You love the blog, so subscribe to the Beervana Podcast on iTunes or Soundcloud today!

Friday, December 16, 2011

The OLCC's Latest Gambit

Harry Esteve, writing in today's Oregonian:
The Oregon Liquor Control Commission, which regulates all sales of distilled spirits in the state, is proposing two significant rule changes. One would allow far more liquor stores to become "non-exclusive," meaning they would be allowed to expand into beer and wine sales.

The other, which could have even broader consequences, would allow corporations to become liquor agents. The idea is to make it easier for big grocery chains, such as Safeway or Fred Meyer, to open "store within a store" liquor outlets. Buy the cantaloupe in the produce section, then head over to a separate area for the vodka or gin to make fruity martinis.
The OLCC is running scared because last year month Washington state voters passed a ballot measure allowing supermarkets to sell liquor. They're trying to get in front of things to protect their fiefdom--or as Merle Lindsey, OLCC Deputy Director says, "from the control model."

As I have said many times in the past, the OLCC is a terrible agency. It's innately conflicted, having been put in place out of a post-prohibition way to enact moral codes on a drinking public while being responsible for liquor laws. Their rules and rulings over the past few years have been legendarily bad. But, like any entity, they have a sense of self-preservation, and the Washington law has them scrambling. As always, I'll end with my usual plea: scrap the OLCC and join the 21st century.


  1. I think you meant to say Washington voters last MONTH passed a measure that will allow stores to sell hard stuff. That measure is quite flawed and gives significant benefits to large Costco (which in large part paid to get the measure passed). No matter. Voters decided they wanted to get the state out of the liquor business, and they did. But the law will need to be tweaked.

    You're right about the OLCC. It's a dreadful agency. Two-faced incompetence comes to mind. Like Washington, we need to get the state of Oregon out of the liquor business. The OLCC hopes to hold onto their fort and toy soldiers. We shall see.

  2. Those of us in Oregon who have a 21st Century mindset should find this whole story rather embarrasing. As a state that pontificates its progressive Beer, Wine and Liquor prowess, we've missed the boat at changing the ridiculously old post-prohibtion OLCC control! Not only should we have seen this coming and have had plenty of time to act, but now we look like a bunch lame antiquated buffoons. The last of the Pacific Rim States to come out of the woods and see the light of progress. Can hardly wait to see what those ass-backward blowhards at the OLCC will try and come up with next! I guess all we can do now is sit back and cluckle?

  3. ....that's chuckle....

  4. I would like to say that the OLCC is a very integral part of the craft beer in Portland they make it so the big guys A-Bev and Coors-miller cant come in and destroy the craft market buy giving bars incentive(cash, free kegs, tap systems and such)to carry their flag ship beers. The OLCC makes oregon a heaven for the small brewer. I have found no reason to bash the OLCC they are here for the small business man. I here all you guys bashing them and saying they are out dated but no one has given any facts that would make you'r statements true it seems to be a band wagon cause. If the big boys had the sway that OLCC keeps from them then there is a good chance that you will be buying all your craft beer from costco and the big box stores. right now its illegal for the distributors to sell beer at different prices to different retailers if the OLCC goes away the big box stores will be able to buy up all of one type (all the abyss) of beer and the bottle shops we all love to go to will disappear. that would be bad for all of us. i love my beer! I love my local beer bar! and I love all my local breweries and I don't want them to go away!

  5. Doc, you're alive! Hello!

    Just Beer, if you follow my links, you'll see the long, slightly unhinged corpus of my jihad against the OLCC, one that documents their transgressions over the past five years or so.

    What you describe is a regulatory need, but there's absolutely nothing that requires the OLCC to be the mechanism of that regulation.

  6. Wanna get the Doc to talk? All you have to do is bring up that antiquated agency of good ol' boy greed and moronic deceptive values. Their time has come and gone, it's time for Oregon to see lifes' reality and deal with it in an adult way. Getting rid of the OLCC in a step out of the mislead post prohibition "TEMPERANCE" paranoia and a step closer to reality and the 21st century.

    If the OLCC survives in any shape or form, Oregon will be cementing its place in the nations lexicon as meek spineless simpletons.

