Legislative staff brief lawmakers on Oregon’s liquor revenue mechanics
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Summary
Legislative Revenue Office staff explained Oregon’s control-state approach to distilled spirits and the separate privilege tax for beer and wine, outlining how OLCC markups and tax distributions funnel roughly 36% of distilled liquor gross sales into state and local allocations.
Mazin Malik of the Legislative Revenue Office briefed the House Interim Committee on Revenue on January 13 on how Oregon generates revenue from alcoholic beverages, distinguishing the Oregon Liquor Control Commission’s markup system for distilled spirits from privilege taxes applied to beer, wine and cider.
Malik described Oregon as one of 17 control states where the state—through the OLCC—operates a state enterprise for distilled liquor. Under that model the OLCC controls inventory, applies a product-by-product markup (Malik used a sample ‘‘bottle chart’’ to illustrate), and remits net proceeds into a distribution formula. Malik said the example markup can approximate 100–105% on landed cost; after costs and allocations, about 36% of gross distilled-liquor sales flow into the state’s distribution pool.
By contrast, Malik explained, beer, wine and cider under 5.6% alcohol by volume are taxed as a privilege (by volume or barrel/gallon) through regulated distributors who collect those taxes. A portion of wine tax (2¢ of 67¢ per gallon) is directed to the Oregon Wine Board; the remaining beer and wine privilege-tax receipts are split (50% to mental health programs and 50% into the OLCC account).
Malik outlined the statutory distribution from the OLCC account as presented: 56% to the state general fund, 10% to counties by population, 20% to cities by population and 14% to cities by formula. He noted that a 50¢ statutory surcharge per bottle (added in recent biennia) is directed entirely to the general fund.
Committee members asked clarifying questions about the role of federal excise taxes (Malik said those are paid by producers/importers before product reaches the state), whether the OLCC markup is uniform (Malik said the markup is formula-driven and varies slightly by product rather than being a single statutory percentage), and the policy rationale (the OLCC has both revenue and public-health/control mandates). Malik offered to provide the OLCC formula details to the committee on request.
The committee did not take legislative action on the liquor revenue briefing; the presentation was used as background for later policy discussions.