It's a known fact that ever since the state of Washington began privatizing its liquor sales, more consumers have been crossing into Idaho to buy cheaper booze.
Jeff Anderson, director of the Idaho State Liquor Division, said November 2013 sales, for example, were up 40 percent compared to the year before in the border communities of Moscow and Post Falls. Idaho also opened a new liquor store in the small Idaho Panhandle community of State Line, just to relieve some of the overwhelming sales pressure from the Post Falls store.
The Washington Department of Revenue says the average price of a bottle of liquor is $24.06, but that's a lot higher than Idaho's average of approximately $21.59.
And now, the Associated Press reports that Washington lawmakers want some of those liquor sales back.
Washington lawmakers introduced a measure Feb. 26 that would gradually lower that state's liquor sales taxes from 20.5 percent down to 6.5 percent over eight years.
According to fiscal impact estimates attached to the bill, cutting taxes for booze would cost the state $20 million in the first two years of implementation and more than $46 million two years later. Local governments would also lose about $20 million, according to those estimates.
But supporters say the ultimate impact would boost sales tremendously and have a positive influence on the overall economy.
In early March, Boise Weekly sat down to have a conversation with Jeff Anderson, Director of Idaho Lottery and the Idaho State Liquor Division.
Among other topics, we asked Anderson about "the Five Wives incident." In May 2012, Anderson balked at Five Wives Vodka, calling its label featuring women hiking up their skirts offensive. When the Utah-based distiller, Ogden's Own, took its dispute to national media outlets a verbal firestorm erupted, resulting in the Idaho Liquor Division backing down and allowing the vodka to be sold in state-run stores.
"I got in trouble by being too honest about the reasons we didn't want something," Anderson told BW. "The product is fine. If you want to spend $20 for Five Wives Vodka, fine. In fact, we just ordered another pallet [approximately 720 bottles]."
When we asked Anderson about his change of heart, he said he wasn't interested in a long, drawn-out legal battle.
"There was no point in getting into a protracted fight with Georgetown lawyers over whether or not we're going to give a slot on a shelf for $20 vodka. OK. Uncle. You got me. I'm done," said Anderson.
And now, the the Thomas Jefferson Center for the Protection of Free Expresion has picked the Idaho State Liquor Division as a 2013 recipient of one of its annual Jefferson Muzzles awards - as an affront to free speech - due to the Five Wives incident. The prize? A t-shirt.
Idaho lawmakers listened to resort town officials this morning call the Gem State's liquor laws a drag on their communities, making it difficult for restaurants to compete for business.
"When customers come in, they realize they can’t have a cocktail with dinner," Driggs Mayor Daniel Powers told members of the House State Affairs Committe. "As a tourist destination, we compete with neighboring states, and keeping our customers from a full dining experience hurts our ability to grow economically."
Only two restaurants in the small eastern border town of Driggs can pour liquor, in accordance with Idaho's liquor by the drink license quota system. Currently, standard liquor licenses, excluding those for airports, golf courses and a list of other locations, are issued to restaurants and bars per 1,500 residents.
House Bill 195 would allow restaurants located in "resort cities" such as Driggs to receive a liquor license exempt from the quota, provided 60 percent of their gross revenue is derived from the "sale of meals on-site."
Of the 19 restaurants in Driggs, Powers told lawmakers a half dozen would be considered sit-down restaurants, and could benefit from liquor licenses.
However license-holders were firmly against the bill, concerned their investment in licenses—which can net big returns when sold to another restaurateur—would be diluted by more licenses.
"We had to wait 12 years to purchase the liquor license. We’re one of the people who invested in that as our retirement," said Melina Nielsen, owner of Si, Bueno in McCall.
"The act before you is fatally flawed," said Russell Westerberg, a lobbyist representing Coeur d'Alene Resort operators Hagadone Hospitality.
"Those promoting this legislation should be careful what they wish for. This bill would open the door to national chains to come in and compete with their businesses," said Raeleen Welton, lobbyist for the Idaho Licensed Beverage Association.
A motion to hold the bill in committee passed unanimously by a voice vote.
Idaho lawmakers have repeatedly said that they don't like to craft new laws or change existing Idaho Code to simply accommodate one business or a small segment of the population. But the Senate State Affairs Committee on Monday approved a bill granting a special exemption to the Caldwell Night Rodeo to serve hard liquor.
CNR officials said they used a catering permit from a local restaurant to serve liquor in the past, but the Idaho State Liquor Division said that was a horse of a different color. So, on Monday, rodeo representatives went before the State Affairs Committee for a special exemption to sell cocktails.
The Associated Press reports that Idaho Falls Republican Sen. Bart Davis struggled with the proposal, saying he was opposed to making it easier to drink at family events and that the measure could be interpreted by some as allowing rodeos in other communities to serve liquor.
But the measure passed through committee and awaits approval from the full Senate.
Garden City’s old-school prawn and prime rib shack, Stagecoach Inn, recently had its liquor license seized for nonpayment of taxes. According to a notice posted on the Idaho State Tax Commission’s website, the license is being auctioned off in a sealed bid sale, with a minimum bid of $75,000, which closes Jan. 24 at 10 a.m.
