HB 3197: Oregon Tax on Wine, Beer, and Cider

By Rebecca Wallis
March 29, 2025

Oregon’s craft beverage industry—celebrated for its wine, beer, and cider—faces a new threat from House Bill 3197 and its amendment, HB 3197-2. This proposed retail sales tax on malt beverages, cider, and wine, set to begin July 1, 2026, promises funding for youth addiction prevention. But its uneven design, exempting small breweries while burdening wineries and cideries, raises questions of fairness, economic impact, and fidelity to Oregon’s long-standing rejection of sales taxes.

Many quotes from individuals or organizations in this article are sourced from public submissions available through the Oregon Legislative Information System (OLIS) for HB 3197.

What HB 3197-2 Entails

Sponsored by Representative Sanchez, the bill introduces a phased tax on retail sales of malt beverages, cider, and wine, collected at the point of sale:

• 2% starting July 1, 2026
• 4% in 2028
• 6% in 2030
• 8% by 2032

A key exemption applies: “small brewery outlet sales” (in-person sales at breweries producing under 15,000 barrels onsite and 150,000 total) are untaxed. No such relief exists for small wineries or cideries, even at their tasting rooms.

Here’s the real-world impact:

For consumers, prices rise. For small producers—especially wineries and cideries reliant on direct sales—the choice is stark: absorb the cost or pass it on, risking lost business in an already tough market.

The Hidden Cost: Administrative Overload

Beyond the tax itself, HB 3197-2 imposes significant red tape:

• Quarterly filings with the Department of Revenue
• Detailed tracking of taxable sales
• Separate invoicing requirements

Retailers can retain 2% of collected taxes to offset compliance costs, but for small operations, this barely covers the expense of new software or staff time. “A sales tax passed on to consumers will be a nail in the coffin for many small breweries across the state,” warns Benjamin Edmunds of Breakside Brewery.

Fairness in Question

Why exempt small breweries but not small wineries or cideries? Oregon’s craft beer industry, a cultural icon, gets a lifeline, yet its wine and cider counterparts, equally vital to tourism and jobs, are left exposed. Newberg City Manager Will Worthey, speaking for Chehalem Valley’s tourism interests, states, “This directly impacts the livelihood of grape growers in our community and the downstream vendors like the tasting rooms and hotels.” Amelia Dobbes of Flaneur Wines warns, “The introduction of an 8% sales tax on beer, wine, cider, and spirits would only make it harder for those of us who are working diligently to support our families and businesses.”

Supporters argue the revenue—85% earmarked for youth prevention via the Youth Development Division Fund—justifies the disparity. Harlo Haynes of 4D Recovery asserts, “The funds generated by this bill will make a tangible difference in their lives, offering them the support they desperately need, and that is currently so lacking in Oregon.” Yet critics, like the HB 3610 Taskforce members, argue, “Alcohol taxes are a proven ineffective tool to control problem consumption, including excessive or teen drinking,” pointing to Oregon’s heavy, poorly tracked SUD spending.

Oregon’s Sales Tax Aversion

Public Testimony: A Resounding Rejection

Testimony for the Joint Committee on Addiction and Community Safety Response’s April 2, 2025, public hearing—due by 5:00 PM that day—shows a stark divide. At the time this article was published, 107 unique submissions had been received:

• 92 Oppose: A chorus of breweries, wineries, tourism voices, and citizens statewide decry the bill. “In this challenging marketplace, HB 3197 would make running our businesses even more difficult by penalizing our customers for patronizing our breweries,” Benjamin Edmunds states. “Our lawmakers should be supporting policies that help small businesses thrive, not hinder them,” Amelia Dobbes urges. “There are more rational ways to solve the revenue problems you have created than taxing our local businesses and tourists at this time,” Will Worthey argues. “Targeting beer, wine and cider will not solve Oregon’s drug crisis,” insist members of the HB 3610 Taskforce. “Oregon Health Authority (OHA) cannot account for $72 million intended for substance use disorder programs,” the National Association of Wine Retailers states. “It’s already hard enough to get customers through the door,” Michael Dimon shares.
• 15 Support: Recovery advocates and Representative Sanchez push back. “Oregon ranks among the worst in the nation for youth access to addiction and mental health services,” Todd Nicholson of Rivercrest Academy warns, urging, “Every child deserves the chance to recover, to heal, and to thrive.” “This bill represents an opportunity to make a real and lasting difference in the lives of countless young Oregonians,” Haynes adds.

More Opposition: Distributors Raise Alarm

The Oregon Beer & Wine Distributors Association submitted testimony opposing the bill, stating, “Alcohol taxes have proven to be ineffective in controlling problematic consumption, including excessive and teen drinking.” They argue that Oregon already allocates less than 3% of alcohol tax revenue to mental health and addiction services and call for a reallocation of current funds, not additional taxes. “Budgets should reflect our values and commitments,” they write. “Increasing taxes on struggling Oregon businesses will not yield the desired outcomes.”

A Better Way Forward?

HB 3197-2’s intent—curtailing youth substance abuse—is noble, but its execution is flawed. Exempting hard liquor while taxing craft beverages feels arbitrary. “Beer, wine and cider are a vital part of Oregon’s economy and identity and need the support of Oregon lawmakers and our communities,” state members of the HB 3610 Taskforce. Why not expand exemptions to all small producers or fund programs through existing revenues? Oregon’s $1 billion SUD spending increase since 2021 yields “little to show,” they note—pointing to mismanagement, not underfunding.

Oregon deserves a policy that balances equity, economic vitality, and public health. HB 3197-2 risks punishing the industries that define the state while ignoring voter sentiment. Lawmakers should rethink this approach—before it becomes another rejected chapter in Oregon’s tax history.

Testimony is due by 5:00 PM on April 2, 2025, for the Joint Committee’s public hearing (OLIS Overview).

Make Your Voice Heard

Oregonians are encouraged to weigh in on HB 3197-2. Whether you support or oppose the bill, your perspective can help shape legislative decisions.

To submit testimony:

1. Visit the Oregon Legislative Information System (OLIS) website.
2. Navigate to the HB 3197 bill page.
3. Click the “Submit Testimony” button under the Testimony tab.
4. To register for in-person testimony, click the ‘Register to Testify’ tab on the HB 3197 bill page linked above.

Testimony can be a short personal story, a statement of opposition or support, or even a sentence or two explaining how the bill would affect you, your business, or your community.

All written testimony is part of the public record and will be reviewed by the Joint Committee on Addiction and Community Safety Response.

Photo Credit – Yamhill County News File