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.
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.
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:
|CHAIN||NUMBER OF PERMITS|
|SPEC'S FAMILY PARTNERS LTD.||163|
|TWIN LIQUORS LP||81|
|WESTERN BEVERAGES LIQUORS OF TEXAS INC.||71|
|GABRIEL INVESTMENT GROUP INC.*||48|
|GOODY GOODY LIQUOR INC.||33|
|D-Z LIQUOR CO.||19|
|SIGEL'S BEVERAGES L.P.||17|
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:
|COUNTY||MARKET SHARE OF LOOPHOLE FAMILIES*|
|RIO GRAND VALLEY||79.9%|
* Based on Jan. 1, 2014 value of business personal property as reported to county appraisal districts.
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.
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.”
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.