Stagecoach Inn owners Rick and Jennifer Fraser didn’t return multiple calls from Boise Weekly for comment. But on the restaurant’s Facebook page Jan. 9, Stagecoach opened itself up for questions from customers:
“I know many of you have questions/comments for me so fire it up and lets start a dialogue,” Stagecoach Inn wrote.
One customer asked, “What's up with your liquor license?”
Stagecoach Inn replied, “We are working hard to get it back. We apologize for the inconvenience this has caused our customers. As soon as we have a change of status I will put it on the Reader Board outside and post the drink specials here on our Page. Thanks for the inquiry.”
Another customer asked: “Are u guys closing?”
To which Stagecoach Inn replied: “No plans to close at all! Still serving Lunch and Dinner with Great Service!”
We’ll keep you updated as this story develops.
2012 can't end soon enough for independent liquor stores in Washington state, hoping that their state's legislators can come to their rescue in 2013.
After watching their state hand the reins of liquor sales over to private companies seven months ago, independent retailers say state fees have eroded their profit margins and ultimately increased the price of booze.
This morning's Tri-City Herald reports that regional storeowners are considering closing their doors if changes aren't made soon.
Additionally, mom and pop liquor retailers say big box stores—such as Costco—are eligible "for quanitity discounts under Initiative 1183 that smaller stores don't qualify for, making it harder to compete with chain grocery stores and pharmacies."
Initiative 1183, approved by Washington voters in 2011 and effective in June of this year, added a 10 percent fee on distributors and a 17 percent fee on retailers in the place of a state markup that Washington used to slap on liquor sales. But the new fees are in addition to the already existing 20.6 percent Washington sales tax and liter tax.
The Herald reports that about 60 small Washington stores have already shut down or never reopened because of the change. Another 20-30 small stores might close in the coming months, according to one retailer.
Washington's recent privatization of liquor sales has been good for business—in Oregon.
The Associated Press reports that June liquor sales jumped 35 percent at stores near the Oregon-Washington border, right after Washington handed the keys over for liquor sales to private owners and operators. According to the AP, one store in Rainier, Ore.—right across the Columbia River from Longview, Wash.—saw a 60 percent sales increase in June over the same month a year ago. Other stores in Umatilla and Milton-Freewater, Ore., reported sales increases above 50 percent.
Statewide, Oregon liquor sales grew by 12 percent in the first month since Washington's change.
According to the AP, Oregon doesn't track where liquor consumers live, "so there is no definitive proof that the Washington law is driving the influx, but owners of several border stores said their new customers are after lower prices in Oregon."
In November 2011, Washington voters passed an initiative to take the state out of the liquor business for the first time since Prohibition.
Some Treasure Valley tavern and restaurant owners are prepared to shell out as much as $140,000 for a secondary market liquor license instead of waiting in line, as long as 16 years.
This morning's Idaho Press-Tribune reports that the City of Boise has the longest waiting list for businesses interested in obtaining a liquor license. According to the Press-Tribune, 72 businesses are currently on the list.
Based on population, Idaho state liquor laws allocate two licenses for Boise (just like every other city in the state) and an additional license for every 1,500 people. The Press-Tribune reports that 137 liquor license are currently taken in the City of Trees. Comparatively, Meridian has approximately 50 licenses, Nampa has 54 and Caldwell as 40.
Traditionally, an application and annual fee for a liquor license runs $750 in a city with a population of 3,000 or greater. But because of the long waiting list, some licenses in the City of Boise are currently being sold by individuals or businesses at $130,000-$140,000. The Press-Tribune reports that the secondary market in Canyon County has a going rate of $50,000-$90,000.
Additionally, some new businesses choose to lease a liquor license from the secondary market. The Press-Tribune reports that a current lease of a liquor license in Boise could cost $1,600 per year.
After a kerfluffle brewed between the makers of Five Wives vodka and the State of Idaho, the distillery issued a statement that it was pursuing legal action. Now Idaho has been formally informed of those intentions.
In a letter dated June 6, Jonathan Turley notified Jeffrey Anderson, director of the Idaho State Liquor Division of Ogden's Own Distillery's intent to pursue legal action. Turley is a professor at the George Washington University Law School in Washington, D.C., now retained to represent Ogden's Own.
"In a desire to avoid unnecessary litigation, this letter demands that you reverse your rejection of special orders of 'Five Wives Vodka' and that you not use this same basis to reject the product in a renewed request for general listing," wrote Turley.
The move comes on the heels of the ISLD's promises to work with the distillery, and the Boise-based distributor, Elite Spirits. However Anderson maintains that the product isn't carried on Idaho state shelves because of its sub-par taste, competitive price point and concern for its risque label.
"The product is OK, it's average," Anderson told Boise Weekly. "But at $21.95, we don't see it being successful in Idaho. The packaging was only the tie-breaker."
Turley also wrote:
"Absent such a reversal of the decision and the underlying policy, we will assume that the matter will have to be submitted to a federal court for appropriate relief."