Why is Walmart Suing Texas to Sell Liquor?

Liquor sales are a $14 billion business annually – but state policies that prevent Walmart from selling liquor date back to the end of Prohibition.

By Laura RiceAugust 30, 2016 10:24 am|

Walmart sells everything from guns to grapefruit. But right now, it can’t sell liquor – at least not in Texas. The mega-retailer is going to court to change that, but liquor store owners are fighting the effort, alongside the state of Texas.

Some of the Texas Alcoholic Beverage Commission’s rules preventing Walmart from selling liquor date back to the end of Prohibition. But the big-box store corporation argues the rules amount to unconstitutional discrimination.

Associated Press reporter Michael Graczyk says there’s a big market for liquor in Texas. “The Comptroller’s office says it’s worth about $14 billion in sales,” he says, “so we’re talking big bucks in booze.”

Walmart stores, which number in the 600s including Sam’s Club stores, already sell beer and wine, but Texas law restricts them from selling hard liquor.

“They [sell liquor] in 31 other states,” he says. “Texas is among the few they don’t. And Texas is the only one where they’re suing to try to get in.”

In Texas, publicly traded companies are not allowed to hold liquor licenses, Graczyk says – a policy that dates back to the 1930s.

“Despite the bar on publicly traded companies… hotel corporations are allowed,” he says. “Another issue is liquor licenses are limited to five per holder. But that rule is out the window if you have a blood relative [who has a license].”

Licenses can be consolidated among close blood relatives, like parents and children or siblings. “That accounts for the growth of family-owned liquor chains in Texas,” Graczyk says.

Walmart, in their lawsuit, says these laws are discriminatory.

“[Walmart executives] don’t have any blood relatives who fit this template,” he says, “so it’s unfair to them, and ultimately to Texas consumers, because they’re saying they can provide liquor, presumably, at a cheaper price.”

statewide stores’ association with about 2,500 members appealed to the Fifth Circuit Court of Appeals to join the lawsuit on the side of the state. Last session, bills introduced in the Legislature that would help Walmart earn the right to sell liquor died in committee.

“Presumably, the lobbyists for the Texas Package Stores Association are pretty convincing,” he says. “It was supposed to go to trial next month but the whole process got stopped when the Package Stores Association appealed the ruling… now it’s up to the federal judge to set a new court trial date.”

Post by Hannah McBride.