OLCC Strikes Again - This Time Against Homebrewers

Jeff Alworth

Let's talk some beer. In my other blogging endeavor, July--Craft Beer Month--is the time of great exhaustion, when ever day brings some new, fascinating event. It rarely brings news, though. Not actual news, front-page news, like this:

The freeze on statewide contests for homemade beer and wine follows a state Department of Justice interpretation of a law regulating where the drinks can be consumed....

Turns out, it's far more limited than anyone thought. In what Burrows, state fair officials and some legislators are calling a drastic step, the Oregon Liquor Control Commission is now prohibiting home brewers and winemakers from drinking or sharing their carefully crafted stouts and pinots outside their homes. Violation is a Class A misdemeanor.

Ah, the OLCC, bane of the craft beer fan, vestige of prohibition. The whole issue started because Deschutes Brewery called the OLCC to ask whether there was a problem with hosting a homebrew forum. They called because the OLCC is famously capricious (my interpretation) and wanted to make sure it was kosher. The whole thing might have ended there. The OLCC might have said, "yeah sure, knock yourself out--other breweries have been hosting homebrewers for years." Instead, they ran it up the flagpole to the Oregon DOJ which consulted the relevant law that cites these goals:

To eliminate the evils of unlicensed and unlawful manufacture, selling and disposing of such beverages and to promote temperance in the use and consumption of alcoholic beverages... and ...To protect the safety, welfare, health, peace and morals of the people of the state.

And thus did we go down this stupid rabbit hole. Now homebrewers are screwed until the legislature meets in January to fix the law. They can't hold homebrew contests or hold meetings with their own beer in breweries or even, if the law is read strictly, carry a beer down the street to a neighbor's house. Fortunately, the legislature appears ready to take quick action because, of course, this is an absurd situation for a place called Beervana.

A little editorial rant continues below the jump.

Good liberals like government. We think it provides valuable services effectively and economically. We do not want to drown government in a bathtub. That does not mean, however, that we are insensitive to bad government. The OLCC is bad government.

The OLCC is a vestige of the temperance movement. Some states were very much on-board with Prohibition, and when the 21st Amendment passed, tried to re-consolidate some authority over the sale and general availability of liquor. Like them, Oregon established the OLCC in 1933, convening a special session of the Legislature just nine days after Prohibition's repeal solely for this purpose. States like Oregon became known as "control" states, because they controlled the actual sale of liquor. Both Oregon and Washington are among the 18 remaining control states.

The upshot of all of this is that control agencies are far from critical in the regulation of alcohol. In a recent editorial, wine merchant William Hatcher successfully makes the case that liquor law enforcement, licensing, and contract liquor stores are all superfluous functions that could be better managed by local government--or done away with altogether.

If all of this fails to convince you that the OLCC is an agency past its expiration date, how about this article from Nick Budnick in last month in the Bend Bulletin:

Even as the agency has become a lightning rod for criticism in recent years, records show it has also been dogged by internal allegations of mismanagement, lackadaisical self-regulation and inadequate record-keeping.

Last year, an internal audit that was not released publicly found that OLCC’s licensing of alcoholic beverage retailers — one of the agency’s main functions — had been significantly mismanaged. Its title: “Oregon Liquor Control Commission’s licensing function lacks accountability and effective oversight.”

The best thing that can be said about the OLCC is that it's unnecessary; at its worst it actively works against the interests of the citizens of Oregon. My suggestions: dump the OLCC and join the rest of the country with modern regulations.

Comments

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    I am pretty sure Kari has argued that the OLCC is good b/c it is the only gov't agency that makes money for the state.

    I agree with you Jeff, this is proof that not ALL government is good. (Nor did I say all gov't is bad)

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      They don't make money for the sate. With 215 employees they mostly are revenue neutral because of fees and liquor taxes. This is money that could be positive cash flow to oregon if we got rid of the warehouses and about two thirds of the employees.

      he rulling shows that OLCC is an anachronism left over from pre-WWII. I fervantly hope Costco wins up in WA and next election cycle they target OR.

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        $171 Million is not revenue neutral. http://www.oregon.gov/OLCC/allocation_of_liquor_revenue.shtml

        Some people come on blogs and just make stuff up without doing any fact checking.

