I-1100 to Decimate Washington Craft Brewing?

There's an alarming (or alarmist, depending on your perspective) story coming out of the Washington Brewers' Guild. I caught their press release over at Seattle Beer News, where friend of the site Geoff Kaiser argues forcefully that you should vote "No" on I-1100 (before caveating that he doesn't fully understand all the technicalities discussed), the measure, heavily backed by the beverage industry, to deregulate liquor sales in Washington.

"The problems resulting from Federal deregulation of telecommunication, airline, and banking industries are well known," reads part of the press release. "The affected industries now have reduced competition, less innovation, and benefit only the largest and wealthiest companies. I-1100 eliminates the level playing field that requires consistent pricing for all breweries."

The crux of the argument is essentially that Washington's heavily regulated liquor industry has benefitted the growth of craft brewing by levelling the playing field by limiting tactics big business uses in other states. Volume discounting through distributors could reduce the price of domestics dramatically compared to craft brews, who may even lose their distributors should they be unable to lower prices enough. Also, according to the brewers' association, deregulation would allow "tied houses," bars owned or controlled by a particular brewery.

Still, I find some of the arguments questionable at best. I'm particularly curious about the tied house idea. Ironically, anti-tied house laws were the target of craft brewers only a couple decades ago, because they prevented brewpubs from existing by forcibly separating production from consumer sales. Craft brewers desperately needed that option, since in the absence of large scale production of proven consumer demand distributors weren't interested in them. In other words, repealing essential components of tied house laws allowed brewers to create a successful business model by taking their products directly to the consumer. Perhaps someone more knowledgeable about current regulations can explain what I-1100 will do that, say, Elysian isn't already. Are brewpubs not legally allowed to sell just their own products?

Also, the association's claim that the measure "enabl[es] the biggest retailers, distributors, and producers to own and give favorable pricing to each other" is also somewhat suspect. I'm not exactly a raging free-market capitalist, but I think that what they're complaining about is increased competition. In other words, they've benefitted from an anti-competitive climate which protects them from pressure from wholesalers to lower their prices. Good for their business, bad for consumers' pocketbooks. And of course, nowhere does the brewers' association point out that the status quo has had the opposite effect on Washington distilleries, who struggle in an oppressive legal environment.

With all that said, I'm a huge fan of craft brewing, particularly Northwest brewers, and would like to see them continue to enjoy some advantages. So all in all, this requires more investigation, but it sounds like there's another legitimate hit against I-1100, in addition to the likelihood it will cost the state more in revenues than supporters claim.