Tag Archives: OLCC Lawyer

Marvin Revoal was Sworn In as Fifth OLCC Commissioner at the Thursday Commission Meeting.

Governor Kizthaber recently appointed Marvin Revoal to the Oregon Liquor Control Commission Board of Directors and the Senate confirmed the appointment. Marvin was sworn in today at the OLCC’s Commission meeting.

The OLCC has been operating with only four commissioners for some time now. The 4th Congressional District position has been vacant, but is now filled.

From his LinkedIn profile, Marvin Revoal is a senior principal at Pacific Benefit Planners. He leads the company as it designs and manages self funded and fully insured employee benefits, worker compensation and general liability services for small and mid sized companies. He has a strong background in civic engagement and leadership, including serving as the Chairman of the Board for the Eugene Area Chamber of Commerce. He also studied criminology at the University of Missouri–go Tigers!

Marvin looks like he could be a strong contributor to the Commission.

The OLCC’s Retail Innovations Task Force: Initial Impressions

The OLCC’s Retail Innovations task force has been meeting since October 4, 2013. The purpose of the task force is bring the various stakeholders together to discuss how the OLCC’s retailing and distribution of distilled spirits may be changed, improved, or modernized. The group has met five times and was scheduled to meet for a sixth time on December 13, 2013. The OLCC recently postponed the meeting date for the upcoming meeting for a date to be determined in January.

The task force has selected a very complicated problem to resolve. The problem is complicated by the fact that some don’t even see a problem to be solved. The threshold question of whether the current system is broken or not can easily sidetrack discussions. That being said, the real reason that the problem is so difficult to nail down and, at times, even discuss is that there is so much at stake. There is the potential for there to be big winners and big losers, particularly from a financial perspective.

The task force has identified the following as key considerations (not necessarily in any particular order):

• Revenue stream to the state;
• Consumer access and experience;
• Public safety; and
• The interests of industry members.

OLCC Revenues. The OLCC distributed $202.6 million to the state during the fiscal year of 2012-2013, including$115.4 to the state general fund, $78.8 million to cities and counties, and $8.1 for mental health, alcoholism and drug services. The state, cities, counties and social service providers do not want their revenues to be cut and would even like a bigger slice of the pie, if possible.

Consumer Access. Oregon has fewer liquor stores per capita than other comparable states and some have suggested that the nature and quality of the retail experience at Oregon liquor stores could be enhanced. Others have suggested that a majority of Oregon consumers are happy with the status quo and are not demanding change. Washington’s ongoing experience with privatization is not a secret and many Oregonians may be reluctant to follow suit.

Public Safety. The public must be protected and any changes must not expose the public, law enforcement, or any other group to increased risk or danger. All parties agree on this issue and any major changes will likely include a renewed focus on public safety efforts, including increased financing.

Industry Members. The interests of the various industry members must also be considered. Existing industry members have all invested heavily in their Oregon operations and their investment should be considered. Any change to the current system for distributing or retailing distilled spirits will have winners or losers, at least financially speaking, particularly if state revenues must be preserved. Industry members include retail agents (the operators of liquor stores), manufacturers, wholesalers, and retailers. Even within a particular category of industry member, interests can diverge dramatically. More on this in later posts.

The pink elephant in the room is a potential initiative that would privatize the OLCC, similar to what happened in Washington with I-1183 in 2012. Many anticipate that such an initiative will appear in the near future. In addition, broad policy considerations involving the free market economy, prohibition, tied house issues, the appropriate role of the state in economic activities, and even the legalization of marijuana surface in discussions.

OLCC staff are currently working on putting together models of various alternatives to the current system and it was anticipated that they would be unveiled at the December 13th meeting. Given the complexity of the task, a delay in producing these models is not surprising.

Look for future posts about the potential alternative models and other thoughts on potential changes to the OLCC.

For more information, go to the OLCC’s website here.

