SB 587 Licensing Does Not Preempt Local Flavored-Tobacco Sales Bans Absent Impossibility or Unambiguous Exclusivity

1. Introduction

Schwartz v. Washington County addresses whether Oregon’s statewide tobacco retailer licensure scheme—Senate Bill (SB) 587 (2021), codified at ORS 431A.190 to 431A.220—preempts a home-rule county’s local public-health ordinance banning the sale of flavored tobacco and flavored synthetic nicotine products.

The plaintiffs-respondents are tobacco/nicotine retailers operating in Washington County. The defendant-respondent on review is Washington County. The county enacted Washington County Ordinance (WCO) 878 in November 2021, prohibiting the sale of “flavored products” to anyone in the county, regardless of age. Retailers sued for declaratory and injunctive relief, arguing the ordinance was preempted by SB 587.

The circuit court agreed with the retailers and permanently enjoined enforcement. The Court of Appeals reversed, holding SB 587 does not preempt WCO 878. The Supreme Court of Oregon affirmed the Court of Appeals, reversed the circuit court’s judgment, and remanded.

2. Summary of the Opinion

The Oregon Supreme Court held that SB 587 does not preempt Washington County’s flavored tobacco/synthetic nicotine sales ban. The court applied Oregon’s home-rule preemption framework: a local ordinance is preempted only if (1) the local law cannot operate concurrently with state law (impossibility of compliance), or (2) the legislature unambiguously intended the state law to be exclusive.

The court rejected the retailers’ central theory that a state tobacco retail license constitutes affirmative permission (a “liberty interest”) to sell all types of tobacco/nicotine products and therefore disables local governments from banning a subset of products. SB 587, the court explained, conditions lawful sales on licensure, but does not grant a sweeping right to sell all products within the broad category of “tobacco products.”

The court further concluded that WCO 878 qualifies as a local “standard[] for regulating the retail sale of tobacco products and inhalant delivery systems for purposes related to public health and safety” under ORS 431A.218(2)(a). It emphasized that “regulating” can include “prohibiting,” and that SB 587’s text and context contemplate enforcement of local ordinances that “govern the retail sale” of tobacco products.

3. Analysis

3.1 Precedents Cited

The decision is grounded in Oregon’s modern home-rule/preemption jurisprudence and a consistent insistence on either “impossibility” or “unambiguous” exclusivity.

• Schwartz v. Washington County, 332 Or App 342, 550 P3d 20 (2024)
  The Supreme Court affirmed the Court of Appeals’ application of the two-part preemption test (concurrent operation vs. exclusivity). The Supreme Court’s opinion largely endorses the Court of Appeals’ framing, but supplies additional reasoning rejecting the “license-as-right” theory and construing ORS 431A.218(2)(a) broadly.
• Owen v. City of Portland, 368 Or 661, 667, 497 P3d 1216 (2021)
  Provided the concise, controlling formulation: preemption turns on whether local and state laws are incompatible because they cannot operate concurrently or because the legislature meant the state law to be exclusive. The Supreme Court used Owen as a direct statement of the test it applied.
• La Grande/Astoria v. PERB, 281 Or 137, 142, 148, 576 P2d 1204, adh'd to on recons, 284 Or 173, 586 P2d 765 (1978)
  The foundational home-rule case supplied both (a) the basic validity inquiry (authorized locally; not contravening state/federal law), and (b) the incompatibility framework later quoted in Owen. The court relied on La Grande/Astoria to emphasize that overlap in regulatory “field” is not enough; the question is true incompatibility or exclusivity.
• Northwest Natural Gas Co. v. City of Gresham, 359 Or 309, 336, 374 P3d 829 (2016)
  Cited for reiterating La Grande/Astoria’s preemption formulation. Its role is confirmatory: Oregon preemption is not presumed; it is tested by incompatibility or exclusivity.
• Rogue Valley Sewer Services v. City of Phoenix, 357 Or 437, 454, 353 P3d 581 (2015)
  The court used Rogue Valley for the strong presumption against displacement of local civil/administrative regulation and for the proposition that only an “unambiguously expressed” legislative intent can overcome that presumption.
• Thunderbird Mobile Club v. City of Wilsonville, 234 Or App 457, 474, 228 P3d 650, rev den, 348 Or 524 (2010)
  The Supreme Court agreed with the Court of Appeals’ articulation that incompatibility is assessed by “impossibility”: the local law is incompatible only to the extent it makes compliance with the state statute impossible. This case helped crystallize the “concurrent operation” prong into a practical compliance test.
• Gunderson, LLC v. City of Portland, 352 Or 648, 663, 290 P3d 803 (2012)
  Supplied the “unambiguously expresse[d]” exclusivity requirement. The court emphasized that it will not find preemption by implication or inference; the legislature must clearly say so.
• State ex rel. Haley v. City of Troutdale, 281 Or 203, 211, 576 P2d 1238 (1978)
  Used to reinforce the “unambiguously expressed” requirement: absent such clarity, compatible local requirements are not preempted even when the state sets “minimum” standards.
• Chamber of Commerce of the United States v. Whiting, 563 US 582, 595, 131 S Ct 1968, 179 L Ed 2d 1031 (2011)
  Cited for a general definition of “license” as permission that would otherwise make conduct unlawful. Oregon’s court used that definition but rejected the retailers’ attempted leap from “permission conditioned on licensure” to an affirmative, statewide substantive right to sell all products.
• Kramer v. Lake Oswego, 365 Or 422, 446, 446 P3d 1 (2019); Hillsboro v. Purcell, 306 Or 547, 554, 761 P2d 510 (1988); Terry v. City of Portland, 204 Or 478, 511, 269 P2d 544 (1954); City of Portland v. Schmidt, 13 Or 17, 22, 6 P 221 (1885)
  These authorities were invoked by the retailers to argue that “regulate” does not necessarily include “prohibit.” The court found them unpersuasive for preemption purposes and instead reasoned that regulation can include prohibitions, including by analogy to SB 587’s own constraints on where sales may occur.
• Patton v. Target Corp., 349 Or 230, 243, 242 P3d 611 (2010); Whipple v. Howser, 291 Or 475, 480, 632 P2d 782 (1981)
  Cited for a core interpretive restraint: courts cannot enforce a “supposed intention” unless it is contained, in substance, in the statutory text. This supports the opinion’s insistence that preemption must be unambiguously expressed and not derived from hints in legislative history.

