Brewer, Cidermaker, Decry Oregon’s Anti-Alcohol Advocates Shady Tactics & Ongoing Campaign
The bitter battle between Oregon’s small alcohol beverage producers and the state’s anti-alcohol leaning organizations and leaders came to an end last week with the final report from the HB 3610 Task Force on Alcohol Pricing and Addiction Services. While the task force decided against recommending crippling new taxes, task force members Jamie Floyd (Ninkasi Brewing/Oregon Brewers Guild), and Aaron Sarnoff-Wood (2 Towns Cider CEO) are speaking out about the dishonest campaign waged against their industry and raising the alarm bells about the neo-prohibitionist movement that is just revving up.
To understand the players on each side of the war and where battle lines were drawn you have to look back to 2021 when Oregon U.S. House Representative Tawna Sanchez proposed a tax hike of over 2,700% on wine, beer and cider.
“I knew it would be controversial,” wrote Sanchez in last weeks final report from the Oregon Liquor and Cannabis Commission (OLCC). “From the outset, I knew that such a significant tax hike was unlikely to pass, especially on the first go, and given the lingering economic uncertainties following the COVID-19 pandemic. Nevertheless, it was not designed for easy passage – it was meant to spark a conversation….Despite the weight of opposition, the proposal was not meant to cripple the industry but intended to save lives and generate much needed support for addiction recovery services that are critically lacking across the state.”
While Sanchez’s initial proposal for increased taxes never picked up any steam and failed to move forward, it only stoked the coals for the next proposal that would come with the backing of stage agency the Oregon Health Authority (OHA) and anti-alcohol groups like Oregon Recovers. In 2023 the HB 3610 task force was created to analyze and investigate from the public health perspective on alcohol consumption in Oregon (by OHA), the role of the Alcohol and Drug Policy Commission and the Statewide Plan to address Substance Use Disorders (SUD), and economic analysis of the costs of excessive alcohol use in Oregon. The plan was always to recommend a much higher tax on the industry.
It is true that Oregon has one of the lowest beer, cider and wine excise taxes and state sales tax in the nation. Yet there is little evidence that those industries are responsible for Oregon’s undeniable addiction treatment issues, or that there is not already more than enough funding to address them. According to the Oregon Beverage Alliance, despite alcohol being the third largest source of revenue for the state, the legislature only spends 3% of alcohol revenue on mental health and substance use disorders (SUD). Also, the Oregon Health Authority (OHA) does not know whether money spent on behavioral health has made a difference because, as OHA testified, it does not track legislative funding or hold providers accountable. And it cannot account for $72 million – 7% – of SUD spending.
The HB 3610 task force chaired by Sanchez included a broad range of public health experts, addiction treatment professionals, representatives from the malt beverage, wine, and cider industries, State agency officials, community advocates, a member of the nine federally recognized tribes in Oregon. And initially, the task force included ‘Oregon Recovers’ executive director Mike Marshall. On the surface Oregon Recovers is a nonprofit tackling addiction by creating a “movement will bring world-class prevention, treatment, and recovery support services to ALL Oregonians suffering from the disease of addiction.” But it quickly became clear that Marshall and Oregon Recovers were coming after the small Oregon alcohol makers with the help of the Oregon Health Authority, and they were not afraid to use shady tactics to do so.
Marshall targeted craft breweries by using the unfortunate sudden death by heart attack of Vanguard Brewing co-owner Don Anderson to suggest without evidence that alcoholism was the culprit. That stunt got Marshall thrown off the task force by Oregon governor Tina Kotek, but set the stage for what would be a highly contentious 16 meetings taking place over the course of 2024.
In January it came out that the OHA had buried their own $60k commissioned ECONorthwest study that showed increasing taxes would not significantly impact harmful drinking and addiction. The report's author Andrew Dyke even said in a video presentation that “The research tends to show, time after time, that changes in price – and that’s what a tax increase does – it does not appear to affect risky drinking behaviors.” But instead of releasing the info to lawmakers and the public, the OHA revealed it to Mike Marshall and who advised them on edits before briefing a redacted version of the findings in a memo.
