On Monday, April 10, the Texas Senate voted to eliminate a package liquor store law that for years has, according to the advocacy group Texans for Consumer Freedom and many proponents of free market competition, "provided a loophole granting some families the ability to own an unlimited number of liquor stores, while restricting others to a maximum of five."
Basically, the loophole, dating back to the Prohibition era, allows for consanguinity — yes, good old-fashioned blood ties — to dictate who gets what. Large immediate families are allowed to count all their locations as a single entity, with the added benefit of being able to seek unlimited permits, which is why an empire such as Spec's, run by the Rydman family, has been able to amass more than 160 stores, and dominate with more than 51 percent of the Houston retail booze market. In San Antonio, loophole families — including proprietors of Spec's, Twin Liquors, Western Beverages, Gabriel's and Goody Goody's — reportedly dominate over 82 percent of the market share. Meanwhile individual liquor store owners are restricted to just a handful. Businesses established before 1949 are also currently exempt from the five-store regulation as well.
"Look, the loophole probably has its roots in avoiding organized crime," Texans for Consumer Freedom's Travis Thomas tells the Houston Press, "from a time when that most certainly could've taken control of the industry. But now we've basically got these liquor store cartels that have strongholds on regional markets. If you believe in a fair market, this is contrary to all that. It's egregious."
Senator Brian Birdwell (R-Granbury), the sponsor of the bill, told his colleagues his aim is to “ensure that all Texas businesses are treated equally regardless of their tenure in the market or their familial makeup.” Whether or not that will become the case is still up in the air, but his legislation would eliminate both the five-store limitation and the consanguinity loophole as well.
According to the Texas Tribune, similar bills have been introduced in the state Senate at least five times, twice by Birdwell. Last year it actually passed the Senate as well, but died in the House, which could very well be the case this time around too. "We are trying to educate people so they understand this," Thomas says. "We don't limit the number of sports stores you can have. We don't tell florists they can only have five locations."
In terms of booze laws, though, this is not the state's most shocking one. Texas is the only state in the nation that allows privately held companies to own liquor stores (or sell booze) while prohibiting publicly traded companies or private companies with 35 or more shareholders from doing so, which is why Walmart is currently suing the state, and potentially why a company as big as Spec's isn't a publicly traded entity.
Legislation has been introduced in both the House and the Senate to tackle this provision of the Texas Alcoholic Beverage Code.