Oregon Expands Privileges for Out-of-State Breweries to Sell Malt Beverages Directly to Consumers and Retailers
Breweries outside of Oregon can sell and ship malt beverages directly to Oregon retailers if they obtain a newly created direct-to-retailer self-distribution permit. In addition, out-of-state breweries may obtain a Direct Shipper permit to sell and ship malt beverages direct to consumers (DTC) in Oregon, without the need for a reciprocal DTC shipping law in the out-of-state brewery's home state.
These new privileges are a result of a lawsuit settlement agreement between a group of Washington breweries and the State of Oregon and Oregon Liquor and Cannabis Commission (OLCC).
Under existing Oregon law, only Oregon breweries have the ability to sell and ship malt beverages directly to retailers in Oregon. Out-of-state breweries can only sell through Oregon distributors. Further, Oregon's DTC shipping statute permits out-of-state breweries to hold an OLCC Direct Shipper license only if that brewery's state has reciprocal direct shipping privileges for Oregon breweries.
Last year a group of Washington breweries sued the State of Oregon and the OLCC, arguing that the Oregon laws that allow Oregon brewers to sell and deliver malt beverages directly to Oregon retailers and consumers, but which prohibit out-of-state breweries the same or restricted privileges, violate the Commerce Clause of the U.S. Constitution. The lawsuit relied on Granholm v. Heald (2006), where the United States Supreme Court ruled that discriminatory DTC wine-shipping laws in Michigan and New York were unconstitutional under the Commerce Clause.
The parties recently agreed to settle the Oregon lawsuit. As part of the settlement, OLCC will forego enforcement of the state laws that restrict sales and shipments by out-of-state breweries and agreed to issue permits even while legislation is pending, as follows:
- Direct to Consumer (Direct Shipper): OLCC will allow out-of-state breweries to obtain OLCC Direct Shipper permits to sell and ship malt beverages to Oregon consumers, even if that brewery's home state does not have a reciprocal DTC law.
- OLCC updated its Direct Shipper permit form: Oregon DTC Permit. Breweries that already hold an OLCC-issued Direct Shipper permit (those in reciprocal states) do not need a new permit.
- Breweries that do not already have an OLCC-issued Direct Shipper permit can now apply for the permit. All Direct Shipper permittees must follow the delivery rules in OAR 845-006-0392 and 845-006-0396.
- Direct to Retailer (Self-distribution): OLCC created a direct-to-retailer permit allowing out-of-state breweries to distribute directly to Oregon retailers beer they manufacture.
- The permit application form is here.
- Key points of permit:
- Out-of-state breweries must hold an OLCC Certificate of Approval (CERA).
- Out-of-state breweries that have existing distribution agreements with Oregon wholesalers cannot sell already distributed brands in the same territory as covered by their wholesale territorial agreements.
- Malt beverage products are subject to the Oregon Bottle Bill when shipped in applicable beverage containers (bottles and cans). Breweries that ship directly to Oregon retailers or consumers are acting as wholesalers under the Oregon Bottle Bill, and certain responsibilities come into play (initiating deposits, redemption of containers, potential registration with Oregon Beverage Recycling Cooperative, etc.): BOTTLE BILL FAQs (oregon.gov)
The settlement agreement between the parties ends in five years but may terminate earlier if the Oregon legislature passes a law that allows for substantially similar privileges. A bill on this issue (HB 2013) is currently being considered by the 2023 Oregon legislature.