Citing recent examples of Texas Alcoholic Beverage Commission (TABC) withholding permits from a convenience store in South Texas and a Texas-based food and beverage distribution company, Texas Association of Business and McLane, a Berkshire Hathaway subsidiary, sued Texas Alcoholic Beverage Commission (TABC) in federal court seeking to force it to discontinue the “One Share Rule,” which prohibits the ownership of even a single share of stock in a business in a different tier.
TABC is applying this rule arbitrarily and only in limited instances, the association said. In fact, in the last year, over 40 manufacturers, distributors and retailers with overlapping ownership had over 2,500 permits approved or renewed by the TABC.
“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,” said Bill Hammond, CEO of the Texas Association of Business. “The TABC is arbitrarily picking winners and losers, and 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. We’re taking this action to demand that our government create a level playing field for all business in the State of Texas—anything less goes against the very fabric of our state,” said Hammond. “Texas has succeeded principally because we make 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 believes 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. Through the filing of this lawsuit, the Texas Association of Business wants the TABC to abandon the so-called One Share Rule, and begin enforcing the three-tier system in a fair, consistent and legal manner, similar to other state alcohol agencies.