Collectively, they’re known as Tied House Laws, and they date to the end of Prohibition.
Washington, like other states, adopted laws in the early 1930s aimed at preventing a “house,” or drinking establishment, from becoming “tied” to an alcohol manufacturer or distributor.
By erecting a wall between manufacturers and retailers, lawmakers hoped to avoid the kinds of problems that historically came from close connections -– like breweries bribing barkeepers, and Al Capone-style gangsters building empires by controlling which brands of booze were sold at bars.
That was fine, then.
But plenty has changed in the ensuing decades, including the birth and rise of a Washington wine industry that was not contemplated by the 1933 legislation known as the Steele Act.
Lawmakers have made a number of changes in the laws over the years to accommodate the changing times, but probably none as significant as this year’s adoption of House Bill 2040.
The new law, which went into effect July 26, ends the state’s prohibition against alcohol manufacturers and distributors holding a financial interest in retail establishments, making Washington the first state in the country to open up investing among the so-called “three tiers” (manufacturers, distributors and retailers).
The change is expected to promote economic development. It means that it will soon be possible, for example, for a winery to invest in a restaurant and for owners of a hotel to also invest in a winery and restaurant, said Jean Leonard, executive director of the Washington Wine Institute.
Leonard’s organization has lobbied for years to update the state’s laws, and supported this year’s legislation.
“It’s pretty significant,” said Rick Garza, deputy director of the Washington State Liquor Control Board. The state agency supported the law, which it described as a simplifying and modernization of Washington law.
The new law also:
· Removes a rule that required distributors to mark up their prices to retailers by 10 percent.
· Allows manufacturers to give away some branded promotional items of nominal value, such as cork screws or apparel, to retailers.
· Removes the so-called “post-and-hold” requirement that made beer and wine distributors file prices with the state Liquor Control Board and hold the price for 30 days.
The changes in pricing rules are related to a lawsuit Costco brought against the state in 2004, challenging the state's regulation of wine and beer sales and distribution.
A federal appeals court reversed a lower court ruling in 2008, upholding much of the state law.
But the state Legislature convened a committee in September to review the state's regulations, and the Legislature ended up approving House Bill 2040 in April.
Marty Clubb, president of the Washington Wine Institute and owner of L’Ecole N. 41 Winery, said the changes will help consumers.
“Washington already has some of the most progressive laws on direct-to-consumer retail sales,” Clubb said in a release. “Now our wineries will have some of the broadest privileges available to wineries anywhere in the country.”