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      Michael, you're confusing me with someone else. I think the OLCC has way too much power - and, in particular, that its enforcement functions and its wholesale/retail functions are an inherent conflict of interest.

      I don't have any idea why the state government should be in the business of selling booze - any more than it should be in the business of selling any other product.

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    Is there any constituency that supports retaining OLCC?

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    The burning issue of our time.

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    Two points.

    First, OLCC makes money; Kurt is just wrong on that point.

    Not that the agency isn't without fault, but I find the disdain for OLCC to be interesting, given that it was an Oregon Department of Justice (DOJ) legal opinion (PDF), not the "capricious" work of "an agency past its expiration," that reached the conclusion. Why not pick on the AG and his staff lawyers? Why doesn't Jeff have contempt for the Legislature who have a statutory scheme "past its expiration?" And here in Beervana its not like the beer drinkers are unorganized and don't have political clout -- why did they sit back and not propose changes to the stale statute?

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      Chuck, help me out. By going to the budget highlightd issued by the Legislative fiscal Office report issued March 2010, the OLCC had Other Funds Expenditures out of the state budget of $134.3MM. When weighed against the revenue they claim (link provided above by Bill Ryan) of $171MM there isa slight revenue positive cash flow of about $35MM.

      That is what I characterized as revenue neutral and no real money for the state. IF I'm wrong please show me where. I would be glad to extoll a state agency that actually provided almost $200MM to the state coffers. However, not unlike centralized land use planning and outlawed self serve gasoline; if the idea were so wonderful other states would be copying rather than doing the opposite.

      I defintely agree that OLCC did not interpret that law they asked the DOJ to do so. They could have, however just said they wouldn't rain on craft brewers.

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    What a ridiculous law. Is there anyone out there that will argue for this law? I can't imagine so.

    Interesting stats on the OLCC profit. Wow. A good example of what you can achieve with a monopoly.

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    Well, isn't the problem the Legislature and DOJ, rather than OLCC? OLCC did what it was supposed to do when confronted with a legal issue requiring interpretation - it asked DOJ.

    As for abolishing OLCC, my experience is that it hasn't done enough. They try hard to bust problem bars and liquor outlets, but they're so hamstrung by the enabling legislation that it takes them years to shut down places that are chronic problems for the communities that they're in. Without OLCC, who shuts down the bar that serves drunks, allows patrons to drive under the influence and allows criminal activity on the property? The local police aren't equipped to manage that kind of problem...they just respond to the immediate issue.

    In other words, don't shoot OLCC for following the law. Get the law fixed to allow homebrewers to continue what they've always done. This sort of non-controversial "fix" legislation usually breezes through without opposition.

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      Marshall, I have to agree with you here.

      Spend a late Friday or Saturday night on the streets of downtown Portland sometime, and you'll see what a problem alcohol is.

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    Do we really have to choose our villain between the AG's office and the OLCC?

    What if it's the case that Kroeger is doing his due diligence, and in the process we've discovered that certain archaic aspects of the law need some tweaking by the next legislature?

    Irritating but not catastrophic....

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    I suspect folks have abandoned this thread, but I want to respond--for the record, I guess--to a couple comments.

    On the question of the OLCC v DOJ. There are two things informing my ire here, and they're related. Folks who have worked with the OLCC often find them inscrutable, capricious and secretive. There are laws and there are business people and in between these two is the OLCC, acting as a referee. I have mentioned a number of their stupid rulings both here and at my beer blog--suffice it to say this is far from the first case. The second problem is that the DOJ isn't the agency that implements law; once the OLCC asked for an interpretation, the DOJ had to give it. Keep in mind that the now-eliminated practice has been going on for years and in some cases decades, despite the pre-existing law. The only change was the OLCC's officiousness.

    As to Chuck's question about why I didn't mete out criticism to the legislature--well, actually that was the point. The post is a call for the legislature to do something about it.

    I have less criticism for businesspeople who don't spearhead the change. I can imagine more than a few reasons why a business would not like to take on the agency that regulates it.

    Marshall and Michael, on the question of enforcement, that's not the role of the OLCC. When a bar is breaking the law, you don't call the OLCC. You call the police. That would still be the same.

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