Judge Rules Wal-mart Can Sell Spirits in TX

US District Judge Robert Pitman has struck down a state law that prevents public companies like Wal-mart from selling spirits in the Lone Star state.

Recall, Wal-mart can sell wine and beer in Texas, but is prohibited from owning a package store permit and therefore from selling spirits. The mega retailer claims it is irrationally banned for being a public company because private package store owners are permitted to sell spirits as are publicly traded hotel corporations.

After not having any luck changing laws in the legislature, Wal-mart filed suit against the TABC in 2015 [see WSD 02-13-2015], challenging four provisions in the TABC code including: (1) the ban on public companies from obtaining a package store permit; (2) the five permit limit; (3) the consolidation exception to the five-permit limit for family members; and (4) one that prohibits retailers from holding both a package store permit (to sell all categories) and a permit for wine and beer only.

We’ll spare you the nitty gritty details and legal jargon from the 50-page opinion issued nearly a year after the trial [see WSD 06-05-2017], so here’s what you need to know: Judge Pitman has ordered the TABC to cease enforcement on: (1) the ban on public corporations, (2) the five permit limit and (3) the consolidation exception for family members, leaving the fourth challenged section of the code in tact.

Judge Pitman declared the ban on public corporations violates the Commerce Clause and “imposes a severe burden on interstate commerce.” Though the court concedes that the state’s interest in reducing the availability and consumption of alcohol is valid, the public corporation ban is not the best way to do it, finding that “this interest can be achieved through alternative means with less impact on interstate commerce,” per court documents.

Moreover, the court found that the consolidation exception for family members, or consanguinity exception, violates the Equal Protection Clause, while the five-permit limit is just weak.

However, the case may not be settled just yet. The TABC “has not yet reached a decision on whether to appeal the judge’s ruling,” TABC public information officer Chris Porter tells WSD.

Though intervenor Texas Package Store Association (TPSA) does have plans to appeal. “We will appeal the trial court’s decision and continue to fight for family-owned liquor store owners against the world’s largest corporate entities that seek to inflate their profits by upending sensible state laws that protect both consumers and small businesses,” per a statement form TPSA executive director Lance Lively.

WINEAMERICA: CRAFT TAX REFORM ACT IN NEED OF TECHNICAL CORRECTION

Since the passage of the Craft Beverage Modernization and Tax Reform Act (CBMTRA) late last year, there have been some lingering technical questions on how it would apply to the industry. Now, as the TTB continues to issue guidance, a couple problems have come to light.

One notable snafu is that any wine transferred to and bottled at another winery is not eligible for the tax credits, and will pay full tax rate on their wine, according to a statement from Wine America (WA). This will hit any brands that use custom crush facilities, or any wineries that use bonded wine cellars.

“Without the ability of a bond to bond transfer the smallest wineries in the country will face a substantial tax increase,” writes WA vp Michael Kaiser.

“WineAmerica is working with industry colleagues, the TTB and Congressional staff to remedy this situation. The first step is to request that TTB either reverse their decision or to extend the ‘alternative procedure’ beyond June 30…Secondly, WineAmerica urges the House Ways and Means Committee and the Senate Finance Committee to pass a technical corrections bill as soon as possible. A legislative fix would negate TTB’s decision and would remedy the situation.”

WILL CANNABIS COMPANIES BE BUYING ALCOHOL COMPANIES?

Canadian cannabis company ceo believes that soon we’ll see cannabis brands on the same level as Absolut or Coca-Cola in a recent interview with Marijuana Business Daily. Sundial Growers ceo Torsten Kuenzlen has played in both spaces before, serving as an executive at Molson Coors and Coca-Cola.

Torsten touts that because there are synergies between cannabis and alcohol, we’re likely to see more deals go down between the two industries like Constellation Brand’s investment in Canopy Growth Corp. “Today, alcohol companies are buying cannabis companies. We will see a time when cannabis companies start buying alcohol companies. Definitely within the next three to five years,” he contends.

He adds that other industries could work with cannabis outside of the alcohol biz, including Pharma, cosmetics, food and beverage companies.

WSD BRIEFS:

NEW NETFLIX COMEDY SET IN WINE COUNTRY. Napa Valley will be the setting for a new movie from comedienne Amy Poehler. The movie, aptly named Wine Country, will be about a group of friends who go to Napa for a weekend getaway, per the Hollywood Reporter. Filming is set for the end of March, but aside from that, not many details on which wineries will be in the film.

LATITUDE BEVERAGE DEBUTS 90+ CELLARS LOT 141 PROSECCO. Made from grapes grown in northeast Italy, the prosecco is the latest addition to the portfolio. With a suggested retail price of $15 it will be available in retail locations across 15 states as well as for online purchase.

VIVA XXXII TEQUILA NAMES NEW PRESIDENT. Joseph Angelo joins the Viva XXXII Tequila team as the new president, responsible for overseeing the national sales and distribution for the company among other things. He has nearly 20 years of industry experience, most recently working as a sales executive at Empire Merchants. The tequila brand launched a few years ago and includes Joven, Reposado and Extra Anejo expressions.

FOLIO FINE WINE PARTNERS BRINGS ON NEW VP OF SALES. Clint Wilsey has been appointed vp of sales, effective immediately. He joins the company from Silverado Vineyards, where he worked for the last 11 years, most recently as vp, sales and marketing. “I have known Clint for more than 20 years, and he brings tremendous experience to our Folio team, and we are confident he will lead our sales organization in the next phase of growth,” says Folio co-founder Michael Mondavi.

HAWAII’S KOLOA RUM COMPANY ACCELERATES EXPANSION PLANS after strong 2017 results. The company plans to add a new bottling line to increase production capacity and operating efficiency; accelerate plans for a new distillery; and beef up its distribution, sales and marketing programs, per a release. The Koloa Rum Co. portfolio includes Kauai White, Gold, Dark, Spice, Coconut and Coffee rums.

Until tomorrow,

Your Editors

Emily Pennington – emily@winespiritsdaily.com

Sarah Barrett – sarah@winespiritsdaily.com

“I believe in luck: how else can you explain the success of those you dislike?” — Jean Cocteau

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