R Street: It's Time for Texas to Permit Sunday Liquor Sales


We recently discussed West Virginia’s passage of legislation legalizing Sunday liquor sales, and now Texas is considering doing the same thing. R Street’s Josiah Neeley, a resident of the Lone Star state, wrote for the American Spectator about why Texas lawmakers should embrace this reform:

Texas laws governing alcohol have their own quirks. Take Sunday sales, for example. Texas is one of a handful of states that maintains a ban on certain types of alcohol sales on Sundays. Whatever the original motivation of the Sunday sales ban, the current version is so shot through with exemptions as to make it arbitrary and senseless. Sales of hard liquor on Sunday are prohibited, but only if they are for off-site consumption. Bars can still serve hooch, and stores can still sell wine and beer. It goes without saying that you can still buy as much liquor as you want on Monday through Saturday and then drink it on Sunday…

Folks who favor economic liberty want these anachronistic rules wiped away. Meanwhile, voters worried about Texas’ public coffers can also take heart—permitting drinks sales each day of the week may generate more sales tax revenue. And consumers certainly would like these needless hassles eliminated.

While modest, bills like these are a sign that Texas’ attitudes towards liquor aren’t encased in amber. Times change, and the laws governing drinks should reflect that…

Read the whole piece here.

Texas Legislature Considers Reforming "Blue Laws"


Under current Texas law, liquor stores (but not grocery stores and other retail outlets) are prohibited from opening on Sundays. According to ABC 7, state lawmakers are considering repealing this antiquated blue law:

New legislation introduced in the Texas House would repeal so-called "blue laws" and allow liquor stores to open on Sunday.

State Rep. Richard Peña Raymond, D-Laredo, has introduced House Bill 1100, which would allow package stores (a.k.a. liquor stores) to be open seven days a week…

42 states allow the sales of spirits on Sunday. Texas already allows Sunday sales of all other alcohol beverages for all other retailers, including bars, restaurants, clubs, grocery and convenience stores and hotels…

Read more here.

Online Delivery Gives Consumers Independence Day Drinks


As previously mentioned on DrinksReform, Texas allowed Amazon to expand its services to deliver booze. Now, a Texas grocer is using an online platform to offer same day booze services. Thankfully, this came just in time for Independence Day:

Heading into the Fourth of July holiday, H-E-B has launched same-day delivery for beer and wine order via its Favor e-commerce subsidiary.

The service kicked off just before the weekend in the greater San Antonio, Austin, Corpus Christi and Houston markets, the Texas supermarket chain said. Plans call for Favor to make the service available in more than 30 cities, with free one-hour delivery for beer and wine orders through Labor Day.

To order beer and wine for delivery, customers download the Favor app and tap on the H-E-B Beer & Wine banner or go online to FavorDelivery.com. Orders require a Runner tip, set at a minimum of $2, and the delivery charge for beer and wine is automatically waived.

Read more here

Amazon Starts Delivering Booze in Texas


As mentioned previously on DrinksReform, Amazon is disrupting the booze industry. This time, they are making a splash in Texas. They are now allowed to deliver beer and wine:

Amazon previously had not applied for a permit to sell alcohol in Texas, said Texas Alcoholic Beverage Commission spokesman Chris Porter. But recently it obtained "wine only package store" permits  and "beer off premise" licenses for five of its warehouses in Texas. 

The permits allow Amazon Logistics, which holds a TABC "carrier's permit" to deliver beer, ale, and wine to consumers within the counties where their warehouses are located — in this case, Bexar, Dallas, Harris, Tarrant and Travis. The drivers are trained to check for IDs and to collect an adult's signature before delivering the alcohol, Porter said.

Other online delivery services that operate in Texas had to partner with a retailer in order to deliver beer and wine. Amazon is now a retailer in Texas, from the standpoint of beer and wine sales, Porter said...

Read the whole piece here.