The OHA has their own anti-alcohol campaign called ‘Rethink the Drink’ which itself came under fire after they took out television advertisements that went directly after fathers who enjoy drinking wine of all things. The advertisement was so ill-received that the governor even expressed her disapproval and the television spot was pulled. But the Rethink the Campaign is back for another run this holiday season with a “winter advertising campaign that encourages people in Oregon to celebrate safely by understanding the health and social harms of excessive alcohol use.”
All of this and Sanchez, OHA, and Oregon Recovers, were still unable to get a majority of the 16 voting task force members to recommend increasing taxes, despite only 6 of them working in the alcoholic beverage industry. According to the Oregon Beverage Alliance, the OHA is using misinformation to fuel this crusade by:
Claiming alcohol consumption is up when it’s down;
Excessive and binge drinking is up when these claims are based on improperly comparing CDC data points before and after a change in the survey methodology;
Substance use disorder rates are increasing when the National Survey of Drug Use and Health (NSDUH) changed methodology in 2020 making all older data incompatible with the most recent data set;
Oregon is the second worst in the nation in rates of addiction or last in access to recovery services yet when accounting for the NSDUH margin of error there is no significant difference between Oregon and 37 other states according to an internal OHA whistleblower;
OHA claims six Oregonians die from alcohol per day based on death certificates but it’s actually based on a theoretical model attributing alcohol as a cause of other diseases, not actual death certificates and admitted as much when called out yet continue to make these misstatements.
Aaron Sarnoff-Wood, co-founder of 2 Towns Ciderhouse
Jamie Floyd, co-founder of Ninkasi Brewing, and vice president of the Oregon Brewers Guild
With the HB 3610 task force disbanded and the tax seemingly defeated, it would be easy to assume the battle is over and no more words need be spilled on the matter. But Jamie Floyd and Aaron Sarnoff-Wood have much more to say on the subject and why it may be more relevant than ever.
Do you believe Oregon's small alcohol beverage producers were unfairly targeted or scapegoated in this bill?
Jamie Floyd: In many ways yes. Aaron from Two Towns and Myself were the only two business owners on the task force and we were never utilized for our knowledge of the industry and as the year went on, Addiction advocates became comfortable referring to us in less than professional ways. Chair Sanchez controlled the narrative and kept it to raising taxs not a study of what is working and not working in the health and addictive advocacy space. I absolutely thought we would talk about OHA performance but even as OHA would tell us they have no metrics for success and lost $79,000,000 dollars without a trace. If a brewery lost 7% of a loan that big the bank would shut down our loan and maybe throw us in jail. OHA asked for $6 Billion dollars instead. Ben Edmunds spoke about how breweries work as did Aaron about the cidery and there were task force members who still refuse to believe we pay taxes even when they are asking to raise them. I felt like some members on TF had no intention of trying to understand how our businesses work. They refuse to acknowledge the many layers of taxes we pay in addition to the excise tax and also refused to acknowledge the impacts of Meth, Fentanyl, gambling as a part of the problem only focusing on beer, wine and cider and not the state sold alcohol.
