What did Idaho's AG flag about the 2012 ballot initiative to end Idaho's state liquor monopoly and privatize retail liquor sales?

Plain-English summary

A petition filed with Secretary of State Ben Ysursa on January 23, 2012, sought to privatize the retail sale of alcoholic liquor in Idaho. Idaho operates a "control" liquor system in which the State Liquor Division runs the retail liquor stores and serves as the sole legal seller of distilled spirits at the state level. The proposed initiative would have ended that monopoly and moved liquor retail to private licensees.

Attorney General Lawrence Wasden's certificate followed the standard Idaho Code § 34-1809 framework. The AG offered no opinion on the policy merits or on the projected revenue impact, and reminded petitioners that the AG's office would prepare ballot titles. The certificate's substantive section walked through the petition's structure and flagged drafting issues; readers should consult the original PDF for the full text of those substantive comments.

Currency note

This opinion was issued in 2012. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

Idaho is one of about 17 "control" or "monopoly" states that maintain state-run liquor retail systems. The legal framework dates to post-Prohibition policy choices made in the 1930s and has remained politically stable, with privatization proposals appearing on ballots in several control states (most notably Washington, which voted to privatize in 2011) without success in Idaho.

A privatization initiative typically must address several technical issues simultaneously: licensing scheme for new private retailers, transition rules for existing state inventory and employees, distribution channel reform (wholesale vs. retail separation), tax/markup replacement to preserve state revenue, and local-option provisions for cities or counties that prefer to remain dry. The certificate-of-review process is where those drafting issues first get flagged to the petitioners.

Common questions

Q: Did this initiative reach the ballot?
A: Idaho did not privatize liquor sales as a result of this petition. The state still operates a control system through the State Liquor Division.

Q: How does Washington's 2011 privatization compare?
A: Washington voters approved Initiative 1183 in November 2011, ending that state's control system. The Idaho 2012 petition came shortly after that vote but did not produce the same result.

Q: What revenue does Idaho's liquor monopoly generate?
A: The State Liquor Division's profits flow to state and local governments. A privatization plan must replace that revenue stream, typically through new licensing fees and per-bottle markups, to be revenue-neutral. The certificate-of-review process flags whether the petition's tax/markup design plausibly accomplishes that.

Q: Why does the AG not comment on revenue impact?
A: Idaho Code § 34-1809 limits the AG's review to issues that may affect the legality of the initiative. Fiscal impact is the responsibility of the legislative budget office during legislative consideration, or the petitioners themselves during the campaign.

Citations and references

Statutes:
- Idaho Code § 34-1809 (initiative review)
- Idaho Code Title 23 (Alcoholic Beverages, including State Liquor Division provisions)

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/C022112.pdf

Original opinion text

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
LAWRENCE G. WASDEN

February 21,2012

The Honorable Ben Ysursa
Idaho Secretary of State
Statehouse
VIA HAND DELIVERY
Re:

Certificate of Review
Proposed Initiative to Privatize Liquor Sales

Dear Secretary of State Ysursa:
An initiative petition was filed with your office on January 23, 2012.
Pursuant to Idaho Code § 34-1809, this office has reviewed the petition and
prepared the following advisory comments. Given the strict statutory timeframe
in which this office must review the petition, our review can only isolate areas of
concern and cannot provide in-depth analysis of each issue that may present
problems.
Further, under the review statute, the Attorney General's
recommendations are "advisory only." The petitioners are free to "accept or
reject them in whole or in part." The opinions expressed in this review are only
those that may affect the legality of the initiative. This office offers no opinion
with regard to policy issues raised by the proposed initiative. Similarly, the
accuracy of the potential revenue impact to the state budget is beyond the scope
of this review.
BALLOT TITLE

Following filing of the proposed initiative, this office will prepare short and
long ballot titles. The ballot titles should impartially and succinctly state the
purpose of the measure without being argumentative and without creating
prejudice for or against the measure. While our office prepares titles for the
initiative, petitioners may submit proposed titles for consideration. Any proposed
titles should be consistent with the standard set forth above.

P.O. Box 83720, Boise, Idaho 83720-0010
Telephone: (208) 334-2400, FAX: (208) 854-8071
Located at 700 W. Jefferson Street, Suit 210

The Honorable Ben Ysursa
February 21, 2012
Page 2 of 8

MATTERS OF SUBSTANTIVE IMPORT

A.