Texas Brewers Battle the Three-Tier System


Regulations in Texas that separate production, distribution, and retailing of alcohol continue to meet strong opposition from local brewers. The Wall Street Journal reports on the ongoing battles in the Lonestar State:

Small brewers are squaring off against distributors and bar owners in a fight for drinkers as craft beer’s once-explosive growth cools...

Growth is being driven entirely by direct sales from brewers to customers, mainly through taprooms and brewpubs. Direct sales last year grew by 24%—accounting for one in 12 craft beers sold— while the remainder of craft-beer sales declined, according to the Beer Institute.

Small brewers are eager to capitalize on the trend—selling direct makes for higher margins— but many distributors and bar owners are feeling shortchanged.

In response, the two sides are waging a lobbying war across the U.S. over exceptions to the post-Prohibition “three tier system” that keeps the production, distribution and retailing of alcohol separate in many states.

Learn more about this lobbying battle here.

Recent Legislation Makes Texas Beer Laws Even Worse


Texas craft brewers have long been entangled in onerous laws and regulations surrounding beer in The Lone Star State. Jim Dow of the Texas Craft Brewers Guild recently penned an op-ed for The Dallas Morning News describing how recent legislation has only made the problem worse:

If you're confused by recent proclamations by beer wholesaler trade groups that "Texas craft beer is thriving because of good regulation," you should be, because many small breweries are struggling. Yes, some Texas craft breweries are growing. Some are even thriving. But this is only in spite of the law, not because of it...

Besides being deprived of the ability to compete on a level playing field with their manufacturing competitors, Texas breweries are also subject to the bizarre vagaries of our Alcoholic Beverage Code. To put the matter neatly in perspective, a single brewery in Texas can require as many as 14 individual licenses and permits in order to convey their product to market. That's enough red tape to affix a hammer to a sickle.

Making matters a lot worse, in 2017, persuaded by beer wholesalers, the Legislature enacted HB 3287. This legislation created a new dimension of absurdity: In the case of the most logical investments and mergers, it restricted or penalized the flow of capital from one brewery to another. It had the real effect of devaluing Texas' small, independent craft breweries the day it became law.

Under the most ludicrous provision of the law, certain breweries could be required to pay a distributor for the right to sell their own beer in their own tap room. No value-added service here — it's just mandated payment to a third-party for doing nothing...

The whole piece is here.


Walmart wins challenge to Texas alcohol retailing laws


Texas has several laws governing the issuance of alcohol retailing permits, including a restriction preventing publicly traded corporations from obtaining a permit and a rule limiting the number of permits one entity can hold in the state to five (albeit with a consanguinity exception for certain family-owned entities). Walmart brought a constitutional challenge against these laws--on both Dormant Commerce Clause and Equal Protection grounds--and a federal judge just handed down a ruling striking them down. ABC reports:

A federal judge has blocked a Texas state agency from withholding from Wal-Mart licenses to sell liquor by the bottle.

In a 50-page ruling signed Tuesday, U.S. District Judge Robert Pitman of Austin, Texas, concurred with Wal-Mart's constitutional challenge to the Texas Alcoholic Beverage Commission refusal of licenses for retail liquor sales.

More here

The court's full opinion can be found here.

After series of scandals, Texas liquor agency pursues reforms


Last summer we covered the series of scandals that rocked the Texas Alcoholic Beverage Commission. Now, fast forward to 2018, and the agency is debuting new leadership and a revamped approach to regulation, according to the Texas Tribune:

Five years ago the Texas Alcoholic Beverage Commission spent more than $10,000 in taxpayer money to send four employees to Honolulu to attend a national liquor conference — complete with open bar, golf tournament and a “luau under the stars.” 

This summer, the National Conference of State Liquor Administrators is again holding its annual meeting in Hawaii — Waikoloa Beach to be exact — but there won’t be an official delegation from the TABC. In fact, the state’s alcohol regulators won’t be sending anyone to any liquor conferences outside Texas anytime soon.

