Washington Fate of liquor initiative has distillers stuck in limbo

By Shannon Dininny Associated Press YAKIMA, Wash. (AP) -- Washington's craft distillers are finding themselves in a state of limbo following a judge's ruling last week that could derail the voter-approved initiative that requires the state to get out of the liquor business. The fate of Initiative 1183, which was approved last fall, has been in question since two lawsuits were subsequently filed challenging the constitutionality of the measure. Steve Stone of Sound Spirits in Seattle says the timing of the uncertainty is awful for a growing industry that was making economic gains, particularly small distillers who are just starting out in the business. More than 20 Washington distilleries are currently in production. "They need a stable system -- and efficient marketplace, if you will -- to get their businesses going," he said. "We're all in limbo." Voters approved I-1183 last fall to privatize liquor sales and dismantle Washington's state-run liquor system, which was formed in the 1930s in the aftermath of Prohibition. The measure, backed by retailing giant Costco, allows stores larger than 10,000 square feet to sell liquor, though it could allow smaller stores to sell liquor if there are no other outlets in a trade area. Opponents filed suit, arguing that it violates state rules requiring initiatives to address only one subject because it includes a provision for funding for public safety. The judge on Friday upheld most of the measure to privatize liquor sales, but called for a trial to determine whether voters would have approved the initiative without the provision. The entire measure would be nullified if the court determines that voters would have rejected the initiative without the provision. "We're the ones who lost," said Brian Morton of Blue Flame Spirits, a Prosser distiller that produces vodka, gin, whiskey, brandy and grappa. Morton estimates he's lost as much as $100,000 since the initiative was passed, because the state has bought less of his product. "We were pretty much selling exclusively in state stores, so not using them, we got the rug pulled out from underneath us," he said. "We're all in a waiting game." More than 800 retailers across the state have applied to sell liquor, including Costco, Fred Meyer, Albertson's and Safeway, and consumers will be able to buy liquor directly from private retailers beginning June 1. Meanwhile, the Washington Liquor Control Board has said it will continue with plans to implement the measure, despite the court case. "The judge did not issue a stay of the initiative, and we have some aggressive timelines to meet to be able to transition to the private sector," spokesman Brian Smith said. "We will continue down that path to ensure we're meeting those requirements." Sound Spirits has been open for about a year and a half, which Stone said has helped him to better weather the uncertainty. His products are sold in state liquor stores. "We're not against privatization. We'll make any system work," he said. "Until we hear otherwise, we're just going to assume it's all going to go down as the voters dictated, but it doesn't make this whole process any less complex." He also noted the June 1 deadline. "At that point, if something doesn't happen by then, you can't reverse it," he said. "There is a time crunch." Published: Wed, Mar 7, 2012