OLCC Rulemaking: OBWDA Seeks Modest Increase in Allowance for Supplier Provided Bins and Racks

The Oregon Beer & Wine Distributors Association recently initiated OLCC rulemaking to increase the allowed cost for a bin or rack provided by an alcohol supplier to an Oregon licensed retailer. Oregon’s tied house laws prohibit alcohol suppliers from providing bins or racks to retailers absent an exception. The proposed rulemaking increases the allowed cost from $100 to $200. While such as increase may appear steep at first glance, increases to the cost are fairly infrequent due to the time and resources required to go through the rulemaking process. As anyone who buys things knows, costs are always going up. This change makes sense because it will allow suppliers the reasonable opportunity to promote their products by providing quality bins and racks to Oregon retailers subject to the existing requirements and safeguards.

The comment period ends on January 6, 2014. You can find the petition and related information here.

OLCC Case Profile: The OLCC Canceled the Liquor License of Liquid Club & Lounge in Bend, Oregon for License Restriction Violations

The OLCC canceled the liquor license of the Liquid Club & Lounge located in Bend, Oregon in later October. The basis for cancelling the liquor license was that the licensee violated a number of license restrictions imposed on the license when it was issued. It serves as a good case study about the risks of having a liquor license with restrictions. Here, the OLCC imposed restrictions on the liquor license because the previous licensee had its license cancelled for a history of serious and persistent problems.

The OLCC can impose restrictions on a liquor license when there is a basis for denying an applicant’s application. The denial basis may be related to characteristics or the compliance history of the applicant, or it may be related to recent compliance problems at the location to be licensed. Applicants should carefully consider whether to accept a license with restrictions. Depending on the situation, it may make sense to appeal the restrictions or simply walk away from the business opportunity. If an applicant decides to accept license restrictions, they need to take great care to ensure total compliance with the restrictions going forward.

The reason that license restrictions are so serious is that the standard penalty for a first license restriction violation is license cancellation. The license restrictions at issue here were as follows:

• Licensee shall limit each person to possessing no more than one container of alcohol at one time and limit the amount of alcohol in a container to no more than 16 ounces of malt beverage, 6 ounces of wine, or 1.5 ounces of distilled spirits.
• Licensee shall ensure that the parking lot area under the licensee’s control and the outside area adjacent to the premises are patrolled on Friday and Saturday at lease every five minutes starting at 10:00 pm and continuing until 30 minutes after the close of business to discourage loitering and illegal activity.

The OLCC showed that the licensee violated the license restrictions on five separate occasions. In order to cancel the license, the OLCC must show that restriction violations are substantial enough to warrant cancellation. The Commission considers four factors in determining whether a restriction violation is substantial enough to warrant the presumed penalty of cancellation.

• Timing—with breaches soon after the license issues considered to be more serious. Here, the violations occurred almost immediately.
• Willful—restriction violations that are committed willfully by the licensee are considered to be more serious. Here, the licensee was found to be aware of the restrictions and voluntarily allowed them to be violated.
• Number of violations—five separate violations are considered to be more serious than an isolated incident.
• Hardship—breaches that strike at the heart of the restriction are considered to be more serious than more peripheral violations.

In this case, the OLCC found that all four of these factors weighed against the licensee and that license cancellation was thus warranted.

Licensees that currently have license restrictions should consider requesting their removal as soon as is practical, but should take care that they have a plan for ensuring 100% compliance while the OLCC is considering the request. The OLCC will typically not seriously consider requests to remove restrictions if the restrictions have been in place for less than one year. The burden is on the licensee to show that the original basis for imposing the restrictions no longer exists and explaining how they will ensure compliance going forward. Applicants that are facing a decision about whether to accept a license with license restrictions should also think carefully about the practical realities of operating with license restrictions and what other business opportunities are available.

OLCC Rulemaking: Proposal for Biennial Liquor Licenses Makes Sense

ORLA’s proposal for biennial liquor licenses makes sense. The Oregon Restaurant and Lodging Association recently proposed a rule change that would give Oregon licensees the option to obtain a liquor license with a two year term, rather than a one year term. This is a good idea and makes sense because it will result in time and administrative savings for both licensees and the OLCC. The licensing fees are the same in either case. The fee for a biennial license would simply be double the fee for an annual license.

The rule change has a safe guard that would prevent certain licensees for which the local government recommended against renewing their license from obtaining a biennial license. In addition, local governments, citizens, and anyone else negatively impacted by a licensee’s operation can always reach out to the OLCC or local law enforcement with their concerns.

The comment period for this proposed rule change is December 26, 2013. For more information, click here.