Texas Legislature Green Lights Bigger Liquor Chains, But Still Excludes the Biggest Retailer Walmart

Texas likes to boast about its free market attitudes, except when it comes to one topic: liquor.State lawmakers last week sent a bill to Gov. Greg Abbott that changes some outdated loopholes concerning liquor store ownership that favored blood connections. But a big exclusion remains. Publicly-traded companies like Walmart, Costco, Walgreens and Kroger still won't be permitted to sell liquor in Texas. With House Bill 1545, the Texas Legislature chose not to address an issue that is now before the 5th U.S. Circuit Court of Appeals.A U.S. district court judge in Austin ruled in March 2018 that preventing Walmart and other national chain stores in Texas from selling liquor was unconstitutional. The Texas Package Stores Association appealed the decision to the 5th Circuit, where it's pending. The trade organization didn't respond to a request for comment. The new bill sponsored by Sen. Brian Birdwell, R-Granbury, and Rep. Chris Paddie, R-Marshall, is before Abbott, who has until June 16 to sign, veto or let bills become law without his signature.The bill that Birdwell had tried to get passed in three prior legislative sessions kills outdated rules, including a limit on the number of liquor stores an individual can own. That limit had been five, with the exception of any retailer in business since before 1949. It also eliminates the "consanguinity" exception, which allowed a liquor store owner's closest blood relative to get more permits and then consolidate the permits under family ownership. That's why supporters say it advances the free market in Texas, while others argues it only selectively does so.The bill expands the number of liquor store permits that an individual can own to 250. New and existing retail chains such as Total Wine & More and Spec's Wines, Spirits & Finer Foods can add a maximum of 15 permits a year on the way to 250 stores. And, under the new pending rules, liquor store chains can grow larger than 250 locations through acquisitions. Eliminating the family ownership provision is a step in the right direction because "for decades [it] allowed a few privileged families to play by a separate set of rules, consolidate their permits and amass liquor store empires that now dominate the state's retail liquor market," said Travis Thomas, spokesman for Texans for Consumer Freedom. The lobbying group is funded by retail companies, including Walmart, Costco and Kroger, and trade organizations such as the Texas Retailers Association. Thomas said Texas still has a protectionist law that allows private companies to compete in the retail sales of liquor, while prohibiting publicly traded companies from doing so."The bill does not resolve all that Federal District Court Judge Robert Pitman declared to be unconstitutional and remains pending before the federal courts," said Anne Hatfield, spokeswoman for Walmart.The March 2018 decision by U.S. District Court Judge Robert Pitman declared unconstitutional both limits that the legislation fixes and the one it doesn't. One of the arguments to exclude publicly traded companies in Texas has to do with price, convenience and consumption. A bigger company may lower the price and make liquor more accessible. But Pitman said in his ruling that excise taxes on liquor can make it more expensive, if price is a deterrent.The bill makes the most significant reforms of the Texas Alcoholic Beverage Code since the 1930s that in the past moved at a "glacial pace," said Dale Szyndrowski, vice president of the Distilled Spirits Council of the U.S.  Continue reading...