An Overview of the Initiative

The purpose of the proposed initiative is to "privatize" the retail sale of
alcoholic liquor in the State of Idaho. If successful, this initiative will overturn
Idaho's current liquor sales regime. It will eliminate the Idaho State Liquor
Division ("state liquor division" or "division") and terminate existing state authority
to import and sell alcoholic liquor.
By repealing the current title 23, chapter 2, Idaho Code, the initiative
eliminates a surcharge currently added to the price of alcoholic liquor and other
merchandise. Idaho Code § 23-217. This surcharge is currently credited
monthly to the benefit of the drug court, mental health court, and family court
services fund, as set forth in Idaho Code § 1-1635. While it appears that the
initiative provides for a distribution to this fund, see proposed Idaho Code § 23404(1)(v), the fund referenced there is not identified by a statutory reference. If
the intent is to continue funding these programs, the proponents of the initiative
should ensure that the appropriate language is contained within these provisions.
The proposal requires sale of all buildings, warehouses, retail stores or
other facilities owned, as of July 1, 2013, by the State of Idaho as part of the
state liquor division. This sale is required to take place after July 1, 2014. See
proposed Idaho Code § 23-301 (1). The provision prohibits these properties from
being declared state surplus property and mandates that the property be sold for
no less than 10% below the property's fair market value. There is no stated
rationale as to why the properties should not be declared surplus, but instead
seeks to prohibit continued state ownership or use of these properties for any
purpose by the state. The statute does not include a provision for calculating fair
market value, and it contains no rationale as to why the property cannot be sold
for less than 10% of that value. There is no similar provision, mandating sale,
pertaining to any personal property or fixtures which might be in the possession
of the state liquor division.
Product and merchandise owned by the liquor division and unsold by the
effective date of the act are required to be either returned to product wholesalers
for a refund or sold at a fair market price to privately-owned liquor retailers in the
state. See proposed Idaho Code § 23-301 (2). Currently, product is paid for at
the time it is put into the stores. It is likely that it would not be possible for
product that has been put into stores to be returned to product wholesalers for a
refund.
Product being held for distribution at the division warehouse is held in
bailment. It isn't owned by the division and likely could be returned to the

The Honorable Ben Ysursa
February 21,2012
Page 3 of 8

wholesaler. A question remains as to who would bear the cost of returning the
product and ensuring its safety while it was being returned to the wholesaler.
Likewise, it is unclear what would happen to any product that could not be
returned but was not acquired by the privately-owned liquor retailers. In order to
avoid these issues, and to provide for a smoother transition, the initiative
proponents may want to include a grandfather clause as well as an effective date
that would permit the orderly liquidation of existing inventory, whether owned or
in the possession of the division.
Proposed Idaho Code § 23-201 (3) mandates all contracts or agreements
existing as of the effective date of the act, between the division and any person,
"relating to the operation of a contract liquor store or relating to the purchase of
any product, merchandise or other material or relating to any other matter," shall
terminate no later than one year after the effective date of the act. In addition to
being vague ("or relating to any other matter"), this provision does not address
the potential legal ramifications if the state, in complying with the statutory
directive, breaches existing agreements. The proposal does not include any
budgetary provisions for legal fees, costs, or damages arising out of any such
breaches.
Proposed Idaho Code § 23-301 includes a definition of "liquor." This
definition may conflict with how existing Idaho Code § 23-105, which will not be
changed as a result of the initiative, currently defines "alcoholic liquor."
Additionally, proposed Idaho Code § 23-301(5) defines "retail liquor license."
This subpart seeks to differentiate the retail sale of alcoholic liquor by the drink
from the retail sale of "packaged" alcoholic liquor, using the phrase "for
consumption off the licensed premises." This phrasing might benefit from some
additional consideration and review of existing provisions to ensure consistency
with the law.
Proposed Idaho Code § 23-302(1) prohibits the county commissioners
from limiting the number of retail liquor stores that may be established within a
county, but does not mention the authority of cities in this regard. Proposed
Idaho Code § 23-305(3) provides for county licensing fees. These provisions are
problematic.
They appear to conflict with Idaho Code § 23-916, which
recognizes that in any given county, there may be licenses for the retail sale of
liquor by the drink that are issued within incorporated city limits over which
counties would have no control. Additionally, the initiative does not appear to
provide or recognize the express authority for counties or cities to require a local
license for retail sale of liquor for off-premises consumption. It is difficult to
ascertain whether a county or a city would have discretion to deny a license
since the number of licenses cannot be limited. Currently, both counties and
cities have specific authority to require licenses for by-the-drink liquor sales

