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Federal Judge Paves Way For Walmart To Sell Spirits In Texas

March 22, 2018

In a ruling that could potentially shake up the Texas retail spirits market, U.S. District Judge Robert Pitman has issued a decision striking down the state’s ban on publicly traded companies selling spirits. The decision is a victory for Walmart, which has been fighting to enter the retail spirits fray in the Lone Star State. According to Impact Databank, the Texas spirits market rose 6% to total 16.7 million cases last year, making it the third-largest market in the U.S., after California and Florida.

In his ruling, Pitman said the state’s prohibition on spirits sales by publicly traded corporations violates the dormant Commerce Clause of the U.S. Constitution, which bars states from discriminating against interstate commerce. In the case of Texas, Pitman wrote, “The credible evidence demonstrates that the public corporation ban disproportionately affects out-of-state companies. The law disproportionately burdens out-of-state companies’ ability to enter the Texas retail liquor market.”

After being denied a package store permit, Walmart challenged the state law by suing the Texas Alcoholic Beverage Commission (TABC). Later, the Texas Package Stores Association (TPSA) joined the case on the side of the TABC. A statement from Lance Lively, executive director of the TPSA, said the group will appeal the ruling, which Lively said overturned decades of Texas law. “The Texas Legislature put a system in place to ensure safe access to alcoholic beverages in Texas, and that system has worked for over 80 years,” Lively wrote. “We will continue to fight for family-owned liquor store owners against the world’s largest corporate entities that seek to inflate their profits by upending sensible state laws that protect both consumers and small businesses.”

If Pitman’s ruling stands it will mean vastly intensified competition for the state’s existing retailers. In recent years, major players like Spec’s Wines, Spirits and Finer Foods; Total Wine & More; and Twin Liquors have expanded rapidly, opening stores across the state.

Ultimate defeat for the state and the TPSA would mean “a significant change in how our business is done,” Twin Liquors president David Jabour says. “I don’t think there would be a retailer or outlet that wouldn’t be impacted.” Twin Liquors operates a total of 83 stores in Texas, second only to Spec’s, which has 165 locations in the Lone Star State. —Daniel Marsteller

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