Aaron Sarnoff-Wood: Yes, I absolutely feel that there has been a concerted effort made to damage the craft alcohol industry in Oregon. Representative Sanchez sponsored both HB3296 and HB3312 prior to HB3610 at the request of Oregon Recovers, a neo-prohibitionist group. Mike Marshall, the ex-director of Oregon Recovers has stated that his intention is to tax alcohol out of existence, and both HB3296 and 3312 were designed to do just that. HB3296 attempted to raise Oregon excise taxes by ~2,600% and HB3312 looked to increase taxes ~1,400%. Both bills also included language that would increase the tax annually after the initial tax hike guaranteeing that if passed Oregon would have the highest alcohol taxes in the nation today and forever. Neither bill ever made it to a vote, which Sanchez indicated was always her plan. Sanchez has told the task force that these extreme tax bills were only intended to "scare alcohol to the bargaining table." I found this a strange position to take given that the alcohol industry had not previously been invited to the table which seems a logical first step prior to proposing intentionally damaging legislation. HB3610 was sponsored by Sanchez in order to provide a venue to continue the alcohol tax conversation after the defeat of her earlier two attempts. However, in reality the task force was only created for one purpose - to provide a recommendation in favor of increasing alcohol taxes. The task force was stacked 6 alcohol industry members against 9 addiction recovery advocates and the last voting member the new director of the OLCC. Despite the makeup of the task force being stacked against the industry and the fact that we were only provided 2 of 20 sessions in order to make our case, the majority of the task force was not in favor of a tax increase and so Sanchez refused to hold the vote for final recommendations. Instead, Sanchez extended the task force by 3 months to accomodate a public commentary period, looking to win in the court of public opinion if not in the task force. The response however, was overwhelmingly against increasing taxes (87.5% against), and so these comments were also excluded from the final report.
There is some talk of the OHA running a dishonest and/or misleading campaign against the alcohol producers of Oregon. Do you believe this is the case, and what examples would you cite?
Jamie Floyd: One of the more disheartening aspects of this deep dive is that members of the recovery and addiction space feel comfortable sharing misleading facts. As a scientist, once something is proven wrong, you stop using the data. OHA and Oregon Recovers continue to spread false narratives and made sure that they were kept in the report despite numerous objections. OHA continued to say that alcohol consumption is up when it is not Oregon including underage drinking. On multiple occasions OHA used data that said excessive and binge drinking is up when these claims are based on improperly comparing CDC data points before and after a change in the survey methodology. We see it again with Oregon being the second worst in the nation in rates of addiction or last in access to recovery services yet when accounting for the NSDUH margin of error there is no significant difference between Oregon and 37 other states according to an internal OHA whistleblower. Effort was put in to make sure these made it in the final report and it saddens me to think lying is a strategy for addiction recovery policy making.
Aaron Sarnoff-Wood: Again, yes I believe OHA has been providing intentionally misleading information to the public and lawmakers in efforts to advance their desire to increase taxes -- the proceeds from which would bolster their own budgets. Below I've chronicled but a few examples of misinformation or misleading information from which OHA has made their case that tax increases are necessary:
OHA presented that consumption was on the rise and thus tax increases were needed to curb growing consumption rates. However, the data they presented A) ended in 2021 and B) was not based on any physical records. Beginning with the timeline - consumption had increased from 2010 to 2021 based on OLCC tax records (again, OHA did not use tax records to make their consumption analysis, they used "national trends" and a 3rd party website to come to estimate their conclusions). But, what OHA omitted was according to the OLCC, consumption dropped rapidly at the conclusion of the pandemic. 2023 per capita consumption was the lowest it had been since 2012 and 2024 is continuing to decline. Again, our analysis came from tax records provided by the OLCC, OHA's claim was based on a theoretical model they constructed that did not look at actual sales or production records. The increase in consumption observed from 2010 to 2021 was entirely due to increases in consumption of state controlled spirits. Consumption of beer & wine actually declined during this period. So, OHA was backing a tax increase on beer and wine to curb consumption when the growth in consumption had come from increases in state controlled spirits consumption. The OLCC is starting a $150M taxpayer funded project to expand liquor distribution capacity to grow liquor sales in the near future - their initial projections were an increase of ~60-70% in liquor sales. It seemed hypocritical to declare a need for taxes to curb beer/wine consumption which has already been in long decline while spending tax dollars to grow sales of state owned spirits which were the cause of recent growth in consumption in the first place.
Do you anticipate a new proposal to penalize alcohol beverage producers in the near future?