The Honorable Ben Ysursa
February 21, 2012
Page 4 of 8

(existing Idaho Code § 23-901), retail beer sales (existing Idaho Code § 231009), and wine (existing Idaho Code § 23-1315).
Proposed Idaho Code § 23-302(5) includes a reference to the director of
the state liquor division. The reference should be deleted.
Applicants for licensure are required to demonstrate that they meet all the
qualifications and possess none of the disqualifications for licensure; a similar
provision exists with regard to the transfer of liquor licenses. See proposed
Idaho Code §§ 23-303 and 23-306. Under the caption "qualifications for retail
liquor license," proposed Idaho Code § 23-304 details what appear to be
disqualifying conditions, but the initiative makes no mention of qualifying
conditions.
Because the statute does not establish specific licensure
requirements, or qualifications, such as age, business licenses, documented
training, work history, and bonding, proposed Idaho Code § 23-304 is somewhat
confusing. The proponents of this provision may wish to revise the section so
that it lists both qualifying and disqualifying conditions or re-title the section to
accurately reflect that it lists only disqualifying conditions. If the second option is
chosen, both proposed Idaho Code §§ 23-303 and 23-306 should be revised to
maintain continuity in the requirements.
Proposed Idaho Code § 23-304 also appears to be missing a word or
term. The section requires an applicant to submit an application and fee for
"each [?] sought to be licensed." It appears that the missing word might be
"premises."
Proposed Idaho Code § 23-306 provides for the approval of a request to
transfer a license issued under the act, upon application providing "substantially"
the same information required of an applicant for licensure. There is no stated
rationale for why it might be appropriate for the recipient of a license pursuant to
a transfer to provide anything other than information equivalent to that required of
the original licensee.
This provision also refers to "qualifications" and
"disqualifications" for licensure. If the proponents make changes addressing the
questions concerning qualifications and disqualification that were raised
previously, this section will likely need some revision to maintain harmony
between the sections.
The initiative requires liquor to be "sold [?] purchased" only in the original
package. See proposed Idaho Code § 23-307. It appears that the word "or" has
been omitted from the phrase. Additionally, proposed Idaho Code § 23-307(3)
references an official seal or label "prescribed by the division." As there will be
no division, this provision would benefit from some additional revision.

The Honorable Ben Ysursa
February 21,2012
Page 5 of 8

An excise tax is established in proposed Idaho Code § 23-308. The
provision requires the State Tax Commission to promulgate rules, and then it
states that "[s]uch rules shall be approved by the legislature." Because Idaho's
Administrative Procedures Act, title 67, chapter 52, Idaho Code, already requires
legislative review and approval of agency rules, it is difficult to tell whether the
purpose of this language is to prevent the legislature from rejecting the Tax
Commission's proposed rules, or whether it was intended as a reference to the
requirements of the Administrative Procedures Act. Additionally, the number "46"
has been inserted into proposed Idaho Code § 23-308(2), but this appears to be
a typographical error and should be corrected.
Continuing the prohibition against locating liquor stores near schools,
proposed Idaho Code § 23-312 provides for a 300 foot buffer zone. While the
provision is clear that the buffer is to be 300 feet, it continues a flaw that existed
in the previous version. The proposed section should be revised to make it clear
that the buffer zone is measured from whatever entry door on the school that is
located closest to the nearest entry door on the licensed premises.
The initiative leaves in place Idaho Code § 23-403. In light of the other
funding provisions, which are included in the initiative, consideration should be
given to deleting this section or at least subsection (a). Under the proposed
initiative, there would be no division, and so no obligations to pay.
The initiative proposes amendments to Idaho Code § 23-404, pertaining to
distribution of monies in the liquor account. As amended, there is a provision for
the transfer of a percentage "beginning in FY 2010." As the state has passed FY
2010, this reference should be updated. Additionally, in the absence of the state
liquor division, it is unclear as to who will be responsible for making the actual
distributions and transfers out of this account.
Current Idaho Code § 23-409 contains a reference to monies being
remitted to the drug and mental health court supervision fund by the division. If
successful, the initiative will eliminate the division, so this reference should be
corrected.
The proposed amendments to Idaho Code § 23-901 would benefit from
the addition of the phrase "by the drink." This phrase should be included in the
title ("retail sale of liquor by the drink") and elsewhere in the section. Additionally,
throughout this section there are references to this "act." The correct reference
should be to the "chapter," since it is only chapter 9 that deals with the retail sale
of liquor by the drink.
The amendments to Idaho Code § 23-914 neglect to delete the reference
to the division that is contained in the title, as well as the reference to price. The

The Honorable Ben Ysursa
February 21, 2012
Page 6 of 8

new requirement is that liquor by the drink licensees must obtain their alcoholic
liquor from a retail liquor store licensed pursuant to the provisions of title 23,
chapter 3, Idaho Code.
Idaho Code § 23-919 has also been revised to delete the reference to
state liquor stores, replacing it with a reference to licensed retail liquor stores.
The phrase "or state distributor" should also be eliminated. The title would
benefit by inserting the word "retail" before the phrase "LIQUOR STORE SALES
NOT AFFECTED."
It is unclear whether, and if so, how, the responsibilities of the director of
the Idaho State Police will be changed by the initiative. Additionally, it is likely
that the director may need to promulgate some additional rules. Nothing in the
initiative speaks to these subjects, and, because rules promulgation takes time
and additional responsibilities may require additional resources, it seems
appropriate to consult the director of the Idaho State Police in this regard.
This review did not include any analysis of other potential references to
the state liquor division or the director of the division, which might appear
elsewhere in statute. It would be appropriate for the proponents to incorporate
and address any such additional references in the initiative.
B.