3.2 Legal Reasoning

A. Oregon’s home-rule baseline and the two-path preemption test

The court situated the case within Oregon’s home rule provisions (Or Const, Art XI, § 2; Art IV, § 1(5); Art VI, § 10) and statutory home-rule authorization for counties (ORS 203.035(1)). Under La Grande/Astoria, local action is generally valid if authorized and not in conflict with superior law. “Conflict,” in this context, is resolved by the Owen/La Grande/Astoria test:

• Concurrent-operation (impossibility): preemption if the local law makes compliance with the state statute impossible.
• Exclusivity (unambiguous intent): preemption if the legislature unambiguously meant state law to be exclusive.

The court stressed the presumption against preemption from Rogue Valley Sewer Services: the party asserting preemption bears the burden, and the court will not infer exclusivity from ambiguity.

B. Concurrent operation: a state license is not a statewide entitlement to sell every tobacco/nicotine product

The retailers’ incompatibility argument depended on recasting SB 587 licensure as a substantive “liberty interest” to sell all nicotine products statewide. The court rejected that framing:

• SB 587 makes retail sales unlawful unless made “at or from a premises” licensed/authorized under ORS 431A.198 or ORS 431A.220 (ORS 431A.194), and directs DOR to issue/renew licenses for “qualified premises” (ORS 431A.198).
• But conditioning sales on licensure is not the same as granting a broad “right” to sell all products that might fall within the statutory category. SB 587 does not “expressly legalize” tobacco sales generally (they were legal pre-SB 587), nor does it speak to flavored products specifically.
• Compliance with both regimes is feasible: a retailer can hold the state license and simply refrain from selling the locally banned subset (flavored products) in Washington County.

On this point, the court effectively treated WCO 878 as a product-specific sales restriction that does not negate the licensing scheme’s operation. The “impossibility” threshold is not met merely because local regulation reduces the range of products that can be sold within the licensed business.

C. Exclusivity: SB 587 does not unambiguously preclude local flavored-tobacco bans

The court then asked whether SB 587 unambiguously expresses an intent to occupy the field or preclude local rules like WCO 878. It held no.

(1) ORS 431A.218(2)(a) affirmatively contemplates local standards “for purposes related to public health and safety”

ORS 431A.218(2)(a) authorizes local public health authorities to enforce, by ordinance, “standards for regulating the retail sale of tobacco products and inhalant delivery systems for purposes related to public health and safety,” including additional “qualifications” beyond ORS 431A.198.

The retailers attempted to narrow “standards for regulating” to “how or the manner in which” sales occur, not “whether” certain products can be sold. The court rejected that as an impermissible insertion into the statutory text (ORS 174.010). Whatever uncertainty existed, it did not amount to an unambiguous legislative intent to bar local prohibitions.

