One Liquor Distributor Seems to be Financing Both Sides – Real Target is I-1100, Which Repeals Distribution Rules

By Erik Smith

Staff writer/ Washington State Wire

OLYMPIA, Aug. 31.—The beer industry is opening up the taps to defeat a pair of initiatives that would close down the state liquor stores, and it signals a huge shift in campaign strategy by the distributors of alcoholic beverages.

            Some $2 million in new contributions showed up in the latest Public Disclosure Commission reports Monday -- making $4 million that the beer biz has poured into the ‘no’ campaign over the last week.

            But it's wrong to say it comes from the beer industry alone. Through interlocking partnerships and sales arrangements, hard-liquor distributors have an interest in the beer and wine business, and vice versa. And alcoholic-beverage distributors as a whole are in a state of alarm about Initiative 1100, a measure that would shutter the state liquor stores and allow booze sales in supermarkets and convenience stores. Polls show it’s a popular cause. And the problem with that, at least as far as wholesalers are concerned, is that among other things the retailer-backed measure would repeal rules that require all alcoholic-beverage sales to go through distributors. If the measure succeeds here, the movement could spread to the other 49 states where similar rules are in place.

            Earlier in the campaign season a pair of hard-liquor distributors financed their own competing ballot measure, I-1105, which would close the liquor stores while keeping the marketing and distribution rules intact. The measure made it to the ballot, but the distributors haven’t put up a dime since they paid off the signature gatherers last month. And in a telling slip -- or maybe just a mistake -- a campaign finance report last week indicated that one of the hard-liquor distributors had decided to put its money behind the beermen instead. That report was later amended.

            “I think it shows you that 1105 is just out there trying to confuse voters,” said Ashley Bach, spokesman for the competing I-1100. “It’s not that the distributors want to pass 1105. It’s that they want to defeat 1100.”

            Big New Donations

            The campaign finance reports show that the big money from the distributors is going to the “no” campaign, which calls itself Protect Our Communities. Late on Monday, another $2 million in contributions showed up on the Public Disclosure Commission website. Half came from the Beer Institute, the national lobbying arm for the beer industry, and the rest from the National Beer Wholesalers Association.

            Last week the national wholesalers put up $1 million, and the Washington State Beer and Wine Wholesalers Association contributed $975,000. The no campaign has raised about $4.7 million overall. Most of the rest of the money comes from labor unions representing state-liquor-store workers. 

            Playing Both Sides?

            The beer and wine biz has a clear financial stake in the outcome of the campaign. Even though the state liquor stores get the spotlight, repealing marketing and distribution rules hits the wholesalers where they live. Not only would I-1100 end their protected status under state law, they also would have to deal with volume discounts and payments for in-store displays, both of which are now prohibited for alcohol but are common practices for other commodities. And under both measures, beer and wine would end up competing with hard liquor for a limited amount of shelf space.

            The beer and wine distributors never climbed aboard the I-1105 campaign. That was financed entirely by two hard-liquor distributors, Young’s Market Co. of Los Angeles and The Odom Corp. of Bellevue. They put up $2.2 million to get it on the ballot – but they haven’t put in any money since July 19.

             And in a bizarre campaign filing last week, it appeared that Young’s, after spending $1.2 million of its own money on the campaign, had decided to finance the opposition instead.

            ‘A Complete and Total Error’

            The fund-raising report last week was one of those things the average human would never catch without the tireless work of political insiders.

             On Aug. 20, the same day that the Washington Beer and Wine Wholesalers Association Political Action Committee contributed its $975,000 to the “no” campaign, a $306,000 donation arrived in the PAC’s coffers from Columbia Distributing, a beer and wine wholesaler in Oregon and Washington. So basically about a third of the money came from Columbia.

            But last week that report said something different. Initially, when the report was filed, it said the $306,000 came from Young’s Columbia – a wine distributing venture jointly owned by Columbia Distributing and Young’s Market Co.

            If you look at the Young’s Market Co. website, you can see there are close ties between the two companies. Young's Market Co. executives oversee Young's Columbia, for example.

            All of which made it look like the same company is backing “yes” and “no.”

            But Charla Neuman, spokeswoman for the I-1105 campaign, said the whole thing was ‘a complete and total error.’ A mistaken report by the Beer and Wine Wholesalers Association was to blame, she said.

            New Filing Makes Everything Clear

            Neuman said the amended campaign report should clear everything up. Young’s Columbia and Columbia Distributing “are two separate companies.”

They just happen to have some of the same owners.

            She said the folks at Young’s caught the mistake within an hour of its posting last week. “Everyone with Young’s said, ‘what?’ ” she said.

            Neuman said everyone on board with 1105 truly believes in liquor-store privatization – as long as the distribution and marketing rules are firmly in place. She also denied that the campaign is “going dark,” saying that resources are expected when they are needed. And she said the charges come from people “who have too much time on their hands.”

            A Freudian Campaign Slip?

            The folks behind I-1100 have been waiting for this sort of thing all election along. They’ve been saying I-1105 was always a ruse to confuse voters. But something this obvious? That surprises them.
            “If they’re dealing from both sides of the deck, it just makes their whole initiative look like a joke,” Bach said.