Federal Judge Rejects Texas Law Restricting Big Store Liquor Sales

A federal judge in Austin has thrown out a nearly century old Texas Alcoholic Beverage Commission policy that prohibits publicly traded corporations from holding 'package sale' liquor licenses, restricting them to sales of beer and wine only, News Radio 1200 WOAI reports.

In a fifty page ruling, U.S. District Judge Robert Pitman in Austin agreed with Walmart Stores, Inc that the law amounts to illegal discrimination.

Texas is the only state that has a law that restricts package sale licenses to small stores only, and, in his ruling, Judge Pitman commented on the bizarre nature of the law.

"The consanguinity exception creates an unusual and entirely arbitrary classification. There is no reason to believe that the exception bears any relation to the promotion of family business or small business or serves any other legitimate state interest. It thus fails rational basis review.

"The consanguinity exception is unconstitutional because it extends a benefit (the right to have more than five package store permits) to some persons while withholding it from others without a rational basis," Pittman wrote in his ruling.

The rule, which dates from Prohibition, only allows private companies with 'fewer than 35 shareholders' from selling liquor, essentially limiting the business to small retailers.

“We applaud Judge Pitman’s decision that these unfair Texas laws violate the U.S. Constitution.  For decades, these laws have stood in stark contrast to Texas values. The State of Texas should not pick winners and losers in private industry," said Travis Thomas of Texans for Consumer Freedom, which supported Walmart's lawsuit.

The Legislature has tried and failed twice to remove the 1930s era law.  They have been supported by small retailers who say they will be unable to compete with corproations like Walmart.

No word on whether the TABC will appeal.

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