This is rather old news, dating from the spring of 2003, but if any bona fide Oregon news outlets plumbed its depths at the time, I'm not aware of it. Anyway, I'm a historian by training: I like old news. So join me as I trace the depressing journey of a recent Oregon bill intended to get the OLCC out of the distilled spirits business forever.
Liquor Control
Oregon is a "control state" when it comes to the distribution of distilled spirits. Our Liquor Control Commission (OLCC) is the Al Capone of hard booze in this state; its control of wholesaling, distribution and retail is utterly complete.
Case in point: Rogue Brewing Co., in addition to producing its highly acclaimed boutique beers, has recently entered the business of distilling its own liquors. Rogue also operates a number of bars throughout the state. In order for Rogue to serve its own distilled spirits at its own bars, the company must sell its liquor to the OLCC, then buy it back at marked-up prices. According to Rogue President Jack Joyce, the company thereby cedes roughly $10 to the OLCC per bottle, a sum the company has whittled down by about $1.50 by becoming an OLCC-licensed liquor "store."
The OLCC takes a similar pound of flesh from every seller and consumer of liquor in Oregon. Consider the pricing life of a bottle of MacTarnahan's single malt scotch, imported and labeled by Portland Brewing Co. Portland Brewing imports a bottle from the distillery in Scotland for roughly $18, including state and federal import tax. The company then sells the bottle to the OLCC for about $25. By the time the bottle reaches consumers, the OLCC asks us to pay a nickle short of $50 -- a 200% markup that Portland Brewing CEO Jerome Chicvara describes as nothing short of "rapacious." By comparison, the MacTarnahan goes for less than $40 in the comparatively free market of California.
A Modest Proposal
In March of 2003, House Bill 3130 was introduced to the Oregon Legislature by Representative Randy Miller of West Linn. As trumpeted in the Bend Bulletin, the bill would end our state's "Prohibition anachronism" -- the OLCC's anticompetitive, "nonsensical" monopoly on distilled spirits. No longer would liquor be sold in state-run outlets at outrageous markups and capricious hours (absent market pressure, liquor stores are free to deem it reasonable to close as early as 6:30 PM; by contrast, liquor is available for sale until 2 AM in California.) Booze would rather be sold by private outlets under license from the OLCC.
The summary (linked to above) of Bill 3130 stated its purpose clearly:
Eliminates role of Oregon Liquor Control Commission in
importing, warehousing and retailing of distilled liquors.Creates off-premises distilled liquor license. Authorizes
holder of license to sell factory-sealed containers of distilled
liquor for consumption off licensed premises. Allows holder of
license to establish prices of distilled liquor. Establishes
conditions and fees for off-premises distilled liquor license.Creates wholesale liquor license. Prohibits importation,
storage, transportation, wholesale sale or distribution of
distilled liquor without wholesale liquor license. Establishes
conditions and fees for wholesale liquor license.. . .
Becomes operative July 1, 2004.
But a funny thing happened on the way to the governor's desk.
Malternatives!
On May 13, HB 3130 was referred to the House Rules and Affairs Committee, and there it met an interesting set of lobbyists.
Far away from Randy Miller, but right under the nose of Committee member Linda Flores, who signed onto HB 3130 originally, the Committee heard exactly no discussion of the proposal to phase the OLCC out of the distilled spirits business.
Instead, it considered "amendments" to 3130 and took testimony from lobbyists for the Oregon Grocery Industry Association, 7-11 and Anhauser-Busch. The subject of their testimony? Keeping it legal, until pending federal regulations take effect, to sell so-called "malternatives" or "flavored beer" -- Mike's Hard Lemonade, Smirnoff Ice, etc. -- in grocery stores.
The Committee, after hearing this testimony, voted unanimously to recommend HB 3130 to the full House, as amended by language brought to the table by the Anhauser-Busch lobbyists.
Gut And Stuff
HB 3130, in its amended form before the Rules and Affairs Committee, read in its effective totality:
Relating to alcoholic beverages; and declaring an emergency.Where previously there had been pages of amendments to the Oregon statutes totally eviscerating the OLCC's role in liquor retail, there was now one effective statement -- "any alcoholic beverage being sold by off-premises sales licensees as a malt beverage . . . may continue to be sold as a malt beverage until December 31, 2004, and shall be taxed as a malt beverage under ORS chapter 473 until December 31, 2004" -- intended to give breathing room to the producers of "malternatives" until new federal regulations took effect. The Rules and Affairs Committee recommended the bill "as amended" to the full House.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Section 2 of this 2003 Act is added to and made
a part of ORS chapter 471. + }
SECTION 2. { + Notwithstanding any other provision of this
chapter or ORS chapter 473, any alcoholic beverage being sold by
off-premises sales licensees as a malt beverage on the effective
date of this 2003 Act may continue to be sold as a malt beverage
until December 31, 2004, and shall be taxed as a malt beverage
under ORS chapter 473 until December 31, 2004, even though the
alcoholic beverage contains more than one-half of one percent of
distilled liquor. + }
SECTION 3. { + This 2003 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2003 Act takes effect on its
passage. + }
So, instead of getting real, quality distilled spirits in our grocery stores at market prices, we would for several months continue to have the privilege of being able to buy Smirnoff Ice. It was a classic "gut and stuff" legislative move. To complete the lobbying coup, the summary of the bill, as submitted to the full House, still declared that it would "{eliminate the) role of Oregon Liquor Control Commission in importing, warehousing and retailing of distilled liquors," long after it could do anything of the sort. It passed the House without controversy, a similar version passed the Senate, and the Governor signed it into law.
As well he should have, for the bill declared itself "necessary for the immediate preservation of the public peace, health and safety . . ."
Lord knows, we'd have been mighty unpeaceful, unhealthy, and unsafe without our hard lemonade.
* * * * *
If you made it this far, you surely have little faith left in your elected state legislators. So I should cheer you up a tad. Here: there's bound to be worse stuff deep inside this.
Posted by FLOG at November 19, 2004 1:35 AMThe bill you cite lost its steam once Karen Minnis informed the sponsors that it wouldn't get a floor vote in that form. The beer lobby wanted it dead, eventually they reanimated its corpse as a means of increasing their marketshare with the malternatives.
It will probably take an initiative to privatize the OLCC, this Legislature (both sides of the aisle) is already bought and paid for.
Posted by: PanchoPdx at November 19, 2004 8:03 AM