November 15, 2011

I-1183: New Business Opportunities for Craft Distilleries and Retailers

Initiative Measure 1183, approved by voters, privatizes spirit sales in the State of Washington. The initiative presents opportunities and potential challenges to Washington’s craft producers. In addition, spirits retailers will face more stringent training and supervision requirements than previously required for sales of beer and wine.

Opportunities For Craft Distilleries
I-1183 opens new sales opportunities for Washington’s craft distilleries. Each distillery may continue to sell up to two liters per day for off-premises consumption, as well as offer tastings (as before). Craft distilleries no longer will have to buy products from the Washington State Liquor Control Board for retail sales (or tastings). Instead, a distiller may act as its own distributor for those sales. Craft distilleries also will be able to sell up to 24 liters at a time to licensed retailers, including, for example, restaurants. Craft distilleries will be allowed to have price differentials in their spirit sales based upon "competitive conditions, costs of servicing a purchaser's account, efficiencies in handling goods, or other bona fide business factors."

Training Requirements For Retail Spirits Vendors
Under the new law, businesses seeking or renewing a “retail spirits license” must provide specified training of retail clerks and supervisors before they are permitted to sell spirits. The training must be renewed every five years, and the employer must maintain training records for all retail sales staff.

Although no training program currently exists, the Liquor Control Board is required to develop a “responsible vendor program” and create guidelines for employee training. In addition to the new training requirements, licensees must accept only certain forms of identification for alcohol sales, adopt related policies, post signs in the business, and keep records verifying compliance with the new requirements. We will provide updates as the Board defines the training requirements.

State Liquor Stores to Close by June 1, 2012 -- Stay Tuned
I-1183 takes effect immediately upon certification of the 2011 General Election by the Secretary of State. But, holders of a new spirits distributor license or spirits retail license may not commence distribution earlier than March 1, 2012; or for retailers, June 1, 2012 (the date retail sales by State Liquor Stores cease). Over the next few months the Liquor Control Board will issue regulations to implement I-1183.

Foster Pepper is pleased to have represented the sponsors of I-1183.

Sign up here to receive our e-alerts on this rapidly changing industry. If you have questions on I-1183 or other industry-related questions, please feel free to contact Foster Pepper’s Wine, Beer & Spirits Group.

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