s Market has eight.

Those large national or regional distributors deal in a wide range of alcoholic and nonalcoholic beverages. Odom, for example, carries Coke, Rockstar Energy Drink, Coors and Miller beer, Captain Morgan rum and Crown Royal whiskey in other states. Young’s has a list of alcoholic products that spans 16 pages on its website.

Odom and Young’s helped thwart Initiative 1100, Costco’s initial attempt to end the state’s liquor monopoly in 2010, spending $2.7 million on an alternative initiative and contributing to the beer and wine wholesalers political action committee, which also fought I-1100. Both ballot measures failed.

In 2011, the wholesalers PAC was a major donor to Protect Our Communities, which tried to defeat I-1183. It passed with nearly 60 percent of the vote.

Some smaller wine or beer distributors also have received licenses to distribute liquor. Vehrs, a wine distributor in Spokane Valley with a product list that includes Arbor Crest, Latah Creek and Coeur d’Alene Cellars wines, also received a liquor distribution license. All four liquor distribution licenses in the Valley are for warehouses in the Spokane Business and Industrial Park on North Sullivan Road.

Costco has filed for retail liquor licenses for all of its Washington stores, including the two in the Spokane area. But it has not filed for a distributor license, although it could operate like one with its own internal system that takes advantage of mass purchasing and a provision in I-1183 allowing “retail-to-retail” sales.

A recent board hearing on that provision shows there’s still friction between Costco and the big distributors. Although the law says retail-to-retail sales are limited to 24 liters at a time, Costco is fighting any effort by the board to limit such sales to one per day. Store officials argued they could sell as much liquor as a customer wanted, as long as it was purchased in 24-liter batches with individual checks.

That would mean Costco could sell large quantities to restaurants, bars, catering companies or even other stores without being on the hook for one of the financial requirements in I-1183. The new law says distributors must provide a minimum of $150 million to the state in 2013 through a 10 percent tax on gross receipts. If they don’t sell enough to raise that amount through the tax, they must make up the difference, based on their proportional share of the market.

Further hearings on the retail-to-retail rule are scheduled for next month.


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