Significant Constitutional Issues May Be Raised by the Initiative

Art. III, Sec. 16 of the Idaho Constitution Requires a Unity of Subject and a
Single Subject

Reviewing the initiative, it appears that it may require additional
amendments to insure compliance with art. III, sec. 16 of the Idaho Constitution.
These amendments are necessary because the title must reflect all of the code
sections amended within the body of the legislation. The current title does not
appear to comply with this requirement. Federated Publications, Inc. v. Idaho
Business Review. Inc., 146 Idaho 207, 211, 192 P.3d 1031, 1035 (2008)
("Consequently the substance of the statute not included within the title is void.").
Cohn v. Kingsley, 5 Idaho 416,429,49 P. 985, 989 (1897).
A second requirement under art. III, sec. 16 is that every act embraces a
single subject and all matter that is reasonably related thereto. Although this
appears to provide a broad umbrella under which to legislate, the Courts have
noted that a revenue-raising measure must be separated from a substantive
measure. Reviewing this initiative, it appears that revenue is being raised
through the creation of a tax (and which may run afoul of another constitutional
limitation on the origin or revenue-raising measures), as well as substantive
repeal and creation of a new liquor regime. A similar mixing of purposes was

The Honorable Ben Ysursa
February 21, 2012
Page 7 of 8

rejected when a salary increase for an officer was placed into a general
appropriation bill that made no mention of the increase within its title. Hailey v.
Huston, 25 Idaho 165, 168, 136 P. 212, 214 (1913). The proponents may desire
to determine whether this should be introduced as two separate measures-one
repealing and creating a new liquor regime, and another raising the necessary
revenue-to assure strict compliance with Idaho's constitution.
Art. III, Sec. 14 of the Idaho Constitution May Prohibit the Use of an
Initiative to Raise Revenue
By establishing an excise tax and creating fees for issuance of licenses,
the initiative appears to raise revenue for the State of Idaho. In fact, the initiative
specifically provides for the allocation and distribution of this revenue (in the form
of the liquor fund). This raises the question whether an initiative that raises
revenue may not be allowed because it is contrary to art. III, sec. 14 of the Idaho
Constitution. This section provides that all revenue raising bills originate in the
House. At a minimum, there is an argument that an initiative to raise revenue is
prohibited by art. III, sec. 14, which provides that "[b]ills may originate in either
house, but may be amended or rejected in the other, except that bills for raising
revenue shall originate in the house of representatives."
We think it likely, however, that the rationale for requiring revenue-raising
measures to originate in the House seems inapplicable to initiatives. If, in fact,
the motive is to give the power to the body closest to the people, it follows that
the initiative process-which is the people's process-could be used to raise
revenues.
Art. III, Sec. 26 of the Idaho Constitution Expressly Authorizes the
Legislature Control Over Intoxicating Liquors
The initiative could also be challenged as falling outside the ambit of the
initiative power. Based on the Idaho Constitution's express delegation of the
plenary power over intoxicating liquors to the legislature, it could be considered
that the specific charge to the legislature indicates that power is restricted solely
to the legislature. Art. III, sec. 26 states:

§ 26. Power and authority over intoxicating liquors. - From
and after the thirty-first day of December in the year 1934, the
legislature of the state of Idaho shall have full power and authority
to permit, control and regulate or prohibit the manufacture, sale,
keeping for sale, and transportation for sale, of intoxicating liquors
for beverage purposes.

The Honorable Ben Ysursa
February 21, 2012
Page 8 of 8

Since this provIsion grants the legislature "full power and authority," a
question arises as to whether the legislature's power in this arena can be
checked by the people's exercise of the initiative power. No case law exists on
this issue, but in the event the initiative passes, this provision may reflect one
avenue by which the initiative could be challenged under the Idaho Constitution.
CERTIFICATION

I HEREBY CERTIFY that the enclosed measure has been reviewed for
form, style, and matters of substantive import. The recommendations set forth
above have been communicated to the Petitioner via a copy of the Certificate of
Review, deposited in the U.S. Mail to Jeffrey L. Ward, Idaho Federation of
Reagan Republicans, P.O. Box 1274, Post Falls, Idaho 83877.

LAWRENCE G. WASDEN
Attorney General
Analysis by:

TIMOTHY DAVIS
Deputy Attorney General