Rumors of the three tier system’s demise have been greatly exaggerated. The Supreme Court of the United States declined a petition from Walmart that would have allowed the big box behemoth to sell hard alcohol in its Texas stores.
Without comment, SCOTUS opted not to hear Walmart Stores v. Texas Alcoholic Beverage Commission, 19-1368. The decision preserved a 1995 state law that forbids publicly owned corporations from selling spirits (but not beer and wine) in the Lone Star State.
The case will now head back to a lower, federal trial court where Walmart will be required to prove that the state discriminated against out-of-state companies. However, the mega-retailer previously argued that discrimination should not be a factor.
The corporation preferred to push the theory that the law is unconstitutional given that it effectively creates a residency requirement for alcohol retailers. Walmart’s lawyers wrote that the regulation “operates to block anyone in a position to compete with Texans in the retail liquor market from doing so” in their filing.
On the other side of the bench, Texas argued that the barriers to entry are intended to keep Texans from drinking too much. “This approach has served Texas well — it has consistently ranked among the states with the lowest per capita liquor consumption,” Texas Attorney General Ken Paxton plead.
Back in 2018, Walmart won the first round of litigation when U.S. District Judge Robert Pitman declared that the Texas law was, indeed, unconstitutional. However, in the subsequent appeal 5th U.S. Circuit Court of Appeals reversed the ruling and demanded that plaintiffs prove discrimination. That decision was appealed to the SCOTUS bringing us to the current state of affairs.
The case is one of several that industry watchers believe could eliminate the US’ notorious three tier system. The current legal framework places power over alcohol sales in the hands of each state, discourages national trade, and forces separation between retail, wholesale, and production.
Notably, a 7-2 SCOTUS ruling in June 2019 in ‘Tennessee Wine and Spirits Retailers Association v. Blair, No. 18-96’ determined that the states’ ability to regulate alcohol has boundaries.