Stores wade through liquor applications

Retailers must deal with numerous details, including seven different taxes that are levied on liquor sales.

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WALLA WALLA - Applications have started to come forward from area grocery stores planning a shot at retail liquor sales.

At least three grocery stores have filed applications or indicated an interest in selling spirits in preparation for the state's transition out of the liquor business under an initiative approved by 59 percent of the voters last November.

The changeover from I-1183 is expected to transform the retail landscape for alcohol sales, moving it from the state's operation to the private sector starting June 1.

For consumers, the transition is easy, officials say. It means more locations at grocery stores for finding liquor, likely at cheaper prices, and throughout longer hours of the day. But for retailers the process is one with a lot of twists.

Super 1 Foods, Bi-Mart and Walla Walla's Harvest Foods are among the first to show their intent to carry alcohol. During a Walla Walla City Council meeting last week the three applications were unanimously approved by Council members in attendance as part of the state approval process for liquor sales.

Bi-Mart and Super 1 applied for retail spirits licenses as part of their applications. Harvest Foods' piece approved by Council last week was for wine reselling, but store owner Nolan Lockwood said he has also applied for a license to sell alcohol.

The applications serve as a starting point to determine how privatizing liquor sales may look in the local community after the closure of Walla Walla's state liquor store on Ninth Avenue.

Walla Walla City Manager Nabiel Shawa said he anticipates more applications will make their way through City Hall because of key timing elements.

Starting March 1, retailers who meet the qualifications will be legally allowed to begin building their liquor inventories. For the city, privatization could mean an increase in revenue for the city's general fund. Shawa doesn't expect it to be a big one at this point.

"It's not really that big of a change for us at all. It's about the convenience of the consumer," Shawa said. "The big sea change is at the store level: What are they going to inventory, how are they going to display it?"

But that's just one small piece after retailers determine they meet the 10,000-square-foot requirement to even consider selling liquor.

Applicants must also develop a security plan to address inventory management and employee training, as well as physical security of the products to prevent sales to underage or under-the-influence customers and theft. More complicated for some retailers, particularly smaller independent stores, is determining whether the business's current operational structure can support the transition.

Lockwood said seven different taxes are levied on retail liquor sales. Calculating them, collecting them and sorting them requires more sophisticated computerized accounting than most independent stores have or could afford to get.

Lockwood said progress may be in the works on the cash register front. He said legislators seem willing to work with retailers on developing a system that will work for the smaller stores. A meeting at the capital more than a week ago between independent retailers and legislative officials seemed positive, he said.

Another daunting task also remains: Building relationships with producers and wholesalers to buy the products.

At the end of the day, Lockwood doesn't believe liquor sales will boost revenue at his store. On the other hand, he believes it needs to be offered to remain competitive with other markets in the community.

Though privatization has already taken place in other states, it's difficult to find models for the transition. Every state has vastly differing regulations, Lockwood said.

"I think the general public just thinks they'll be able to go to any grocery store on June 1 and they'll be able to purchase alcohol like they do in Nevada," he said. But with so many details yet determined, he said some stores - his own included - may opt to hold off the first year just to get the details worked out.

"We've got to let the smoke settle so we can figure this out," he said.

One issue still to be determined is the constitutionality of the initiative itself, which has been questioned in two separate lawsuits.

Opponents of the change have said the initiative was unconstitutional because it violated a rule that voter initiatives address just one subject.

In addition to moving liquor to grocery stores, the initiative changes wine-distribution laws as well as the ability of the Liquor Control Board to regulate alcohol advertising, and creates new franchise protections for liquor distributors, opponents say.

Suits have been filed in King County by two unions representing the roughly 1,000 workers who will lose their jobs from the closures and in Cowlitz County by an attorney representing a small grocer, a landlord and the Washington Association for Substance Abuse and Violence Prevention.

Arguments in the Cowlitz County suit are scheduled to be heard March 5.

There are so many unknown variables in the change that those planning to sell liquor have no choice but to move forward simultaneous with the legal pursuits to block the transition.

One thing Lockwood knows for sure: "You have to have a license, so we've started with that."

The Seattle Times contributed to this piece.

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