MOBILE
State must close all of its liquor operations by June
Store manager Dean Doces stocks bottles of Jagermeister at a state liquor store Wednesday in Seattle.
November 10, 2011 - Updated: 4:16 a.m.
Sometime after the first of next year, the impact of the successful initiative ending Washington’s 78-year control of liquor sales will become more apparent.
That’s when state liquor stores, which are currently increasing inventory for holiday sales, will start to draw down their inventory. It’s also when contract stores, which are operated by individuals under agreements with the state, will look for new suppliers or decide to go out of business.
“Most of us will close,” Kelly Osterberger, owner of Airway Heights Liquor Store, predicted Wednesday, as vote totals were showing Initiative 1183 passing with about 60 percent support.
Owners of the state’s 163 contract liquor stores, most of whom signed five-year contracts with the state earlier this year, will be eligible to apply for retail licenses for their location. But the business model will change, and not in their favor, Osterberger said.
Right now, contract operators work on consignment; they survive on a small profit and don’t pay for liquor until they sell it. They remit the purchase price, minus a small commission, to the state.
Under the new law, they will have to buy their supplies wholesale and mark up to cover their costs, which will include new license fees mandated by I-1183. Osterberger estimated she had about $200,000 worth of alcohol in the store and doesn’t have the cash to purchase anywhere near that to stock the store after the law takes effect.
Small stores also will struggle to compete with discount giant Costco, which contributed record amounts to the I-1183 campaign, and other retail and supermarket chains expected to obtain retail licenses. Osterberger’s store shares a parking lot with Walmart, which hasn’t indicated whether it will start selling liquor, and a major supermarket is less than a mile down Highway 2.
Tillman Carr, owner of the Cheney Liquor Store, faces a similar dilemma. He shares a shopping plaza with a Safeway, and three other supermarkets in the city meet the I-1183 requirement of being at least 10,000 square feet and already sell beer and wine. He’d have to borrow money – if he could get a loan – to purchase inventory to stay in business.
Carr believes inventory problems and the loss of commission, plus competition from big-box stores, will force many contract store operators out of business.
Meanwhile, the state Liquor Control Board will begin “divesting” itself of retail and wholesale operations in January. Liquor distributors can begin selling distilled spirits in March; the state must close all of its stores and end its warehouse operation by June 1, and the remaining inventory must be sold off over the next year.
It will have to figure out a system to compensate contract liquor store owners that are forced out of business by the initiative.
About 900 of the board’s 1,400 employees work in either the wholesale or retail sales force, said Brian Smith, a spokesman for the agency. Some may be able to go into the state worker pool and qualify for another job based on seniority rights, but “the vast majority” will be out of work, he said. Most wholesale and retail employees don’t come to the agency from another state department because those jobs are unique to Liquor Control.
“Our assumption is state stores will look pretty much the same through December,” Smith said. That’s because they recently increased inventory to meet increased holiday sales. After January, customers might notice that shelves are not being restocked.
What’s next
Liquor distributors can begin selling distilled spirits in March; the state must close all of its stores and end its warehouse operation by June 1, and the remaining inventory will be sold off over the next year.
I guess many forgot the human costs of passing this. Shame so many people will lose their job due to this and many of these people will have a very hard time finding another job in today’s economic climate. I for one am glad I voted against this.
Lib….. feel exactly the same way.
Why so negitive guys there is plenty of opportunity for the former WSLCB employees they have the most and best experiance selling liquor and will be hired if they can ditch their negative attitude. Yes I can works a lot better than I cant.
It does not matter if you think you can or think you cant, either way your right. Henry Ford
The human cost is unfortunate, however sometimes that is the cost of deregulating an industry. These folks have retail management experience if they owned a store, there is high turnover in those types of jobs so I highly doubt there will be nothing for them to do, even if it takes a little time to find something. Additionally, if 5 year contracts are signed with several years remaining on them I would think there would be a provision of some sort, as stated in the article, that would provide some compensation for nullifying that contract. For those that are savvy this is an opportunity to go in a new direction with their business abilities.
The state can’t even balance its own budget. What makes one think they can run a liquor store?!
Good riddance.
What about Ray? That guy is a liquor legend. Been around for probably more than 30 years.
And before anyone starts running their mouths about liquor store staff fabulous wages, they get paid $11.35 to start. WOW!
And they are very coveted jobs nonetheless! 11.35 isn’t bad at all.
It was about time the state got out of the liquor business and let the private sector sell booze. The opponents that threatened the voters stating all the mini-marts would be selling liquor was an out right lie.
crazyivan, I agree that $11.35 in this economy is not bad at all but some on here act like all of the liq. store employees are pulling down 50k a year or something….
crazyivan, I agree that $11.35 in this economy is not bad at all but some on here act like all of the liq. store employees are pulling down 50k a year or something….
Yes, this is a golden opportunity. To go from a small business owner to a WalMart greeter would be an amazing story of triumph. Have you seen the vests they get to wear? They look like Mexican generals! SALUTE!
ONLY IN AMERICA! NUMBER ONE! NUMBER ONE!
And once these former owners and employees don’t have medical insurance, they will be forced to live healthier lifestyles.
HEAR OUR VOICE!!!
There needs to be a more orderly transition that provided for in the initiative - I gets that is the cost of direct democracy though. You can write anything without considering the practicalities of carrying it out.
Frankly though rather than point out this kind of thing the “NO” campaign blew it by relying on ridiculous scare tactics rather than telling people things like “You won’t be able to buy Jaeger for 6 months” which they might have undersood.
Only time will tell how this will play out. Now if we could only get people to be responsible for their OWN actions instead of forever blaming someone else, that goes for individuals up to our Congress and President.
For the life of me I can’t see where any of this money will go toward Public safety as advertised on TV except thru the General Fund. At a time when the state is cutting all types of programs etc…..I can only see disaster. When the lottery came in they said it would be the answer to our school funding for the state…sure haven’t see that one yet. Good Luck people.
@bumblebee - Ray is still there? He must be 100 now so maybe he can retire finally.
wow spokesman
More Dollar stores coming your way! Or Easy loan sharks!
$11.35 an hour would mean living below the federal standard for poverty. After taxes it’s about $1400.00 a month. That would qualify a father of three for food stamps, medicaid for his children, section 8 housing and a host of other social programs. So before you had self-supporting people in jobs with livable wages and now you’ll get minimum wage drones at Wal-Mart who’ll need to be subsidized by tax payers. Brilliant move Washington voters.
We need to rid ourselves of initiative style governance. It’s mobocracy, not democracy. We elect representatives to make these types of decisions, not allow monied interests to grease the skids solely in their favor. The only initiative I’ll ever sign and/or vote for will be one to eliminate initiatives!
I know a lot of you are whining and complaining about this. But WA state was way behind the rest of the country. Our present legislation and liquor control board has been in existence for 78 years! Clearly a holdover from Prohibition. Ten years from now, people will look back and say, “the transition cost a few jobs but in the long run was the right way to go”. WA state is only one of a handful of states that still operate this way. It was time for change.
Seer I have to agree with your last paragraph with one exception we have a republic not a democracy other than that you are right on. True democracys do not elect represenitives.
This should cut your liquor prices by about 50%. The people of WA are being raped by the state for liquor, compared to other states. Idaho will soon follow suit, as many will just jump the state line and buy in WA when this law takes affect. Just like the days of the past where every 19 year old was flocking to State Line ID on weekends to drink.
In ten years, when there’s a Washington state income tax and liquor’s more expensive than it is now, ask yourself if this was a good idea.