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Oregon State Representative Tawna Sanchez and anti-alcohol advocates have introduced a new tax proposal that could significantly impact the state’s alcohol industry. The latest move involves an amendment to House Bill 3197, which seeks to create Oregon’s first-ever state grocery and restaurant sales tax, imposing an 8% increase on beer and wine sales. This proposal has generated significant concern from local alcohol producers, especially as the state’s beer and wine sectors continue to face economic challenges.
Sanchez’s new proposal comes after a failed attempt in 2024 to include new taxes on small alcoholic beverage producers as part of the HB 3610 Task Force on Alcohol Pricing and Addiction Services. The task force, which included members representing Oregon’s craft beer and cider industries, ultimately did not recommend such tax increases. However, Sanchez, working with Oregon Recovers, quickly introduced the new amendment, which could have substantial implications for local businesses in the alcohol sector.
Aaron Sarnoff-Wood, co-founder of 2 Towns Ciderhouse, criticized the timing of the proposal. “With tariffs, rising supply chain costs, and a significant decline in alcohol consumption nationwide, this tax proposal couldn’t come at a worse time for small producers,” he told The New School in 2024.
The proposed 8% sales tax would apply to grocery and restaurant sales of beer, wine, and other alcohol products, potentially pushing prices higher for consumers already dealing with inflation and rising costs of living. The Oregon Beverage Alliance, which represents local beverage producers, voiced its opposition, warning that the new tax would disproportionately affect Oregonians who are struggling financially. “Lawmakers should not raise prices through a regressive sales tax, especially when consumers are already facing record-high prices,” the alliance stated.
HB 3197 claims that the additional revenue generated from the tax will be used to fund youth prevention programs, despite youth drinking rates being at an all-time low. In fact, for more than two decades, youth alcohol consumption has been steadily decreasing, thanks to the success of existing prevention programs. While alcohol taxes currently serve as the third-largest source of revenue for the state, only a small fraction of this revenue—about 3%—is allocated to funding addiction and mental health services, with the rest being funneled into the general fund.
Critics argue that before introducing new taxes on struggling industries, the state should better utilize existing revenue. “If youth drug addiction and recovery services are truly needed, lawmakers should repurpose existing funds more effectively, rather than imposing higher taxes on businesses and consumers,” the Oregon Beverage Alliance emphasized.
Oregon’s craft beverage sector is already facing significant challenges. In the past two years, more than 70 breweries, taprooms, and brewpubs, as well as 60 wineries and tasting rooms, have closed their doors. This has led to a decline in jobs and a reduction in the $17 billion economic contribution from Oregon’s alcohol industry, which includes over 300 breweries, 900 wineries, 1,300 vineyards, 70 cideries, and 100 distilleries.
Despite the downturn, advocates for the alcohol industry remain committed to finding solutions to Oregon’s substance use problems without resorting to additional taxes. “We are willing to work toward solutions, but this bill ignores the findings of economic studies that show alcohol taxes won’t curb youth drinking,” the Oregon Beverage Alliance concluded.
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