The agency got its out-of-state travel privileges yanked last year by a Legislature angered over spending controversies and regulatory excesses, exposed in a series of investigative reports published by The Texas Tribune. When the smoke cleared, seven top agency honchos were gone and the TABC board had hired a retired Army general, Bentley Nettles, to clean up the mess...

Now, nearly a year later, even some of the TABC’s most vociferous critics say a wholesale change in leadership has produced a reformed agency that no longer triggers fear and loathing at the very mention of its name.

“The transformation that has taken place already under General Nettles’ leadership is hard to overstate,” Texas Craft Brewers Guild Chairman Josh Hare said in a thank-you note to Gov. Greg Abbott. “We have seen nothing other than a hard shift toward a business and consumer-friendly approach to business.”...

Read the whole article here.

More Litigation Involving Texas' Three-Tiered System

A state Court of Appeals decision recently upheld a Texas law concerning the sale of a brewery's distribution rights under the state's three-tiered system. The Institute for Justice, which is representing the breweries challenging the law, plans to appeal to the state Supreme Court:

"Three Texas brewers are going back to battle with the state after an appeals court reversed a decision that would have allowed them to sell their distribution rights for monetary compensation.

In 2014, Peticolas Brewing Co. (Dallas), Revolver Brewing (Granbury) and Live Oak Brewing Co. (Austin) sued the Texas Alcohol and Beverage Commission, saying a newly passed law related to who could sell a brewery's distribution rights was unconstitutional. The mandate, which passed in 2013 with a bundle of other beer regulation reforms, said breweries may not accept payment for contracting with a distributor, but that a distributor could get a payout if it sold those same territorial rights to another distribution company.

Last year, a judge served victory to the breweries. But on Dec. 15, the Texas Third Court of Appeals reversed that decision. It stated, in part, the law does not prevent the brewers from successfully operating their businesses and that it also upholds the industry's three-tier system, which aims to avoid conflicts of interest between alcohol manufacturers, distributors and retailers.

The decision will be appealed to the Texas Supreme Court, according to a statement from Institute for Justice, which is representing the breweries..."

Read more here. This case isn't the only litigation challenging Texas' three-tiered system in recent years.


The Latest Texas Litigation Involving the Three-Tiered System


Texas courts have seen their fair share of litigation involving the state's three-tiered alcohol distribution system, which forbids any tier from owning even a minimal ownership interest in any other tier. MyStatesman.com reports on another recent federal case about the state's three-tiered system, in which the judge said the system was "absurd" but that he was legally bound by it:

"In a decision that even the judge who wrote it conceded was ridiculous, a Texas court this month concluded the state’s Byzantine liquor laws prohibit most publicly traded companies from doing business here, including such giants as Anheuser-Busch and Molson Coors Brewing. Experts say the ruling could upend Texas’ $40 billion booze industry.

Administrative Law Judge Robert Jones Jr., acknowledged his legal conclusion — that a large alcohol distributing company in business for years was technically ineligible for a state liquor license — made little sense. “The ALJ sympathizes with the absurdity of the outcome in this case,” he wrote.

But, the judge added, he had little choice in the matter. State lawmakers had failed to clean up vague laws to prevent cross-ownership among alcohol manufacturers, distributors and retailers — potentially defined by as little as one person owning a single share of stock each in companies in different sectors of the booze business...

Yet identifying and maintaining the boundaries has become increasingly complicated as corporate structures have grown more sophisticated. Regulators have struggled to identify where to draw cross-ownership lines, particularly with publicly traded companies boasting multiple layers of ownership and millions of investors. Individuals within giant pension funds can own shares in both alcohol manufacturers and retailers without even realizing it.

In the meantime, the number of businesses seeking Texas alcohol permits has soared, straining regulators’ resources. the commission now processes about 87,000 applications annually. Last year, it received approximately 17,000 new applications requiring the commission to vet the ownership of each business to ensure no tier boundaries were being crossed..."

Read more about the entire saga here.