SENATE BILL REPORT

SB 5248

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Background: Washington's tied house laws regulate the relationship between liquor manufacturers, distributors (industry members), and retailers. In general, tied house laws are meant to regulate how liquor is marketed and prevent the vertical integration of the three tiers of the liquor industry. The general rule is that no industry member may advance and no retailer may receive money or money's worth under an agreement or by means of any other business practice or arrangement.

There are numerous exceptions to the tied house laws. One exception allows domestic wineries to perform personal services such as participation and pouring, bottle signing events, and informational or educational activities, at the premises of certain retailers and those holding special occasion licenses or private club licenses.

Another exception allows domestic breweries, microbreweries, and beer certificate holders to perform personal services, but only at the premises of grocery store licensees with a tasting permit.

Distillers, importers, manufacturers of spirits, and spirits importers to retailers are not authorized to perform personal services.

Summary of Bill: Domestic wineries, breweries, and microbreweries may also perform enhanced packaging promotions, such as bottle engravings, as part of their personal services.

Domestic breweries or microbreweries may also conduct personal services for beer and/or wine specialty shop licensees.

Distillers, importers, manufacturers of spirits, and spirits importers to retailers are authorized to perform personal services on the premises of a grocery store holding a tasting permit or at a beer or wine specialty shop that holds a spirits retail license.

The personal services authorized for any industry member may be performed by an agent of the industry member.

Staff Summary of Public Testimony: PRO: We are seeking parity with all other retailers to market their products and perform personal services. We support the amendment recommended by the Liquor Control Board (LCB) regarding definitions relating to enhanced packaging and promotions. The bill does not erode the three-tier system. These provisions currently exist for beer and wine, and as a matter of fairness should be expanded to spirits. The agent provision in the bill allows a third party to be hired to assist with a tasting versus having a winery send an employee here from California.

CON: This bill will have significant and notable impact on the marketplace. The bill will dramatically expand the number of tastings conducted in the state, as the suppliers will provide those services at no cost. The bill will effectively create a pay-to-play situation where the large players in the market can provide free services and demand preferential treatment. The prohibition against money's worth protects the markets and the consumers.

OTHER: We have concerns about how the bill is written in regard to the promotional packaging. We would be neutral on the bill if our recommended amendment is adopted. We are seeking consistency in education and enforcement in all areas.

Persons Testifying: PRO: Edward Cooper, Cindy Zehnder, Total Wine & More; Charlie Brown, Diageo.

CON: Scott Hazlegrove, WA Beer & Wine Distributors Assn.

OTHER: Justin Nordhorn, LCB.