About Texans for Consumer Freedom

Texans for Consumer Freedom is a registered 501(c)(6) education and advocacy organization of retailers, consumers, and free market advocates committed to eliminating unfair aspects of the Texas Alcoholic Beverage Code and standing up for fair competition in the retail sale of spirits.

Why should the legislature modernize Texas laws regulating the retail sale of spirits?

Texas is a state that prides itself as a champion of free markets and competition, however, the retail tier of the spirits market has for decades operated within a unfair and protectionist model that restricts consumer choice.

On March 20, 2018, U.S. District Judge Robert Pitman issues a decision that struck down the Texas law prohibiting publicly traded companies and private companies with 35 or more shareholders from engaging in the retail sale of spirits, calling it discriminatory and in violation of the U.S. Constitution.

  • No other state in the nation allows private corporations to compete in the retail sale of spirits while prohibiting publicly traded companies from doing so.
  • The law is unfair and discriminatory.
  • The government should not be in the business of picking winners and losers in private industry.
  • The law harms Texas consumers, who expect and deserve choice and convenience fair competition provides.

Is there a limit to the amount of package store permits an individual may hold?

Since 1935, Texas code has limited ownership of liquor stores to no more than five permits per individual.

A glaring exception to this five-store restriction is a loophole that allows members of a package store owner’s immediate family (first degree of “consanguinity”) to consolidate permits under a holding company and then acquire an unlimited number of permits. Thanks to this preferential exception, the private chains of a handful of privileged "loophole families" dominate the retail spirits market in communities across Texas.

The Austin American-Statesman, explained it this way: “The law allows permit holders related to each other within one degree of consanguinity –– related by blood –– to combine their permits. All it takes is a willing parent, child, brother or sister. Each eligible relative can buy five additional permits…and then put them in a holding company controlled by the liquor magnate-wannabe relative. In that way, a single person can, in effect, acquire multiple permits.” (Eric Dexheimer, “Attorney General Asked to Rule on Prohibition-Era Law,” Austin American-Statesman, 11/03/09)

On March 20, 2018, Federal District Judge Robert Pitman struck down both the five-store limit and the loophole, finding them both in violation of the U.S. Constitution, writing, "The statute does not favor family-owned business; it favors businesses that are owned by certain types of family members." He went on to conclude, "There is no reason to believe that the exception bears any relation to the promotion of family business or small business or serves an other legitimate state interest."

As an illustration, below are the “top ten” private chain permit holders, all of which are exploiting a loophole while also enjoying the state’s protection from competition with publicly traded companies:

CHAINNUMBER OF PERMITS
SPEC'S FAMILY PARTNERS LTD.163
TWIN LIQUORS LP81
WESTERN BEVERAGES LIQUORS OF TEXAS INC.71
GABRIEL INVESTMENT GROUP INC.*48
GOODY GOODY LIQUOR INC.33
PINKIE'S INC.19
D-Z LIQUOR CO.19
SIGEL'S BEVERAGES L.P.17
ZIPP's14

Based on 2/22/17 TABC data. *NOTE: The Code makes an exception for ONE CORPORATION (Gabriel’s), which has more than 35 shareholders and owns 48 liquor stores.

Thanks to this loophole, private chains of a handful of privileged families dominate regional retail liquor markets throughout the state:

COUNTYMARKET SHARE OF LOOPHOLE FAMILIES*
SAN ANTONIO83.2%
RIO GRAND VALLEY79.9%
DALLAS75.8%
AUSTIN73.7%
EL PASO73.6%
LUBBOCK68.6%
FORT WORTH60.4%
HOUSTON59.7%
CORPUS CHRISTI52.1%

* Based on Jan. 1, 2014 value of business personal property as reported to county appraisal districts.

Should these regulations be changed, would minors have greater access to spirits?

No. Package stores owned by public companies would have entirely separate entrances and would not be accessible from the retail store. Public companies would be required to abide by all current TABC safety and enforcement requirements designed to keep alcohol out of the hands of minors.

Is Texans for Consumer Freedom seeking to modify the Texas Alcohol and Beverage Commission’s “blue law” regulations, which set the days and hours spirits may be sold?

No. TCF is not advocating for a change in the Texas Alcohol and Beverage Commission’s “blue law” regulations. TCF's goal is to level the playing field allow publicly owned companies to compete in the retail sale of spirits, as well as to eliminate the “five store restriction.”

Can publicly owned retailers be trusted to abide by all current design, safety and marketing requirements with which Texas package stores must currently comply?

Yes. Publicly owned, licensed retailers already abide by state requirements necessary to sell regulated products such as pharmaceuticals, tobacco, beer, wine and firearms. These retailers should not be excluded from competing in the sale of spirits as well.

All TABC safety requirements, day and time sales restrictions, age restrictions, and store design requirements would be followed and enforced by publicly owned retailers.