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Published in the City Club of Portland Bulletin, Vol. 97, No. 5, August 14, 2014

In the Spring of 2014, petitioners began the process of placing several initiative petitions on the November 2014 Ballot that would have privatized distilled liquor sales in Oregon, effectively eliminating the Oregon Liquor Control Commission’s (OLCC) current role as sole wholesaler and distributor of distilled liquor in Oregon.

As of July, 2014 petitioners had failed to qualify for the ballot. In the interim your committee completed its review of Initiative Petitions 47 and 58, and submits the following report, with the hope that our work can inform City Club of Portland, as well as local, state and national communities, on future questions related to this issue.

Under the initiatives, any retailers licensed to sell beer and wine operating in buildings over 10,000 square feet could sell distilled liquor after completing a responsible vendor training program. Existing liquor retailers under the current OLCC system could sell their inventory back to manufacturers with the option to reapply for their liquor licenses and be “grandfathered in” to the new system as retailers. Both initiatives pledged to maintain revenue for the State of Oregon by replacing the OLCC mark-up with a 71.7% wholesale tax plus a per container surcharge of $.75.

Your committee found Initiatives 47 and 58 deeply flawed. The proposed revenue-replacement taxes and surcharges did not provide for an efficient mechanism by which the state could audit and collect revenue, jeopardizing the state budget. Also, deregulation under the initiatives seemed to endanger several Oregon industries including craft distillers, small liquor retailers (especially in rural areas), and even beer and wine. Your committee’s investigation revealed that similar legislation passed recently in the State of Washington did yield negative outcomes for craft distillers, smaller liquor retailers, and even public health. Your committee recommends further in-depth study on the issue of distilled liquor privatization in preparation for future privatization efforts.

Your committee unanimously recommends a no vote.

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