The University of Idaho Argonaut

Photo Illustration by Jake Barber/Argonaut

When Prohibition ended in 1933, states had two choices – control

liquor sales themselves, or hand it to private businesses.

“As a customer, I’m not a fan of it,” said Bill Cole, associate manager and bartender at The Garden Lounge in Moscow. “I would love to be able to get liquor at 9 o’clock at night if I decided I wanted to get liquor.”

It’s not for lack of trying that those 20 jurisdictions still control liquor sales.

In 1998, Sen. Gary Schroeder, a Moscow Republican, introduced a bill to call for the examination of privatization.

“We have a lot of legislators who are basically opposed to the sale of alcohol,” Schroeder said. “They don’t want to open up the sale of liquor to privatization. That’s basically what it amounts to.”

In Washington, Sen. Tim Sheldon, a Democrat, introduced a bill in January to call for the outright privatization of liquor sales at both the warehouse and retail level.

Along with the actual producers of alcohol, warehousing and retail make up the “three-tier system” in the U.S designed to limit influence and collusion by suppliers.

Though no state has subsequently privatized both warehouse and retail sales, a handful have sold or contracted their retail operations to the private sector.

In both Idaho and Washington, privatization was a non-starter in their respective capitals.

“As I recall, (the 1998 bill) just died in committee,” Schroeder said. “I know that there was a sufficient lack of interest that I haven’t tried it since.”

Sheldon’s bill has been introduced before, with limited success shy of a governor’s pen.

“I did pass it out of the Senate in 2003,” Sheldon said.

His bill has two co-sponsors this year. Both are Republicans, and one, Sen. Mike Hewitt, is the leader of that body’s Republican caucus.

“Unfortunately for me, my own (Democratic) caucus is trying to kill this bill,” Sheldon said.

The dichotomy might seem puzzling — Democrats in control of one state’s legislature are just as uninterested in privatization as the Republicans controlling another state’s legislature.

“Some things are not Republican values, they’re personal values,” Schroeder said. “We have a lot of people here who have personal convictions that drinking alcohol is not a good thing to do, so they’re not going to support anything which would tend to make alcohol more available to people.”

Idaho’s GOP controls 76 percent of the state’s legislative seats, while Washington’s Democrats control 65 percent of the seats in that state.

The balance in both states is held by the other party.

According to Shirley Ringo, a Democratic representative in Idaho’s Legislature also from Moscow, there is “no strong sentiment” to privatize.

“I think that Sen. Schroeder’s suggestion should be examined, but I don’t see a lot of mood among people in the Legislature to do that,” she said. “I don’t think anybody is particularly unhappy (with the status quo) or the majority of people are not unhappy enough with the situation as it is.”

According to the dispensary’s yearly report for fiscal year 2008, per-capita liquor consumption in Idaho is below national averages for both open states and control states. The difference between Idaho’s consumption and the open state average is about a fifth of a gallon less annually per person.

The alcohol laws in Idaho task the dispensary with both making liquor available to those who want it and curtailing its “intemperate use.”

According to Sheldon, disinterested sales staff leads to poor service and inefficiency. In Washington, as in Idaho, there’s only one warehouse for the entire state.

“The distribution center is on East Marginal Way in Seattle, and if you and I were running this we’d have one in Spokane, maybe one in Vancouver and one in Seattle,” he said.

Sheldon said much of the liquor comes by rail or truck, and as it comes in, it’s sent back on the same highway. “The agency is not interested in sales,” he said.

Sheldon said he believes privatizing liquor sales in Washington would save at least $50 million from the state’s budget.

To Nally and other defenders of the control system, the lack of incentive to sell is exactly the point.

“Being a monopoly, we’re expected to provide a certain level of service,” he said. “We try to provide the service, but not stimulate sales with heavy marketing or late hours in the stores.”

Idaho’s warehouse is located in Boise. In open states, suppliers sell to distributors, which then sell to retailers. In control states, suppliers sell to the state distributor, and local stores decide what they wish to stock from the state’s selection.

Though Idaho’s liquor dispensary carries around 1,400 different SKUs — a term referring to individual stock items, where, for instance, each combination of flavor, size and brand of a spirit would have a unique identifying number — specialty stores in other states might have more than twice that number.

The Garden has run into problems with product availability in Idaho.

“If (a liquor) isn’t accepted by the state, nobody can carry it,” Cole said. “There are certain liquors we would love to carry, but can’t because the state doesn’t offer them. We used to offer a vodka called Gomi, and recently the state decided not to carry it anymore.”

Bars in Idaho buy liquor at the same place everyone else does — local, state-run liquor stores.

“It’s obvious to me that the state of Idaho is not interested in the business of being a liquor store,” Cole said. “When you’re in business, you want to make money. You want to advertise.”

Sales of beer, wine and liquor by the drink, such as at a bar, are regulated by different parts of Idaho state code than retail sale.

Licensing for liquor establishments in the state is determined by a quota system allotting one license per 1,500 residents, although Gov. C. L. “Butch” Otter is reported to be mulling over changes to that system.

In Alberta, Canada, retail sale went to privatized control in 1994, after a change in the province’s leadership. A private contractor manages wholesaling, though the government retains ownership of the actual warehouse outside Edmonton.

Doug West, a professor of economics at the University of Alberta, prepared a paper in 1997 about Alberta’s experience for the Centre for the Study of State and Market, Faculty of Law, University of Toronto. He later revised it for Public Policy Sources, a journal published by a Canadian think tank advocating free markets, The Fraser Institute.

“We had 205 government liquor stores at the time of privatization, and now there’s about 1,000 privately owned liquor stores,” West said.

The greater number of liquor stores indicates expanded access to consumers. Hours were expanded to mirror the hours that bars are open, and more stores means driving distance is reduced for most customers.

“A lot of the abuse of alcohol is associated with people drinking it in bars and restaurants,” West said, “which clearly this has no impact on.”

West found in his paper that the taxes levied on liquor after privatization led to a revenue-neutral approach — liquor produced neither more nor less tax dollars for the government.

“In general, I think on balance the economic effects of privatization have been positive,” he said. “There’s greater variety in general. Competition exists now where none had existed before. (Stores) can run sales. They can advertise. There’s employment increases on account of privatization because there’s a much larger number of liquor stores.”

In Idaho, even incremental changes to availability are hard-fought.

A year ago, a bill to allow Election Day liquor sales passed the Idaho Senate by a margin of only two votes, at 18 - 16. In 2004, the same body voted 23-9 to endow counties with the right to allow Sunday liquor sales.

Schroeder voted in favor of both bills.

“We have absolute control from a legal standpoint of providing whatever parameters we want around the sale of liquor,” he said. “We can tell the liquor stores they can be open one hour a day and sell one bottle. But, whatever, it’s not done, you know?”