Court Invalidates Per-Day Limit on Amount of Spirits and Wine That Retailers Can Sell to Restaurants

As most readers know, Initiative 1183, passed in 2011 and enacted in 2012, privatized liquor sales in Washington.  Among other things, the Initiative created two new types of retail liquor privileges: (1) a retail spirits license, and (2) a wine retailer reseller endorsement.   These new privileges allow grocery stores, former state-owned liquor stores, and other establishments that meet space and licensing requirements, to sell spirits or wine for resale to on-premise licensees, such as restaurants.  However, Initiative 1183 was clear that “no single sale [to an on-premise licensee] may exceed twenty-four liters . . . .”  In other words, each individual sale by a retailer to a restaurant is limited to 24 liters.

When the Liquor Control Board passed rules to implement these provisions, it added an additional, temporal limitation on sales by retailers to restaurants.  Specifically, the rules passed by the Board provide that no single sale may exceed 24 liters, but also provide that single sales to a restaurant are limited to one per day.   Restaurants and retailers opposed the additional temporal limitation during the Board’s rulemaking, and Cairncross & Hempelmann submitted a formal comment on behalf of the Washington Restaurant Association, explaining that adding a temporal limit where none existed in the Initiative itself amounted to impermissible legislation by the Board.  Nonetheless, the Board passed the rule with the per-day limit.  The Washington Restaurant Association, Costco Wholesale, and the Northwest Grocery Association subsequently challenged the rule in Thurston County Superior Court.   In defense of the additional temporal limit, the Board argued that without a per-day limit, the 24-liters-per-sale limit would be meaningless.  Two weeks ago, the Court ruled against the Board on this issue.  Although the Court agreed that the 24-liter limit would be more meaningful with the per-day restriction, it wrote that “it is not the Board’s place, nor this Court’s, to infuse a policy into statutory language that is not there, even if that policy improves the statute.”  The Court observed that even “[t]he Board concedes that . . . without the ‘per day’ restriction, multiple transactions of 24 liters would still require multiple invoices and other record-keeping obligations.”  In other words, the 24-liter-per-sale limit would still have meaning, even without the additional limit imposed by the Board.   In the end, the Court invalidated the per-day limit, finding that the Board exceeded its authority by adding a temporal restriction to a statute that “included no temporal restriction on sales between retailers, merely a ‘per transaction’ limitation.”  It is not yet known whether the Board will appeal.