Hard to swallow

Washington’s ballot initiative to deregulate liquor sales passed with buzz-like fervor last week at a 60 percent majority, which will mean shuttering state-run liquor stores and allowing cashiers to ring up libations in large grocery stores.

Impacts across the border are predicted to be significant: The loss of 900 jobs from state stores, the likely escalation of private liquor stores and the potential for millions in savings for the state.

Now the question is simmering of whether Idaho should get out of the liquor business, too, and let the alcohol run free.

“People shouldn’t be alarmed. We’re not going to jump in there next year with a ballot initiative,” said Joe Gilliam, president of the Northwest Grocery Association that pushed for deregulation in Washington. “But we’ll have a good discussion with the legislature.”

Industry lobbyists are poised to persuade Gem State lawmakers, he said, and he thinks they have a convincing case.

Handing liquor distribution to the private sector will provide more convenient options for consumers, he contends.

It would also cut out the state as the middle man, he argued, so retailers can directly negotiate with manufacturers on prices.

“There’s money for the retailer in that,” Gilliam said.

State governments, at least in Washington’s case, he added, can save oodles by no longer paying overhead like salaries and leases for stores.

Of course, deregulation might look different in Idaho, Gilliam said, given how the extent of each state’s regulation differs.

Idaho might not see the $80 million in savings in one year, he acknowledged, that’s estimated for Washington.

“We took a system that was literally archaic,” he said of Washington’s state-run system. “That doesn’t mean it’s the same in every state.”

But bottom line, Gilliam said, states shouldn’t be tasked with running liquor stores when they simultaneously oversee liquor regulation and licensing.

“You shouldn’t be inspecting yourself,” Gilliam said.

Hard to swallow

Some aren’t easily won over.

Mitch Watkins with Centennial Distributing in Hayden noted that deregulation might not go down so smooth in Idaho.

Especially if liquor could be sold at any kind of private establishment, he said.

“I think Idaho’s a little more conservative when it comes to attitudes surrounding alcohol,” said Watkins, who also operates Watkins Distributing in Twin Falls. “Once you start talking about vodka in every convenience store, people start getting nervous about it being that available in that many locations.”

It’s not guaranteed that retailers would benefit from deregulation, he noted.

Washington’s law, he pointed out, only allows private sale in stores with at least 10,000 square feet of retail space.

“That pretty much makes it the large box grocery stores,” Watkins said, noting that Costco invested $22 million in pushing for the change in Washington policy. “When it’s concentrated in just a few retailers like that, they pretty much control and dictate pricing.”

The state could also take a huge financial hit, Watkins noted. Idaho, like Washington in the past, rakes in revenue from liquor sales.

“It will be hard to replace that,” he said.

Costco spokespeople could not be reached this week.

Coeur d’Alene resident John Kari, leaving a liquor store on Sherman Avenue on Friday evening, acknowledged it had convenient in his college days in Arizona, where liquor was available at myriad private stores.

“We could shop for deals,” he said.

But Kari doesn’t see the need for that in Idaho, he said.

“I don’t have a problem with liquor in liquor stores, but I don’t need to see liquor in grocery stores,” he said.

Legal Moderation

Deregulation was examined by a legislative oversight committee last year, said Jeff Anderson, director of the Idaho State Liquor Division, but it didn’t appear feasible.

A big issue: Temperance.

The liquor division has a constitutional mandate to prevent excessive drinking, Anderson said.

“We make it available to temperate, responsible consumers,” he said.

The state’s methods are limiting the number of liquor stores in each community and the hours they’re open, he said.

Anderson thinks the state is doing a good job, he added.

“Right now, we have uniform pricing throughout the state, the product is available in virtually all communities,” he said.

There are 66 state-run stores in Idaho, Anderson said, for which the state leases buildings and provides about 250 staff.

There are 97 stores operated by contract agents in small, rural areas where a state-run facility isn’t feasible.

The state spent $10.69 million on state store operations for the 2011 fiscal year, Anderson said, which includes leases, and staff wages and benefits.

Total liquor sales for the fiscal year were $144 million.

“Every store is profitable,” Anderson said.

Whether deregulation would mean less revenue for the state is hard to say, he said. It would depend on what was included in a bill or ballot initiative.

Other possible impacts, though, include retailers and distributors hiking prices to make profit, and longer store hours.

“The issue is, do you want to have vodka available at 1:15 in the morning?” Anderson said. “In Idaho, it’s not available in state-run stores.”

The number of liquor stores could balloon, too, he acknowledged. He pointed out that liquor stores in Washington are expected to vault from over 300 to nearly 1,500.

“Depending on your perspective, that’s a good or bad thing,” Anderson said. “Policy makers would have to decide if the public would be better served by having our 163 locations increase by a factor of four or five.”

Open to a Taste Test

Rep. Vito Barbieri expects there to be a much broader discussion about deregulation this legislative session.

“That (Washington initiative) does help embolden those who have already addressed the issue,” the Dalton Gardens Republican said.

He thinks jobs could be created by letting private enterprise take over liquor distribution, he said.

Granted, employees at state stores would be laid off, he said.

“It could be that people who run the stores now could be first in line to purchase them,” he said. “And with the ability to make a profit, they may be able to hire more.”

Revenue can still be raised through taxes on liquor, Barbieri said.

“And there’s some question as to whether it’s the proper role of the state in any case to be within the confines of private enterprise,” he said.

Rep. Kathleen Sims, R-Coeur d’Alene, favors deregulation from a philosophical perspective.

“I don’t think the state of Idaho belongs in the liquor business,” she said.

She would prefer legislation protect individuals at stores who have long invested in a liquor license, Sims added.

She doubted deregulation would bring in substantially more liquor revenue.

“I don’t know that that drastic an increase in the sale of liquor ever occurs,” Sims said. “I’m waiting to see what’s proposed and how it’s proposed.”

Sen. John Goedde, R-Coeur d’Alene, thinks deregulation talks would fizzle.

“Idaho is just a lot more conservative than the state of Washington. There is concern about the use of alcohol and the availability of alcohol,” Goedde said. “I don’t see a move in the near future that would be positive.”