Oregon Liquor Privatization Shaken, Not Stirred Again

For the second election cycle in a row, a grocer coalition has backed away from an initiative to privatize Oregon liquor sales. Grocers say they will focus on defeating a gross receipts ballot measure, but opponents say they ditched their initiative because polling showed it would fail.

For the second election cycle in a row, a grocer coalition has backed away from an initiative to privatize Oregon liquor sales. Grocers say they will focus on defeating a gross receipts ballot measure, but opponents say they ditched their initiative because polling showed it would fail.

The grocer coalition, pushing for liquor privatization in Oregon, has withdrawn its initiative and says it will focus instead on defeating a labor-backed initiative to impose a gross receipts tax on corporations with large revenues. 

Opponents of the liquor privatization measure say the real reason Initiative Petition 71 was pulled is because it didn’t poll well enough to win in this November’s general election.

This is the second consecutive election cycle that Oregon liquor privatization boosters have backed off initiatives after Washington voters approved a similar measure in 2011.

Meanwhile, the Oregon Liquor Control Commission has expanded its pilot program by allowing liquor sales in 14 additional Portland-area grocery stores. The OLCC said the 14 retail licenses it issued represent the largest liquor expansion in Oregon since Prohibition.

For those unfamiliar with liquor regulation, Oregon is considered a “control” state. The OLCC, which is a state agency, buys and distributes distilled spirits through state-licensed liquor stores. The arrangement dates back to post-Prohibition and is rooted in a policy mindset that liquor consumption can be moderated through limited access and higher prices. Those higher prices feed generous amounts of cash into the state General Fund and city and county budgets and fund mental health and substance abuse services. 

As you might imagine, liquor sales is big business. In the 2013-2015 biennium, distilled spirit sales in Oregon totaled $1.06 billion. After paying for inventory and compensating state liquor store agents, there were net revenues of $435 million. The lion’s share ($247 million) went to state coffers, $77 million went to cities and $39 million went to counties. More than $17 million went directly to community mental health and substance abuse service providers.

Those revenue numbers explain the reticence of public officials to surrender control of the liquor supply chain. They don’t explain why Oregonians are ambivalent about moving liquor sales in part or totally over to private enterprise.

Nigel Jaquiss of Willamette Week reports that Oregonians for Competition dropped IP 71 because after spending $1 million it still didn’t poll well enough to win in the fall election. Jaquiss obtained four relatively recent polls, all funded by opponents of liquor privatization, that showed support for privatization ranging between 32 and 41 percent. The most recent poll, which surveyed 800 Oregonians last month, showed 54 percent opposed IP 71, while only 41 percent favored it.

Dan Lavey, who is advising privatization opponents, said grocers should be concerned about the gross receipts tax, but added, “There are two reasons why people abandon or never start campaigns – lack of money or you don’t believe you have a path to victory. The grocers don’t lack for money.”

Pat McCormick, spokesman for the coalition that pushed for IP 71, said its polling showed “voters are ready to allow Oregonians to buy liquor in grocery stores, alongside beer and wine, like consumers in most states.”

Grocers can be expected to take another run at legislation in the 2017 session. But it does seem clear the landscape for privatizing liquor in Oregon is different than it was in Washington. First off, the Washington initiative passed – opponents would say rammed through – because of a $20 million contribution to the campaign from Seattle-based Costco. Second, privatization in the Evergreen State has been met with mixed reviews. Liquor is available in more places, but at higher prices.

Another factor is the flexibility being shown by OLCC, under the leadership of Chair Rob Partridge, to experiment with different approaches to enhance consumer convenience, including permitting the state’s craft distillers to operate tasting rooms.

“I don’t think Oregonians want a liquor store on every corner. I don’t think they want every gas station and convenience store to have bottles of liquor – that’s not what I hear from Oregonians,” Partridge told KATU News.

He said Walmart, which received four of the 14 new retail licenses, says it plans to offer a limited variety of liquor in its stores compared to what is available in state liquor stores. “Sometimes you buy things for convenience,” Partridge said. “Other times, you’re shopping for that great unique specialty product. So, there’s room in the market for both.”