Jamie Floyd: According to those close to Chair Sanchez, she had decided long before the report was final that she intended to propose a sales tax on beer wine and cider and not hard liquor. 2% taken at the register that goes up every two years until the tax is 8% and that is in addition to all of the other taxes we pay. She made it clear they would not lower the excise tax or remove it. She believes without any proof that it won't hurt our businesses. They do not see the conflict in not assigning a sales tax to hard liquor. How is that moderate message to drinkers having chosen beverages of moderation as our business? This would be the first sales tax for Oregonians to pay at the register. 87 % of those who made comments during the public commenting period for the report said no to taxes on beer wine and cider. The OHA and Sanchez have blinders on to this and feel justified.
Aaron Sarnoff-Wood: I am aware of a new proposal that already exists. Representative Sanchez worked with Oregon Recovers to develop another tax increase proposal months before the task force had concluded. Rep. Sanchez has already presented that she intends to introduce legislation in the next session which would impose a sales tax specific to alcohol. This proposal in advance of the task force conclusions is proof that the task force recommendations were never a consideration of hers. I believe Sanchez felt that the task force would recommend an increase in taxes given she structured the task force with the majority of members representing addiction recovery.
How responsible are wineries, breweries, cideries, etc. in funding these anti-addiction initiatives?
Jamie Floyd: 1.3 Billion dollars went into the addictive services over the last few years. OHA lost 7% of it and asked for %6 Billion more which is many times more then any other state per capita and can't show metrics for success. They assume wrongly that Oregon small alcohol producers are very profitable regardless of post pandemic issues in restaurants and taverns and inflation. Restaurants, taverns and other licensees have struggles post covid, inflationary years with many open less hours. Sales at their registers would have a huge impact. Same with grocery stores. These tax proposals hurt food and beverage as well as hop farmers and other allied trades. It's impacts are larger then just on us and is an attack on the beautiful craft beer, wineries and cideries our state is known for.
Aaron Sarnoff-Wood: There are plentiful funds already existing available to fund addiction recovery efforts. Oregon is one of if not the best funded state in the nation for addiction recovery. Measure 110 dedicated $265M in new addiction recovery funding, $139M of which is still sitting at OHA as they have been unable to distribute the funds due to bureaucratic failures. There is $600M in new funding from the recent opioid settlement, the spending plan for which OHA has yet to deliver. OHA presented to our task force that they can't determine what they did with $72 million dollars (7.4% of every dollar spent on recovery during that budget cycle). Alcohol taxes are the 3rd largest source of revenue to the state, and yet only a tiny 3% of them are dedicated to recovery. Other states spend less per capita and provide better service than Oregon. Our recovery issues are not related to a lack of funding, but rather a lack of effective management at OHA. Representative Blumenauer served on a task force investigating recovery spending along with Governor Kotek and concluded "The consensus of all these experts we brought together is that money is not the problem. The problem is how we mobilize and utilize the resources we’ve got."
Tawna Sanchez in her executive summary in the final report on HB 3610 defended the mission: “After listening to the industry’s concerns, I revised the proposal for a more modest increase – one that could help reduce excessive alcohol consumption, while funding critical addiction services, prevention and other initiatives for the broader community needs. but would be less of an impact to the industry. However, even with the adjustments, the opposition remained. The post-COVID hardships added fuel to the fear of more taxes. Small businesses were still struggling to recover, and lawmakers were hesitant to back anything that could be seen as another hit to the economy. Despite the weight of opposition, the proposal was not meant to cripple the industry but intended to save lives and generate much needed support for addiction recovery services that are critically lacking across the state.”
Aaron Sarnoff-Wood: As I reflect on the past year in service of this task force, I want to make clear that myself and others in the craft beverage industry are sympathetic to the challenges those in recovery are facing in accessing treatment. I for one am going to continue my research in the field of recovery in hopes that I can provide feedback to guide future legislation. I believe there are simple structural changes that could deliver benefits to thousands without damaging Oregon's craft beverage sector if OHA and Representative Sanchez desired to pursue them.
Read the full HB 3610 final report here, and get more info about the battle from the side of Oregon’s beer, wine, cider and spirits producers via the Oregon Beverage Alliance here.