Walmart Sues For A Texas Liquor License, Possibly Shaking Up Smaller Businesses

Texas is the only state in the U.S. with a law that prohibits publicly traded corporations from selling liquor.

By Michael MarksMarch 22, 2018 1:24 pm|

If you’ve ever been to a Walmart in Texas looking for liquor, you’ve noticed that, by law, they don’t sell it. Beer and wine, yes, but not spirits like tequila or whiskey.

And that’s because of a somewhat arcane law that allows privately owned corporations to sell liquor, but prevents public traded companies from doing the same. But now, that could change. Walmart sued to challenge that rule, and on Wednesday a federal district judge sided with the retail giant.

Matt Martin, an attorney at the Addison Law firm in Dallas, deal with liquor laws. He says that, if kept in place, this ruling would change the retail liquor landscape in Texas, with positive and negative effects.

“There’s a fear that if the law is found to be unconstitutional or not enforced, that big box retailers like Walmart will take over the market and force out the smaller business,” Martin says. “Will that mean the end of the mom and pop stores? Probably not, there will probably still be some out there, but it may have a little negative impact on them. It’s really too early to tell exactly what’s going to happen.”

The law was created in the early 1990s when the Texas Alcoholic Beverage Commission, or TABC, lost a lawsuit from an out-of-state package store liquor license applicant. The rule forbids publicly traded businesses from selling alcohol to protect family-owned companies.

On the other hand, big retailers getting package store liquor licenses could mean cheaper prices for consumers.

“Walmart can do stuff on such a much larger scale than your average retailer, and likely even on a larger scale than even like a Spec’s,” Martin says. “Their power to compete in volume just surpasses everybody. That’s really the reason why the Texas Package Store Association was so adamantly opposed to this law being changed.”

The Texas Package Stores Association, which represents state liquor store owners, joined the case on the side of the TABC in 2015. Lance Lively, head of the association, confirmed in a statement that they will appeal the ruling and that that they will keep fighting to protect family-owned liquor store owners from the larger corporations.

“The Legislature has had the opportunity to put in place legislation over the last decade or so, and really has not done it,” Martin says. “I think that’s probably the result of the Texas Package Stores Association lobby in their efforts to keep a law from being passed that would change the status quo.”

Written by Cesar Lopez-Linares.