On June 27, 2016, the Texas Association of Business, along with McLane Company, Inc., filed a lawsuit against the Texas Alcoholic Beverage Commission (TABC) in federal court to force the TABC to apply the Texas Alcoholic Beverage Code in a fair, consistent and legal manner.
Citing recent examples of the TABC withholding permits from a convenience store located in South Texas and a Texas-based food and beverage distribution company, the Texas Association of Business was compelled to file the lawsuit based on the TABC’s arbitrary licensing practices. To learn more about the TABC’s arbitrary licensing practices, see One Share Rule Explained.
The Texas Association of Business is taking on this fight because the TABC is applying the Texas Alcoholic Beverage Code in an unfair, inconsistent and illegal manner:
- The TABC’s application of Texas alcohol law defies common sense as the majority of alcohol manufacturers, retailers and distributors have some over-lapping ownership with businesses in other tiers.
- The TABC only enforces this rule against certain companies while allowing other companies to maintain cross-tier ownership stakes. In the last year, over 40 manufacturers, distributors and retailers with overlapping ownership had over 2,500 permits approved or renewed by the TABC. Because the TABC does not enforce the so-called One Share Rule consistently, it creates an unequal playing field that hampers free market competition. In short, it is arbitrarily picking winners and losers. That is simply not how we operate in Texas.
- The TABC is out-of-step with other states that operate under a three-tier system. For example, in New York, Maryland, Arkansas, Kansas, Kentucky and Michigan, companies are prohibited from having interests across more than one tier only if they control or influence the activities of businesses in more than one tier.
- The Texas Association of Business opposes regulatory actions—like the TABC’s so-called One Share Rule—that harm the Texas economy and job creation, for no good reason. Texas has succeeded principally because the state makes it easier, not harder, to do business here. Regrettably, the TABC’s policies do not reflect the vision and philosophy of the state, and through its absurd interpretation of the Alcoholic Beverage Code, it is discouraging business expansion.
The Texas Association of Business, along with McLane, filed this lawsuit against the TABC to demand that the Texas government create a level playing field for all business in the state. The Texas Association of Business and McLane believe that the TABC’s erroneous interpretation of the law and inconsistent licensing practices clearly violate the protections afforded to all businesses by the U.S. Constitution. The purpose of the lawsuit is to force the TABC to abandon the so-called One Share Rule, and enforce the three-tier system in a fair, consistent and legal manner, similar to other state alcohol agencies.