  7. Based on revenue numbers, the current excise rate in liquors is about just about 35%.

    In other words, based on my best estimation, OR has an excise fee of nearly 35%, while CA has a fee of nearly 3.3% (CA is more complex than that, but for sake of argument, this is a decent approximation). However, at nearly ten times the OR population, sales per capita are very similar. (non-with-standing the recent claim that OLCC made that pricing is similar, which is fundamentally flawed based on consumption weighted statistical analysis (and it shouldn't be anyway))

    Anyhow, based on a similar elasticity of demand across differing pricing, it would seem that it would be more effective to raise the liquor excise pricing while allowing liquor stores to carry beer/wine, as the mission statement is to encourage the moderation of consumption, and by offering much cheaper alternatives, it might actually encourage usage of this lower content substitute good.

    Contrarily, carrying the product in grocery stores seems to have no similar value in achieving the mission statement, and is not supported by the current elasticity of demand (i.e. in CA where this is allowed, consumption does not dramatically differ) - thus, it is only a political attempt to stave off an Oregon initiative similar to Prop 1183 (the claim that this is not in response is valid - it is in response to continuing pressure that previous measures brought; 1183 was successful meaning that likely a similar fight in Oregon could take place).

    I'm curious as to Patrick's take on this (i.e. a real economist, not just my armchair hackney undergraduate analysis), as I recently wrote a paper wherein I went in with a similar philosophy to scrapping the OLCC, but came out the other side as seeing a need for overhaul but retention.

  8. There are currently several law suits in the process against the measure (the only %15 of the total voters registered in washington state voted on that initiative). Also, the state still has to figure out a lot of smaller issues the bill did not include. Oregon needs to wait a sec or learn from Washington's mistakes or they will also end up with an unpopular initiative and several law suits on their hands.

  9. Dann, nice post.

    Jason, yeah, that's the trouble with ballot initiatives.

  10. How about looking at some facts in regard to State Run liquor? In the following article,"Private liquor sales is the national norm."

    The 19 control or monopoly states as of 2005 were:

    Alabama (All liquor stores are state-run)

    Idaho (Maintains a monopoly over sales above greater than 16% ABV.)

    Iowa (Does not operate retail outlets; maintains a monopoly over wholesaling of beverages greater than 6% ABV.)

    Maine (State-contracted to private businesses for commission)

    Michigan (Does not operate retail outlets; maintains a monopoly over wholesaling of distilled spirits only.)

    Mississippi (State-contracted liquor stores)

    Montana (State-contracted liquor stores, modeled after the ALGC)
    New Hampshire (Beer and wine sold at supermarkets & convenience stores; spirits and liqueurs are sold only in state-run liquor stores.)

    North Carolina (Beer and wine can be sold in supermarkets and convenience stores; other spirits must be sold in state-run liquor stores.)

    Ohio (Licenses businesses to run liquor stores for a commission. Beverages under 21% ABV may be sold in supermarkets)

    Oregon (Beer and wine can be sold in supermarkets and convenience stores; other spirits must be sold in state-run liquor stores.)

    Pennsylvania (In the process of opening retail outlets inside some supermarkets.[2]

    Utah (all beverages over 3.2% ABV are sold in state-run stores)
    Vermont (Liquor stores are state-contracted and licensed)

    Virginia (Beer and wine at supermarkets, all liquor stores are run by the state)

    Washington (Beer and wine sold at supermarkets, gas stations, department stores, etc.; spirits and liqueurs are sold only in state-run or state-contracted liquor stores.)

    West Virginia (Does not operate retail outlets; maintains a monopoly over wholesaling of distilled spirits only.)

    Wyoming (State-contracted stores)
    Additionally, Montgomery County, Maryland is a control county, and some cities in Minnesota (notably Edina) control sales.

    Less than one-quarter of the United States population lives in control or monopoly states.

  11. Privatize Oregon Liquor? That might be too progressive for Oregon. They're still not advanced enough to pump their own gas! Only New Jersey is equally as lame. :-0

  12. A correction in regards to Utah. Beverages over 3.2%*ABW* not ABV have to be in liquor stores. If your using the ABV scale then it would be 4.0% ABV. Make sence?