Oregon State Representative Tawna Sanchez and anti-alcohol advocates are once again pushing for new taxes that could impact small alcoholic beverage producers in the state. After her unsuccessful attempt to have the HB 3610 Task Force on Alcohol Pricing and Addiction Services recommend taxes on Oregon’s craft alcohol producers in 2024, Sanchez has now introduced a new proposal—an amendment to House Bill 3197. This proposal aims to implement Oregon’s first-ever grocery and restaurant sales tax, which could increase prices by 8%.
Despite the task force’s failure to recommend a tax increase, industry figures, including 2 Towns Ciderhouse co-founder Aaron Sarnoff-Wood, warned that Sanchez had been preparing a new plan behind the scenes. “Representative Sanchez worked with Oregon Recovers to develop another tax increase proposal months before the task force had concluded,” Sarnoff-Wood said in 2024.
The timing of the new proposal has raised concerns, as small alcohol producers in Oregon already face a range of economic challenges. The beverage industry is struggling with supply chain disruptions, rising production costs, and a nationwide decline in alcohol consumption. The Oregon Beverage Alliance, which represents the state’s alcohol industry, condemned the proposal, stating, “With the highest cost increases in generations and no end in sight, a new 8% sales tax would only harm Oregonians trying to make their hard-earned dollars stretch.”
According to the Oregon Beverage Alliance, such a tax would be regressive, disproportionately impacting consumers already facing high living costs. They also pointed to the troubling trend of industry closures, with 70 breweries, taprooms, and brewpubs, as well as 60 wineries and tasting rooms, shutting down in the past two years. “The beer and wine sectors are seeing record closures as fewer people are drinking,” the Alliance added.
HB 3197’s proposal states that the additional revenue generated from the new tax would be directed towards youth prevention programs. However, proponents of the alcohol industry argue that youth drinking rates are at an all-time low, with existing prevention programs proving effective over the past two decades. The alcohol tax already serves as the third-largest revenue source for the state, yet only 3% of that revenue funds addiction and mental health services. The remainder is directed to the state’s general fund.
Last year, Oregon brewers, winemakers, and cidermakers collaborated with Sanchez on a task force to explore potential alcohol tax increases. The task force ultimately declined to endorse any tax hikes, citing the need for accountability within the Oregon Health Authority, which was found to have failed to track spending or results properly. The Authority also admitted it could not account for $72 million in substance use disorder spending during the previous biennium.
The Oregon Beverage Alliance argued that alcohol taxes would not effectively address youth drinking or substance abuse issues. “We’ve shown we’re willing to come to the table and find solutions to Oregon’s drug addiction problem, but this bill ignores findings and economic studies that state alcohol taxes will not curb the problem,” they said.
The alcohol industry is a significant part of Oregon’s economy, with over 300 breweries, 900 wineries, 1,300 vineyards, 70 cideries, 100 distilleries, and 10,000 restaurants generating more than $17 billion in economic activity and providing hundreds of thousands of jobs. However, industry closures are increasingly affecting the state’s economy, and Oregonians who depend on these job creators are wary of further tax burdens.
As the debate continues, lawmakers are under pressure to address the needs of the state’s small alcohol producers, while also ensuring that funds allocated for addiction services are used effectively and efficiently.
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