Texas can keep three-tier alcohol sales system: ruling

  • Monday 1 February 2010

In a decision that could go all the way to the Supreme Court, a US appeals court has ruled that Texas can continue to regulate alcoholic-beverage sales under its established system.

Ultimately the Supreme Court might be petitioned to hear the case, a well-informed wine-industry source said.

The ruling, by the Fifth Circuit Court of Appeals in New Orleans, upheld the legality of Texas’s three-tier system. Under the system, producers sell to wholesalers (distributors), who sell to retailers.

The appeals court reversed a ruling by a lower court that Texas’s system was unconstitutional because it discriminated against out-of-state retailers.

The Speciality Wine Retailers Association, based in California, sued to have Texas's three-tier system eliminated.

Texas lets residents buy wine directly from out-of-state wineries. But it requires outside retailers who want to sell in Texas to get a license from the state’s Alcoholic Beverage Commission, which creates potential legal complications. In-state retailers can ship to customers.

Association executive director Tom Wark told the Dallas Morning News that the appeals court 'chose to limit Texas consumers’ ability to access the wines they want but which they cannot find in the state's wholesaler-controlled marketplace.'

In that newspaper, Dee Kelly, a lawyer representing major distributors Glazer’s Wholesale Drug Company and the Republic Beverage Company, called the ruling a ‘good decision for consumers’ because ‘it maintains strict control of how liquor is distributed in Texas and the quality that comes into the state.’

The US Supreme Court held in 2005 that states must permit out-of-state wineries to ship to consumers if in-state wineries may do so.

That ruling excluded retailers. Many retailers think such an exclusion is unconstitutional. A well-informed wine-industry source said the Texas case, if heard in Washington, could test that exclusion.

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