Initiative 1100 will bring Washington state's outdated Prohibition-era approach to the retail liquor business to an end, writes Jim Sinegal, CEO and co-founder of Costco.
SINCE 1983, when we started our business in Washington with the very first Costco near downtown Seattle, one of our key business principles has been to stand up for consumers when they are being taken advantage of. We have a well-deserved reputation for selling quality products backed by the best warranties in retail. Our mere presence in a market usually improves competition for consumers regardless of where they shop, because of our reputation for delivering value.
One battle that we have consistently fought is the way that alcoholic beverages are priced and distributed in Washington. We have litigated, and have won some key victories. For example, the U.S. District Court found that many of the state’s regulations violated federal laws, and that the explanation given by the state for doggedly hanging on to Prohibition-era restrictions on the free market — that the state has an interest in temperance and in restricting consumption — is just an excuse not backed up by its actions.
Despite many years of hard work, however, we have not been able to convince the state to modernize this antiquated system and reflect the kind of convenience and fair pricing citizens deserve and our members have come to expect from Costco.
Now voters in Washington have a rare opportunity to do away with more than 75 years of market manipulation by the state by exercising their rights at the ballot box and voting yes on I-1100. A government-operated liquor monopoly is not a necessary function of state government. I-1100 will get the state out of the alcohol business, leaving it to the free market, with appropriate regulation, just as it is done in most other states.
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I-1100 will keep taxes in place to fund the Liquor Board to do its legitimate job of policing underage drinking and other abuses, leaving the rest to businesses that will do it best.
Please be wary of efforts funded by outsiders to scare you into opposing this initiative. Those who have been getting rich for years at your expense are spending millions on advertising to keep this antiquated system in place. They claim that the only way to control teenage drinking and other abuses is to leave themselves and the state in charge of selling and promoting the sale of liquor.
This is complete nonsense.
Others warn that local governments will suffer terrible funding cuts under I-1100. This is just another scare tactic. What the state might lose per year in liquor income represents less than one day’s spending under the state budget.
Don’t fall for these political tricks. The state does a good job of regulating many other products and services that can be harmful if abused. And it does this without manipulating all aspects of those businesses, without forcing retailers to use expensive middlemen, without overcharging for products and without operating a state monopoly.
Washington residents pay the highest tax on liquor in America. The state not only charges taxes on the sale of alcohol, which are left in place by I-1100, the state also tacks on a 51.9 percent markup on cost — an outrageously high markup and, again, the highest in the country.
I-1100 will do away with antiquated methods of distribution that inflate prices and cost consumers hard-earned money for no good reason. It will close state liquor stores, leave all the liquor taxes in place and allow any company that currently sells beer and wine to also apply to sell liquor. You will have the competition, convenience and selection you deserve, and the state can focus all of its attention on enforcing regulations to prevent abuses. Now is your chance to get this right once and for all.
Jim Sinegal is CEO and co-founder of Costco. For more information: www.modernizewa.com