Washington Liquor Privatization: One Year Later

On June 1, it will be one year since Washington state ended its government monopoly on liquor sales. To mark the occasion, the Seattle Times has provided a nice overview of how privatization has affected Washingtonians thus far. Here are some of the highlights:

  • Liquor sales have increased.
  • Tax revenue has increased.
  • Prices have varied, in part because of new fees and taxes.
  • Washington has seen a net job gain after privatization.
  • Drunk driving fatalities are on the decline.
  • The state has seen an increase in shoplifting.

How were things before privatization? “It was a disaster.” That is how Tim Sheldon, the Democratic President Pro Tempore of the Washington State Senate, described the liquor monopoly in his state in a podcast. 

Senator Sheldon lamented how difficult it was for retail stores to get the inventory they needed. Sound familiar, Pennsylvania? The state’s single liquor distribution warehouse could only process 15,000 cases a day, one-fourth the production of a similar private distribution warehouse based in Seattle. 

It is true that some liquor prices have increased in Washington. However, privatization is not to blame.  Excessive taxes and new fees is the reason many have seen a price increase. Washington now imposes the highest liquor tax in the country at $35.22 per gallon, according to the Tax Foundation.  The state has imposed an additional tax on private distributors and will require them to collectively pay $150 million in licensing fees. These costs are passed on to consumers in the form of higher prices, which is driving consumers to other states for their booze.

The disasters predicted for Pennsylvania by vested interests opposing privatization have simply not happened in Washington. Pennsylvania must pass full privatization, which means a complete divestiture of both the retail and wholesale sides of liquor sales, absent any new taxes or fees. The evidence is overwhelming; the government in the booze business is a lose business.