Initiative 1183: A Hidden Opportunity for Washington Hotels

It’s no secret that the State of Washington is getting out of the liquor business as of June 1, 2012 due to the implementation of Initiative 1183. Washington will no longer be in the ranks of “control” states that have monopolies on the distribution and/or retail sale of alcohol. 

One aspect of Initiative 1183 that seems to have gone unnoticed is that Washington hotels that hold hotel licenses will soon be able to sell distilled spirits directly to consumers “to go” without having to apply for a new license. RCW 66.24.590 (2)(e) has been amended to read as follows:  

The hotel license authorizes the licensee to … sell beer, including strong beer, spirits, or wine, in the manufacturer’s sealed container at retail sales locations within the hotel premises.  

Hotels will be able to buy the spirits from spirits retailer or spirits distributor licensees.   

This license privilege is particularly important because the requirements for obtaining spirits retail licenses are restrictive. For the most part, there are three categories of applicants that may be able to obtain spirits retail licenses.

The first group consists of the winning bidders for current state liquor stores that are in the process of being auctioned off and managers of contract liquor stores. Provided that the winning bidder or manager of a contract liquor store is generally qualified to obtain a liquor license, they will be able to own and operate their own liquor stores after June 1, 2012. These stores are not always in the most prime locations.

The second group is made up of large retail stores that have at least ten thousand square feet of fully enclosed retail space. Large retailers will be big players in this space, but are not always centrally or conveniently located.   

Lastly, there is an exception to the ten thousand square foot retail space requirement if there is no retail spirits license holder in the “trade area” that the applicant proposes to serve. The Washington State Liquor Control Board has not yet defined “trade area” in its rulemaking, but it’s likely that meeting the requirement for the exception will involve selecting a location that is somewhat remote.

Many hotels are located centrally or in high traffic or destination locations, often away from existing liquor stores or big box retailers. As a result, some Washington hotels may be able to add a new revenue stream with minimal expenditure by adding distilled spirits to their offerings.   

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