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McCann v. Rosenblum

Supreme Court of Oregon, En Banc

April 24, 2014

ELSPETH MCCANN, Petitioner,
v.
ELLEN ROSENBLUM, Attorney General, State of Oregon, Respondent. PAUL ROMAIN and RONALD R. DODGE, Petitioners,
v.
ELLEN ROSENBLUM, Attorney General, State of Oregon, Respondent. LAUREN G. R. JOHNSON and LYNN T. GUST, Petitioners,
v.
ELLEN ROSENBLUM, Attorney General, State of Oregon, Respondent

On petitions to review ballot title filed March 3, 2014; considered and under advisement on April 8, 2014.

Steven C. Berman, Stoll Stoll Berne Lokting & Shlachter, PC, Portland, filed the petition for review on behalf of petitioner McCann.

Paul R. Romain, The Romain Group, LLC, Portland, filed the petition for review on behalf of petitioners Romain and Dodge. With him on the petition was Margaret E. Schroeder, Black Helterline, LLP, Portland.

John A. DiLorenzo, Jr., Davis Wright Tremaine LLP, Portland, filed the petition for review on behalf of petitioners Johnson and Gust.

Matthew J. Lysne, Senior Assistant Attorney General, Salem, filed the answering memorandum. With him on the memorandum were Ellen F. Rosenblum, Attorney General, and Anna M. Joyce, Solicitor General.

OPINION

Page 956

[355 Or. 258] KISTLER, J.

In this consolidated ballot title case, three sets of petitioners have asked us to review the ballot title for Initiative Petition 47 (2014). See ORS 250.085(2) (specifying who may petition for review of certified ballot titles).[1] We review ballot titles for substantial compliance with ORS 250.035(2). See ORS 250.085(5) (stating standard of review). For the reasons explained below, we refer the ballot title to the Attorney General for modification.

Initiative Petition 47 (IP 47), if enacted, would change the way that liquor is sold in Oregon. Currently, the Oregon Liquor Control Commission (OLCC) governs the retail sale of liquor for off-premises consumption. ORS 471.730; ORS 471.750. The OLCC appoints private business owners as agents to operate state-licensed retail liquor stores. ORS 471.750. The OLCC essentially acts as a middleman between wholesale liquor distributors and retail OLCC liquor stores; specifically, the OLCC purchases liquor from wholesale distributors, marks up the wholesale price, and then sells the liquor at the marked-up price to the OLCC retail stores. ORS 471.730; ORS 471.745; ORS 471.750. The revenue that the OLCC collects as a result of that markup, less administrative costs, is distributed to the state general fund and also to counties and cities. ORS 471.805; ORS 471.810.

IP 47 would eliminate the current system of state-licensed liquor stores and allow " holders of distilled liquor self-distribution permits" (essentially wholesalers) to distribute liquor to " qualified retailers," who would, in turn, sell the liquor to the public. Those retailers would include private stores with at least 10,000 square feet of store space as well as smaller private stores that meet certain other requirements. Among other changes, IP 47 would create a new administrative agency, the Oregon Distilled Liquor Board

Page 957

(ODLB), establish regulatory requirements for wholesalers and qualified retailers, dispose of OLCC property, and wind down contracts and agreements between OLCC-licensed liquor stores and the OLCC.

[355 Or. 259] IP 47 also would replace the current markup system with a " revenue replacement fee" on wholesalers. IP 47, § 16. As noted, the OLCC sells liquor it purchases from wholesalers to state-licensed liquor stores at a marked-up price. See ORS 471.745; ORS 471.750(2). Currently, the marked-up price is roughly 180 percent of the wholesale cost plus certain administrative costs. See ORS 471.730; OAR 845-015-0138.[2] If IP 47 became law, wholesalers would sell directly to retailers, eliminating the OLCC markup. To replace the revenue from the markup, wholesalers would pay the OLCC a " revenue replacement fee" equal to 71.7% of the wholesale price of the liquor, plus a small fee per container. IP 47, § 16(1). Those fees would not be imposed directly on the retailer or the consumer, although the wholesaler could pass some or all of those fees on to the retailer who, in turn, could pass them on to the consumer.

The goal of IP 47's " revenue replacement fee" is to maintain roughly the same level of revenue for the state's general fund, counties, and cities that the current markup system provides.[3] IP 47 implicitly recognizes, however, that it may be difficult to predict whether the revenue generated by the new " revenue replacement fee" will match the revenue generated by the current markup system. Specifically, IP 47 provides for a one-time adjustment to the 71.7% fee. See IP 47, § § 73, 80. IP 47 provides that, if the proposed measure becomes law, a " Legislative Revenue Officer" will determine in 2016 whether the amount of revenue generated by the revenue replacement fee between July 1, 2015 and June 30, 2016 (the " 2015 tax year" ) falls within an acceptable range. Id. ยง 73. If the amount of revenue generated by the revenue replacement fee during the 2015 tax year [355 Or. 260] is less than $190,791,582 or more than $194,645,958, then IP 47 directs the legislative revenue officer to determine in 2016 the rate that, if applied to wholesale sales in the 2015 tax year, would have ...


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