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Free Enterprise & Government Regulation: Alcoholic Beverage Regulations

TCCRI's recently published Free Enterprise & Government Regulation Task Force Report examined the issue of alcoholic beverage regulations. What follows is an excerpt from the Report on that topic.


Texas’s laws and regulations pertaining to alcoholic beverages are both confusing and cumbersome. The Texas Alcoholic Beverage Code was drafted during the aftermath of Prohibition, a unique period of U.S. history ruled by sentiments very different than those that prevail today. Many of the restrictions on alcohol sales thought necessary at the time have since outlived their usefulness. For instance, times and locations of sales for alcohol differ depending on whether the alcohol is sold for on-premise or off-premise consumption, at a grocery store or a liquor store, whether food is served with the alcohol, or whether the alcohol type is beer, wine, or spirits. Those are but a few examples. There is a great opportunity for Texas to promote free market principles by lifting a number of these conflicting, anticompetitive alcohol regulations.

Policy Recommendation: Create Uniformity in Hours of Sale

Conflicting laws on hour of sale should be made uniform for a variety of reasons ranging from the promotion of economic growth, to alleviating anti-competitive effects, to potentially creating more revenue for the state. One proposal is to simply allow alcohol sales of all kinds from 7am until 1am across the board, with an option for a late-hours permit in those jurisdictions that allow it. This will eliminate the anti-competitive system we currently have where certain kinds of businesses may only sell certain kinds of alcohol at variously defined times. Such a reform would simplify the law, free the alcoholic beverage economy, benefit consumers, and make Texas a stronger free market leader. Policy Recommendation: Allow Sunday Liquor Sales

Texas is one of only twelve remaining states that prohibits Sunday liquor sales for off-premise consumption. Not only is this practice outdated, but it is anticompetitive in nature. Bars and restaurants are permitted to sell liquor on Sunday, which eliminates any kind of safety or moral argument against such sales. Indeed, purchasing a bottle of liquor and taking it home for consumption is arguably far safer than allowing a person to drink liquor on a bar or a restaurant and then driving home afterwards. Bills to remedy this anticompetitive law, such as Senate Bill 785 (86R, Johnson) and House Bill 937 (87R, Raymond) are filed every Legislative Session. The 88th Texas Legislature should consider and pass such legislation. Policy Recommendation: Repeal Package Permit Restrictions

Section 22.16 of the of the Texas Alcoholic Beverage Code prevents publicly traded corporations from holding liquor permits. Stores such as Costco, Walmart, and many others, can freely sell beer and wine, but are not authorized under law to sell liquor. Costco, as an end-around, has found a way around this unnecessary regulation by leasing a portion of their property to a liquor store where membership is not required to purchase products.

This rule is anti-competitive, easily circumvented, and outright discriminatory. Indeed, hotels, restaurants, and bars may all serve liquor even if they are owned by publicly traded companies. Bills are filed to address this anticompetitive law every session. Senate Bill 645 (86R, Birdwell) which would have repealed these prohibitions, received bi-partisan support as it passed through the Senate with 27 Yeas and 4 Nays, but it did not receive a hearing in the House. Texas is the only state in the nation that prohibits publicly traded corporations from possessing liquor permits. Repealing these outdated prohibitions would benefit consumers and allow for greater market competition.

You can read this and the rest of the report here.

A number of bills concerning these issues have been filed. Both House Bill 1573 (88R, Dutton) and House Bill 1670 (88R, Jetton) eliminate the Alcoholic Beverage Code section stating that if Christmas or New Year’s Day falls on a Sunday, then liquor sales are prohibited the following Monday. HB 1670 goes further and eliminates the prohibition on Sunday liquor sales altogether. Both pieces of legislation support the free-market values Texas seeks to uphold and eliminates burdensome and overcomplicated legislation.


Note that citations have been omitted from this excerpt, but are present in the full Report linked above.


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