Friday, June 18, 2010

Feedback to Initiative 1100

Family Wineries of Washington State has received lots of feedback, both positive and negative, from member and non-member wineries about Initiative 1100. Listening to the views of member and non-member wineries is very important to FWWS. We understand that some wineries in Washington State (including a significant minority of FWWS members) believe that there are benefits to wineries under the current legal system -- namely the prohibition on volume discounts and the prohibition on offering credit -- that are worth preserving. We have studied these issues carefully for many years and discussed them with legal and economic experts. Our research and these experts have convinced us that these economic restrictions cause more harm than good.

While some individual wineries may feel they benefit from the ban on discounts and credit, there is no doubt that these restrictions limit innovation and the growth of the Washington wine industry as a whole. The restrictions reduce available capital, favor large distributors, and are unfair to retailers, winegrowers and, most importantly, wine consumers. No other industry in Washington State operates under such a paternalistic system. While I-1100 may not perfectly represent all the best interests of the wine industry, the Board believes that the opportunity presented by this convergence of political, economic, and electoral forces will not occur again and must, when weighing the freedoms and opportunities gained against the special treatments lost, be embraced.

Initiative 1100 presents an extraordinary opportunity for our industry. FWWS, while advocating for a comprehensive separation of economic regulation from public safety regulation under the liquor code, has for three years proposed bills in Olympia which offered either significant compromises on major issues such as credit (example: our Payment Parity bill) or voluntary exemption of wineries from restrictions on trade (example: our Craft Wineries bill). Each and every proposal has been rebuffed, without any offer of compromise, by both the Washington Beer and Wine Wholesalers Association, and the Washington Wine Institute. In light of this sustained and uncompromising opposition, the opportunity posed by Initiative 1100 could not be ignored by FWWS. The drafters of Initiative 1100 chose to achieve the privatization of liquor sales in Washington - a proposal that polls show is extremely popular with voters - by comprehensively removing the state from both the sale of alcohol and the economic regulation of the sale of alcohol on behalf of special interests. For those who believe that the "protections" in the existing law are in their own self interest, the question presented by initiative 1100 is this: Are these features of the current law, on balance, worth preserving if doing so will jeopardize the best chance we may see in our lifetimes for ending the invasive and stifling day to day control of our private economic affairs by the Liquor Board? While I-1100 may not perfectly represent all the perceived interests of every winery, the Board of FWWS believes that the opportunity presented by the convergence of political, economic, and electoral forces in 1100 must be embraced. The freedoms to be gained outweigh the special treatment to be lost.

We believe it is time for the Washington wine industry to loosen the shackles of the past and embrace a new era of fair competition and growth. We firmly believe that small wineries and small retailers have the most to gain from the flexibility that Initiative 1100 will provide. Small wineries and retailers have never been able to fight toe to toe with the big companies and the current law unfairly favors large distributors. Initiative 1100 will provide small wineries and retailers with more flexibility to find the niches of profitability the big companies leave behind and that small wineries and retailers have long exploited by being more nimble and providing better quality, selection and location than the makers and sellers of commodity wines. A free market is the only truly level playing field.

For too long, every time a winery thinks of a new way to sell Washington wine, the winery has had to go to the legislature for an exception from the existing law. We respect that others may have different opinions but we think that passage of Initiative 1100 will be the best legal development since the California Wine Act was passed by the legislature in 1968. The California Wine Act created the modern Washington wine industry by allowing the sale of California wine in Washington State stores and restaurants. The passage of Initiative 1100 represents a similar watershed opportunity for Washington State wineries (and breweries and distilleries). We hope all of you will come to share our view that the passage of Initiative 1100 is a huge opportunity to take all of our wineries to the next level.

Again, we thank those of you who have taken the time to express your views.

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