May 02, 2017
A South Carolina law preventing an entity from holding an interest in more than three off-premise retail liquor licenses was deemed unconstitutional earlier this year. The South Carolina Supreme Court accepted an argument by Total Wines & More that the state’s cap on liquor stores had no legitimate basis. Numerous bills had been filed with the state legislature over recent years to have the cap overturned, but without success. The Supreme Court majority, however, found that the state had not offered a persuasive argument on why the restriction was a proper use of its general police power. The only justification provided by the state in the case was that the law was designed to support small businesses, and preserve the right of small, independent liquor dealers to do business, which the court identified as simple economic protectionism.
A number of other states have caps on ownership of retail off-premise liquor licenses, particularly across the Northeast. Similar laws have survived constitutional challenges in states like New Jersey, New Hampshire, and Massachusetts. In these states, justifications for these laws have included reasons such as intensifying the dangers of liquor sales stimulation through retail concentration, preventing monopolies, avoiding indiscriminate price-cutting and excessive advertising, and discouraging absentee ownership. The success of the suit in South Carolina is likely to encourage a new wave of challenges to these laws, as the chain stores focus more efforts on expansion of their model in the region. The ongoing legislative and judicial dispute between Total Wine & More and the State of Connecticut, for example, on the statutory minimum pricing restrictions there, follows a similar path of seeking to open up a market more friendly to chain store liquor retail.
Since the decision was handed down on March 29, the South Carolina Senate has already approved a move to legislate around it, by passing an amendment to the state budget. The change would delay the implementation of the court’s decision for a year, and would require an applicant for a fourth store to pay the equivalent of a year’s gross sales from one of its current stores before it could get the new license. The amendment now passes to the General Assembly for consideration. In the interim, the state has publicly said
that they are accepting liquor store applications in light of the new ruling.
It goes without saying that the elimination of the retail cap in South Carolina is likely to significantly alter the retail liquor landscape there, and that other similar decisions in other states would affect the retail market nationwide. If you want more information on retail liquor licensing, please contact one of the attorneys at Strike & Techel.
December 29, 2011
On January 1, 2012, California Business and Professions Code Section 23394.7 goes into effect, which aims to regulate alcohol sales at self-checkout terminals. The controversial law provides that “no privileges under an off-sale license shall be exercised by the licensee at any customer-operated checkout stand located on the licensee’s physical premises.” The law has been opposed since its inception by grocery stores with self-checkout and has been supported by retail clerks labor unions, among other entities.
The California Alcoholic Beverage Control issued an Industry Advisory to explain the new law last week, and the California Grocers Association (“CGA”) just filed a petition contesting the terms of the Advisory. For example, the Industry Advisory provides in part, “it is clear that ‘customer-operated checkout stand’ means a checkout stand or station that is designated for operation by the customer.” In its petition in the California Third District Court of Appeal, the CGA argues that the ABC overstepped its regulatory authority by defining one of the law’s key provisions in the Advisory, rather than going through the formal rule-making process required by the California Administrative Procedure Act. The CGA also argues that the definition put forth by the ABC is inconsistent with the statute. The CGA has asked that the Advisory be set aside, or that its effect at least be delayed until the issue has been resolved. Check back for updates!
Imbiblog is published for general informational purposes only and is not intended as legal advice. Copyright © 2011 · All Rights Reserved ·
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