Oregon Brewers Association Fights Proposed State Barrelage Fee Hike
Salem, OR – Oregon’s vibrant craft beer industry, a significant contributor to the state’s economy and cultural identity, is facing a potential new financial challenge. The Oregon Department of Revenue has put forward a proposal to implement a substantial increase in the state’s barrelage fee, a per-gallon tax currently levied on brewed beverages. This proposed fee hike, ostensibly aimed at generating funds for state infrastructure projects, has ignited strong opposition from industry stakeholders, most notably the Oregon Craft Brewers Association (OCBA).
Details of the Proposed Fee Increase
The proposal from the Oregon Department of Revenue calls for a significant increase in the existing barrelage fee. While the specific legislative or regulatory mechanism is still under discussion, the core element of the proposal involves adding approximately $5 per barrel to the current fee structure. According to documents related to the proposal, this increased fee is slated to take effect on January 1, 2026. The stated purpose behind this revenue generation is to support various state infrastructure initiatives, which could include transportation projects, public works, or other capital improvements deemed necessary by state planners.
The barrelage fee is applied to the volume of beer produced and sold within the state, making it a direct cost incurred by breweries based on their production levels. For many of Oregon’s approximately 300 breweries, a substantial portion of which are small and independent operations, this fee represents a non-trivial operational expense. The proposed increase would significantly amplify this cost.
OCBA Leads Industry Opposition
The Oregon Craft Brewers Association, the leading trade organization representing the state’s craft breweries, has taken a definitive stance against the proposed fee increase. The OCBA has formally announced its opposition, arguing that the timing and magnitude of the increase would place an undue and potentially crippling financial burden on breweries already navigating a complex economic landscape. The association highlights that its members, ranging from small neighborhood taprooms to larger regional producers, are currently grappling with a multitude of escalating operational costs.
These rising costs include increases in raw material prices (such as malt, hops, and yeast), packaging materials (like cans, bottles, and kegs), labor expenses, energy bills, and distribution costs. Introducing a new, significant per-barrel fee on top of these existing pressures, the OCBA contends, would severely impact breweries’ bottom lines and their ability to invest in their businesses.
“Our breweries are resilient, but they are not immune to economic pressures,” stated a representative for the OCBA. “Adding a $5 per barrel fee starting in 2026 would represent a dramatic increase in their tax burden. This isn’t just an abstract cost; it translates directly to less money available for hiring staff, upgrading equipment, purchasing ingredients, or simply keeping the lights on.”
Potential Impact on Oregon’s Craft Beer Sector
The OCBA warns that the proposed barrelage fee increase has the potential to stifle growth and threaten the overall viability of businesses within Oregon’s celebrated craft beer sector. Oregon is renowned nationally and internationally for the quality and innovation of its breweries. The industry not only produces world-class beer but also drives tourism, creates jobs, supports local agriculture (especially hop farming), and contributes significantly to local economies across the state.
The association argues that an increased cost per barrel could force breweries to make difficult decisions. These might include raising prices for consumers (potentially impacting sales), reducing production volume, scaling back expansion plans, or even contemplating closures, particularly for smaller operations with tighter margins. The fee, while potentially appearing small on a per-barrel basis to state revenue forecasters, aggregates into a substantial annual expense for even a moderately sized brewery producing thousands of barrels a year.
Furthermore, the OCBA suggests that imposing a significant new fee specifically on the brewing industry could make Oregon a less attractive state for brewing businesses compared to neighboring states or regions without such burdens. This could hinder future investment and growth in the sector.
Context: A Challenging Economic Climate
The opposition comes at a time when the craft beer industry, both nationally and in Oregon, is navigating a period of slower growth and increased competition compared to its boom years. Supply chain disruptions, inflation, and shifts in consumer behavior have all contributed to a more challenging operating environment. Breweries are working harder than ever to maintain profitability and sustainability.
The OCBA emphasizes that many small breweries operate on very thin margins. A $5 per barrel fee could represent a significant percentage of their profit margin per barrel, potentially pushing some operations into the red or making it impossible to compete effectively in the market. The fee proposal arrives at a moment when the industry is still recovering and adapting to post-pandemic realities.
Public Hearing Scheduled
Recognizing the importance of industry and public input, the Oregon Department of Revenue has scheduled a key public hearing on the proposed barrelage fee increase. This hearing is set to take place on June 10, 2025. Industry stakeholders, brewery owners, employees, consumers, and concerned citizens are invited and encouraged to attend and provide feedback directly to state officials.
The hearing will be held at the State Capitol in Salem. The OCBA is mobilizing its members and supporters to participate in the hearing, either by testifying in person, submitting written comments, or contacting their state legislators. The association sees this public hearing as a critical opportunity to voice the industry’s concerns and demonstrate the potential negative consequences of the proposed fee.
Looking Ahead
The outcome of the public hearing and subsequent discussions within the Oregon Department of Revenue and potentially the state legislature will determine the fate of the proposed barrelage fee increase. The Oregon Craft Brewers Association remains committed to advocating on behalf of its members and highlighting the vital role the craft beer industry plays in the state’s economy and culture.
The debate underscores the ongoing tension between the state’s need for revenue to fund public projects and the potential impact of taxation on specific industries, especially those comprised largely of small and independent businesses. As the June 10th hearing approaches, the focus remains on the ability of the craft beer community to effectively communicate the potential challenges posed by the proposed $5 per barrel fee increase and to seek alternative solutions for funding state infrastructure projects that do not disproportionately burden Oregon’s beloved breweries.
