Texas House and Senate Approve Historic Legislation to Promote a Free Market for Liquor Store Ownership

The Texas Senate and House of Representatives have overwhelmingly approved historic legislation that strikes down a decades-old anticompetitive and unconstitutional loophole limiting liquor store ownership that will promote a free and fair market in Texas.

The Legislature approved HB 1545, sponsored by Sen. Brian Birdwell, R-Granbury, and Rep. Chris Paddie, R-Marshall, that would authorize the Texas Alcoholic Beverage Commission to continue operating through 2031 as part of its sunset review process. The measure included a provision that raises the cap on the number of liquor store permits an individual can own from five to 250 while closing longstanding loopholes.

Current Texas law limits the number of liquor store – or package store – permits a person can own to five with two exceptions or loopholes: • If the permits were owned before May 1, 1949. • The “consanguinity” exception that allows a package store owner’s closest blood relative to obtain additional permits and then consolidate the permits under the owner’s permit.

Birdwell said the legislation “brings a level playing field and free market approach to the issuance of package store permits.’’

“For far too long we have been unable to write good alcohol policy into law given the challenges that we’ve faced in both chambers. It is for this reason the TABC sunset bill has now become the only opportunity to update our archaic alcohol and beverage code,’’ Birdwell said. “The alcohol and beverage industry is not larger than the people of the state of Texas and it is for this reason that it is critical that we seize this moment and act on behalf of the people of Texas.’’

The bill is awaiting consideration by Gov. Greg Abbott.

“This historic action by the Legislature represents one of the most significant reforms of the Texas Alcoholic Beverage Code since the 1930s,’’ said Dale Szyndrowski, vice president of the Distilled Spirits Council of the U.S. “For generations, Texas law has unfairly granted some families the ability to own an unlimited number of liquor stores while restricting others to a maximum of five. By closing this loophole, Texas lawmakers took strong steps toward modernizing the state’s antiquated liquor laws while signaling Texas is open for business.’’

The consanguinity provision was ruled unconstitutional by U.S. District Judge Robert Pitman in a March 2018 decision. The court concluded the consanguinity exception is inconsistent with the Equal Protection Clause of the U.S. Constitution. The consanguinity exception is “unconstitutional because it extends a benefit (the right to have more than five package stores permits) to some persons while withholding it from others without a rational basis,” Pitman wrote.

“This action will go a long way toward promoting competition and a free market to benefit consumers and businesses in Texas,’’ Szyndrowski said.

The distilled spirits industry is a vital force in the Texas economy and supports more than 82,000 jobs and makes a $7.5 billion impact on the state’s gross domestic product.