Despite the constantly changing landscape of control state agencies, the Oregon Liquor Control Commission (OLCC) always manages to stay several steps ahead of the game. By reevaluating its processes and developing innovative programming, the OLCC continues to thrive and exceed even its own expectations. Recent developments, including a robust retail expansion program, a comprehensive agent education program and overseeing the regulation of recreational marijuana, are just some of the contributing factors that helped the OLCC grow from an agency of 230 employees to 328 in the past four years, with a total alcohol sales forecast of $1.447 billion between 2019 – 2021.
Expanding the Retail Footprint
An immediate priority for OLCC’s alcohol program was to modernize the agency’s warehouse facilities, which effectively doubled its shipping capacity and made the idea of retail expansion a real possibility. Growth had stalled among agency stores over the past 30 years. At one point, Oregon was down to one store per every 16,000 people (previously, it had been as high as one store for every 12,000 people). The OLCC sought to expand the retail market to improve the overall shopping experience for customers, increase state revenue and keep better pace with Oregon’s growing population.
“OLCC’s retail expansion positions the commission for the future by enabling us to not only provide stable revenue growth for the state, but also the convenience and selection today’s consumers demand,” says Paul Rosenbaum, OLCC Chairman.
Abandoning its former process of only adding new retail stores occasionally within a particular geographical location selected by the commission, the OLCC adopted a new market-driven process for approving liquor contracts. The new open recruitment application process encourages a variety of retail models, from more traditional stand-alone stores, incorporation within an existing retail space, boutique outlets and grocery or convenience stores. Applicants may apply for multiple locations, and existing agents are also welcome to participate.
The new expansion program rolled out in 2015, with its initial phase in the Portland metropolitan area. Since then, a total of five location-based phases have been initiated, and the OLCC has held town halls in different areas of the state to share market information and answer questions from interested participants. The result has been the largest retail expansion in Oregon since the repeal of Prohibition.
“We wanted to give people information on the market and also allow all potential liquor agents to compete against one another for specific locations,” explains Steven Marks, Executive Director of the OLCC. “We specifically looked for diverse and innovative proposals and considered a variety of models.”
All expansion proposals meeting minimum qualifications were reviewed directly by the commission, ensuring that a legitimate public process was in place for making decisions. As a result, 23 additional agent stores have opened across the state, with eight more stores currently appointed but not yet operational. Combined, the new stores have generated $27 million in additional state revenue. The OLCC plans to continue operating with this model moving forward, and will initiate statewide open recruitment application periods twice per year. The agency also plans to develop new incentives for retailers to help encourage additional expansion.
Regulating the Marijuana Market
So much of the explosive growth the agency has experienced during the past several years can be attributed to the state’s legalization of recreational cannabis. In 2014, Oregon Ballot Measure 91 legalized the recreational use of marijuana. The law went into effect on July 1, 2015, and the OLCC was tasked with regulating the new industry, which included the adoption of rules, licensing and compliance.
It took a year for the agency to prepare before it began accepting applications for producers, processors, wholesalers, laboratories and retailers. During that time, the OLCC worked to develop an online licensing system, conducted research with various groups and held town hall meetings to listen to people’s ideas and concerns. Commissioners and members of OLCC staff also visited and conferred with Colorado’s Department of Revenue, which has regulated its state’s recreational marijuana program since 2012.
“We developed the rules and regulations based on a year of listening,” says Marvin D. Révoal, Commissioner at the OLCC. “Our primary goal was to place education first and foremost in the regulatory process, just like we do with alcohol. We knew we faced a challenge in having to educate people on how to operate as businesses. Many marijuana providers were previously working on the illegal market and had no idea what was required of them.”
In addition to rules and regulations, this emerging industry required the implementation of new systems, additional staffing and a great deal of employee cross-training. Ultimately, the OLCC’s efforts paid off by generating more revenue than anyone anticipated, with a total of $65 million in marijuana taxes the first year alone. Proceeds from license fees were directed back to the OLCC to invest in additional programming across a variety of areas.
Making Education a Priority
With expansion of beverage alcohol retail sales comes additional responsibilities. For the OLCC, education and enforcement have always been top priorities. Around the time the retail expansion program launched, the agency worked to identify new opportunities to enhance marketing, merchandising and promotional efforts across OLCC retail operations.
After contemplating a variety of models, it was determined that an in-house agency education program would be the most effective. The result is the annual “Keeping Oregon in Good Spirits” program, an event that connects store agents and staff members with industry experts, marketing specialists and business professionals, while also maintaining a strong commitment to safety.
“Investing in annual liquor agent education returns dividends for the Commission, the state and Oregon consumers through the sharing of best retail practices and industry knowledge that helps drive better sales,” Rosenbaum says.
The primary goals of the two-day program are to improve communication with liquor agents, promote solid strategies they can implement to achieve growth, and to help enhance the overall customer experience in retail stores. Now in its fourth year, every program has a specific theme—this year’s was “Let the Fun Be-Gin.” Held in Portland, the program featured speakers from Gallo Spirits Academy, global gin distillers Hendricks and Tanqueray, and local gin distillers Ransom and Aria.
Additionally, the event offered information to small business owners; included speakers from Oregon Saves and the State of Oregon Bureau of Labor and Industries; and featured a digital marketing presentation led by representatives of Jack Daniel’s. Another key element to the program’s success is strong on-site participation by manufacturers and brokers at each event, showcasing their product lines and sharing new, innovative items to continue driving liquor agent interest.
Response to the program has been overwhelmingly positive and agents have begun making recommendations on information they’d like to see included in future sessions. Attendance numbers have grown considerably over the years, and the event has expanded to include breakout sessions on specific topics of interest to the liquor agents.
“Our retailers have really benefited from it, and it has become a core part of our agency,” Marks says. “People have learned how to use data much more effectively in their day-to-day management. They are more knowledgeable about customer service. They’re also making improvements to their own retail environments, which in turn elevates the overall customer experience.”
Plans to enhance the program in the future include developing a full-blown trade show for vendors and suppliers, along with identifying unique product categories to feature. The main focus of the program will continue to be driving growth, illustrating to agents how their efforts help increase overall pay dividends.
Looking to the future, the OLCC continues to refine its work on marijuana regulation, as this is an area that continues to evolve in terms of new legislation, increased demand for new licenses and debate over taxation. Commissioner Révoal stresses the importance of working with municipalities to limit their marijuana taxes in order to assure that consumers continue to purchase the product through legal channels. Additionally, he wants to partner with other states to help address the banking issues currently facing many marijuana retailers, who are generally shunned by banks due to federal laws that outlaw their products.
“This is a legitimate enterprise in our state and in other states, and it needs to have banking,” he says. “This is a safety issue that puts a lot of people at risk when they’re forced to hoard cash.”
Other priority projects for the OLCC include investing in new technology to improve accuracy and eliminate manual processes, increasing communications to licensees and the general public and continuing to target retail expansion opportunities by utilizing the open recruitment model.
Melissa Sherwin is a freelance writer and marketing communications strategist from Chicago, IL. Her work has appeared in Chicago’s Daily Herald newspaper, Time Out Chicago, Suburban Life newspapers, and various magazines. She is also the author of several children’s books. Follow her @MelissaNSherwin.