One Year of Privatized Liquor in Washington

Today Washington state celebrates one year of liquor privatization, having in 2012 become the first state since the end of prohibition to dissolve its state-run monopoly on the distribution and sale of distilled spirits.

As Tom Banse reports at OPB, this has been good for consumers and good for the state government. Liquor can now be bought at more than 1,600 retailers in Washington, compared to just 329 before privatization. This represents a huge leap forward in terms of choice, competition, and convenience. Tax revenues, meanwhile, have soared: Washington expects to collect 37 percent more from liquor taxes and fees this year than it did in the final year of the state monopoly.

The only noticeable downside of the privatization initiative was an increase in the price of distilled spirits: “Washington’s Department of Revenue estimated the average price for a single bottle of spirits was 7 percent higher this March than last March.” Still, that figure represents a leveling off. Prices, which initially spiked (thanks in part to a 17 percent tax on retail sales and a 10 percent tax on wholesalers), have started to fall back as market competition has increased.

Opponents of liquor privatization often warn of the social ills that will materialize if access to distilled spirits is liberalized. But the early signs in Washington are positive: “Fatal crashes involving a drinking driver happened less often in the second half of last year—after privatization—compared to the same period in the prior two years.” It’s also worth pointing out that three-quarters of the American population live in states that do not practice alcoholic beverage control—and the sky hasn’t fallen yet.

Washington’s experience so far should encourage policymakers in other “control” states (starting with Pennsylvania) to pursue liquor privatization—it’s a win-win, for consumers and legislators alike. For more on liquor privatization, see this section of Reason’s Annual Privatization Report 2013.