(2) “In addition to” state standards does not mean “no local divergence”

The retailers argued the phrase “in addition to the standards described in paragraph (b)” (ORS 431A.218(2)(a)) narrows local authority to rules akin to the state’s standards and preserves statewide uniformity. The court disagreed, emphasizing:

• ORS 431A.218(5)(a) requires consistent statewide enforcement of state standards, and is “subject to ORS 431A.220,” which itself preserves certain preexisting local licensing regimes—already undermining a strict uniformity reading.
• ORS 431A.218(2)(a) elsewhere expressly allows local public-health ordinances beyond state standards, so ORS 431A.218(5)(a) cannot be read to forbid local variation that the statute otherwise permits.

(3) “Regulating” can include “prohibiting”

The court rejected the claim that regulation excludes prohibition. It reasoned that SB 587 itself regulates sales locations by setting “qualified premises” requirements (ORS 431A.198(2)), implicitly prohibiting sales from non-qualifying premises. Against that backdrop, a county’s prohibition on a subset of products is comfortably within ordinary meanings of regulation (“bring under control of law”).

The court expressly declined to decide whether a total prohibition on all tobacco sales would be permissible under SB 587, but held that this partial ban is “regulating” within ORS 431A.218(2)(a).

(4) Statutory context: SB 587 was designed to improve enforcement of local tobacco rules

The court found strong contextual support in provisions that expressly anticipate local rules:

• ORS 431A.192 states SB 587’s purpose is “to improve enforcement of local ordinances and rules * * * that govern the retail sale of tobacco products and inhalant delivery systems.”
• ORS 431A.202(1)(b) authorizes DOR licensing consequences if a licensee violates a local ordinance or rule that “governs the retail sale of tobacco products or inhalant delivery systems.”

Those provisions cut against any claim that SB 587 unambiguously forbids local sales restrictions; they assume local governments will continue to enact and enforce rules governing retail tobacco sales.

(5) Legislative history: at most suggests desire for a baseline licensure system, not exclusivity over product bans

Retailers highlighted “patchwork” concerns from testimony and a statement by Senator Steiner Hayward about retailers wanting a “single system” as a “baseline.” The court held those statements, even if credited, speak to licensure administration, not a legislative decision to bar local public-health restrictions like flavor bans. And in any event, legislative history cannot supply what the text does not “unambiguously express.”

3.3 Impact

• Local public-health authority to restrict products is reinforced: The decision confirms that ORS 431A.218(2)(a) can support robust local “standards for regulating” tobacco/nicotine retail sales, including prohibitions on a subset of products (here, flavored tobacco/synthetic nicotine).
• Licensing schemes are not easily transformed into substantive statewide rights: The court’s rejection of the “license equals a right to sell everything in the category everywhere” argument may influence preemption disputes in other licensed industries (e.g., cannabis, alcohol, firearms, business licensing), especially where a local rule restricts some licensed conduct but does not make compliance with state licensing impossible.
• Preemption in Oregon remains demanding: By reiterating “impossibility” and “unambiguous” exclusivity, the opinion strengthens the already high barrier to implied preemption under Oregon home rule. Parties challenging local regulation will need clearer statutory language or a truly impossible compliance conflict.
• Encourages localized experimentation (and variation): Counties and local public health authorities may read the case as approving geographically variable product restrictions so long as state standards remain enforceable and the legislature has not clearly forbidden local action.

4. Complex Concepts Simplified

• Home rule: Oregon’s Constitution grants cities and (by charter) counties authority to govern local matters. Local laws are valid unless they conflict with state/federal law under the preemption tests.
• Preemption: A state law can displace a local law. In Oregon, displacement occurs only if (a) you cannot comply with both laws at the same time (impossibility), or (b) the legislature clearly said the state law is exclusive (unambiguous intent).
• “Concurrent operation” / impossibility: It is not enough that a local ordinance is stricter. The question is whether the local ordinance makes it impossible to comply with state law.
• “Unambiguously expressed” exclusivity: Courts will not infer that the legislature meant to occupy the field. The statute must clearly say, in substance, that local regulation is barred.
• Licensure vs. substantive entitlement: A license often removes one barrier (unlicensed activity is unlawful), but it does not necessarily confer an affirmative statewide right to engage in the activity free of local limits.
• “Standards for regulating”: The court read this phrase broadly. Regulation can include prohibiting certain conduct, especially when the regulation is tied to “public health and safety.”

5. Conclusion

Schwartz v. Washington County establishes (and firmly applies) a practical rule for Oregon home-rule preemption disputes in licensed fields: a statewide licensing statute does not preempt stricter local public-health sales restrictions unless compliance with both is impossible or the legislature unambiguously made the state regime exclusive.

The court’s core moves were (1) rejecting the attempt to convert SB 587 licensure into an affirmative statewide right to sell all tobacco/nicotine products, and (2) construing ORS 431A.218(2)(a) and surrounding provisions as affirmatively contemplating local ordinances that “govern the retail sale” of tobacco products for public health and safety—including, here, a flavored-products ban.