By: Brooks Inciardi*
Abstract
At the end of Prohibition in the United States, the nation debated how it should regulate liquor. American philanthropist John D. Rockefeller commissioned a study on liquor control so that the scourges of bootlegging and saloons would not reenter American life. That study returned two liquor control plans. Eighteen states adopted Rockefeller’s preferred system—a state-controlled liquor monopoly—in which the government controls all retail liquor sales. The remaining states preferred a system in which private citizens and companies enter the liquor trade through a license system. Since states implemented Rockefeller’s state-controlled liquor monopoly, Washington has become the only state to dismantle its monopoly system successfully and institute a license system.
Washington’s liquor laws are unique. Washington is the only state that loosened the three-tier liquor distribution system, which separates manufacturing, distribution, and retail. Additionally, municipalities in Washington have little ability to regulate liquor in their communities. Furthermore, Washington requires new retail stores to have a floor plan of at least 10,000 square-feet. Finally, Washington collects license fees as a percentage of business revenue. Collectively, Washington’s liquor privatization catered to big-box stores, like Costco.
Washington’s experience with privatization became a template for other states. However, states should acknowledge the shortcomings of Washington’s example in pursuing a private liquor industry. States should allow municipal governments to promulgate their own regulations on the locations and premises of liquor stores. Further, states should keep license fees low and tax retailers’ revenue. Ultimately, this Comment argues that the main objective of a state pursuing privatization should be to encourage retail store competition and increase customer satisfaction.
* J.D. Candidate, The Pennsylvania State University School of Law, 2024.