News: Pike introduces bill to prevent future liquor lawsuits against state

Rep. Liz Pike, R-Camas, has introduced House Bill 2026 following the state’s adoption of Initiative 1183, the liquor-privatizing effort promoted by Costco.   In response to concerns from several constituents and citizens across the state, Pike’s bill provides for financial relief in the form of a refund from the state to bidders who experienced unanticipated adverse consequences after the purchase of the former state-owned liquor stores.

“Based on the testimony by those representing numerous bidders, I have come to the conclusion that most of the private liquor store bidders were not given accurate financial information in order to make an informed investment,” said Pike. “Sadly, many of the investors were minorities and most of them have lost everything.”

Pike’s bill aims to rectify many of the deficiencies including misrepresentation of pro-formas provided by the state to prospective bidders and a lack of attention to many other key factors in the transactions between the state and the successful bidders.

HB 2026 also addresses the following deficiencies which occurred in the transition:

  • Problems with application and timely processing of liquor application, fees, certain sales and other factors
  • Proximity to other larger stores holding spirits resale licenses
  • Inability to secure new leases at existing state store locations
  • Inability to find alternative sites within 1 mile radius of existing state store locations
  • Inability to negotiate favorable lease terms in the time allotted
  • State stores closed prematurely which gave retail customer base false impression stores were closed permanently
  • Sales history by individual product (SKU) not available by location
  • Uncertainty of inventory to be purchased
  • Represented inventory not available at time of transfer which necessitated use of cash reserves
  • Reorder of missing inventory items reduced profit margins from anticipated state inventory margins
  • Low order fulfillment for replacement items by distributors severely reduced total sales volume

Pike’s bill states that due to adverse impacts, successful bidders who believe they were misled by the Washington State Liquor Control Board (WSLCB) may apply for a refund to satisfy potential claims against the state.

“This proposed legislation is designed to mitigate hardships suffered by bidders of former state liquor stores.  Of equal importance, the bill also protects our state government from future litigation related to the transfer of state liquor stores,” said Pike.

Section 2 of the bill allows any party who successfully bid on a former state-owned liquor store to apply for a refund of the total amount of the successful bid plus bid premiums through July 30, 2013.  There is a verification process between bidder and WSLCB in the bill.

HB 2026 also allows the successful bidder of former state liquor store to sell their remaining inventory of spirits from the former state liquor store to any holder of a spirits retail license.

“Some of these folks have lost everything and have no way to liquidate their inventory.  This bill will help them get some of their investment back,” said Pike.


Washington State House Republican Communications