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The Associated Press November 2, 2010, 5:17PM ET

Voters decide on WA liquor privatization efforts

Washington state voters cast ballots Tuesday on competing proposals that would get the state out of the business of selling hard alcohol.

Initiatives 1100 and 1105 would both abolish the state's current monopoly on liquor distribution and sales in favor of private businesses.

I-1100 would allow some large retailers -- like Costco Wholesale Corp., the measure's main backer -- to buy beer, wine and spirits directly from manufacturers instead of going through distributors. Those changes disrupt the current three-tier system -- producers, distributors and retailers -- in which retailers generally are required to use distributors. I-1100 also eliminates price controls and other regulations, such as bans against volume discounts and paying on credit, that exist for beer and wine distribution and sales.

The I-1100 campaign battle has mainly been between Costco and other big box stores, and distributors who don't want to disrupt the current system. It's been a big-money battle with lots of out-of-state donations from groups like the Washington, D.C.-based Beer Institute and dozens of state distributor groups giving money to the opposition campaign, which spent $8.8 million on the "no" campaign. The "yes" campaign has spent nearly $6 million, with more than $4.8 million coming from Issaquah-based Costco in money and in-kind contributions.

I-1105 -- backed by distributors -- would keep in place state laws that protect beer and wine distributors, and would also keep in place prohibitions on bulk discounts for beer and wine but would allow them for sales of hard liquor.

A coalition of several groups have opposed both initiatives, including unions, the Washington state Council of Firefighters, and several craft breweries and wineries, citing concerns ranging from public safety to the potential affect on state and city budgets. I-1100 removes the liquor markup imposed by the state, and I-1105 removes the markup and all additional liquor taxes.

Washington is among 18 so-called "control" or "monopoly" states that exercise broad powers over wholesale distribution of hard liquor. Of those states, 12 -- including Washington -- are also involved in retail alcohol sales through either state-run liquor stores, outlets operated by private contractors, or both.

While the liquor privatization debate hasn't been able to gain traction in Washington state until this year's initiative measures, the state Legislature has already made several changes to the three-tier system over the years, including allowing brewers and wineries to sell directly to consumers, and allowing retailers to buy directly from wineries and brewers.

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