SENATE BILL REPORT

                  ESSB 6648

              As Passed Senate, February 17, 1998

Title:  An act relating to permitting the licensing of retail alcoholic beverage businesses in which no manufacturer, importer, or wholesaler has a direct or indirect interest.

Brief Description:  Permitting licensing retail alcoholic beverages in which no manufacturers, importers, or wholesalers have an interest.

Sponsors:  Senate Committee on Commerce & Labor (originally sponsored by Senators Schow, Newhouse, Horn and Heavey).

Brief History:

Committee Activity:  Commerce & Labor:  2/3/98, 2/6/98 [DPS].

Passed Senate, 2/17/98, 45-3.

SENATE COMMITTEE ON COMMERCE & LABOR

Majority Report:  That Substitute Senate Bill No. 6648 be substituted therefor, and the substitute bill do pass.

  Signed by Senators Schow, Chair; Horn, Vice Chair; Franklin, Fraser, Heavey and Newhouse.

Staff:  Patrick Woods (786-7430)

Background:  Under Washington=s Atied house@ law, alcohol wholesalers, manufacturers and importers are prohibited from engaging in the retail liquor business.  Similarly, this prohibition extends to financial interests by these sectors in the retail activities of the liquor industry.  The intent of these restrictions is to prevent inappropriate or coercive business practices among the various sectors of the liquor industry.

However, since these prohibitions were established in 1935, numerous exceptions have been provided under specific circumstances.  These include:  (1) state or federally charted banks with financial interests; (2) on site brewery and winery sales; (3) individuals selling a wholesale liquor business under contract; (4) firms operating an exploration cruise line; (5) individuals operating a brew-pub; and (6) individuals operating an amphitheater with live entertainment.

Summary of Bill:  An additional exemption to the Atied house@ statute is provided to include a corporate entity with financial interests in retailing and wholesaling, manufacturing and importing liquor products, provided the corporate entity does not influence its related business activities or offers for sale any liquor products that are produced or distributed by a subsidiary.  A corporation may use various methods of financing in connection with the construction or operation of its facilities.

Appropriation:  None.

Fiscal Note:  Requested on February 2, 1998.

Effective Date:  July 1, 1998

Testimony For:  This bill will allow Bass PLC to operate their lodging establishments which have liquor for sale.

Testimony Against (original bill):  This exemption further erodes the tied-house principle that safeguards against coercive business practices.

Testified:  Bill Fritz, Corbin Houchins, Bass PLC (pro); Jim Halstrom, Jos.  E. Seagram & Sons, Inc. (pro); Nate Ford, Washington State Liquor Control Board; Dick Ducharme, Washington Beer and Wine Wholesalers Association (con); Stu Halsan, Coors Brewing (con).