The Washington State Legislature is about to pass—and the Governor is expected to sign—HB 2040. This bill effectively wipes out tied house laws in Washington. A simple example will explain the situation:
Bill owns Bill's Distribution Inc. It distributes beer and wine in Washington. Under this new law, Bill could form his own restaurant or tavern business. It cannot operate that retail business under Bill's Distributor Inc., but could under a new name (i.e. Bill's Restaurant, Inc). As you probably know, a few years ago, Costco sued the Washington Liquor Control Board to try and set aside some of these tied house laws. It failed at the 9th Circuit. If this law passes, Costco could set up its own distribution business (under a different name) and distribute beer and wine to its sister company. Of course, as a distributor, it must allow other retailers the right to purchase its product if that product is available. In other words, it will be hard for Costco Distribution to only sell direct to Costco Inc.
What other problems could this mean to you in your state?
Question: If Costco were to set up a distribution company in Washington state, and it came to you in California (as an example) and asked you to help them get a typical retail license for a new store they were opening in Santa Barbara, how would it answer California's typical tied house question: "Do you have any interest in the manufacture or distribution of alcohol?" Costco would say it does not distribute in California, but it does in Washington. Would they be able to get a new liquor license? Would all of their retail liquor licenses in California be in jeopardy?
Rumor has it that should this bill pass, a ground swell of positive reaction in other states is expected, and it is predicted that many states will follow. I guess we will see.