Court Upholds Some, Strikes Some Parts of Texas ABC Code

Yesterday a US District court in Texas ruled on a challenge to various parts of the Texas ABC code.    The decision is here.

Judge Sparks struck down three provisions of the Texas ABC code for violating the 1^st Amendment right to commercial speech.   He upheld the equal protection and commerce clause challenges to the Texas code.  Texas has some unique laws on “ale” and “beer” definitions and Judge Sparks did not have nice things to say about the state’s defense of these laws.

The portions struck include:

1.  The “tied house” rule prohibiting brewers and beer wholesalers from advertising which retailers sell their beers.
2. The labeling and advertising rules requiring beer products containing 4% alcohol by weight as  “beer” while requiring beer products containing more than 4% to be labeled “ale” or “malt liquor.”
3. The beer advertising rule prohibiting references to strength.

The portions of ABC code upheld:

1.  Regulations prohibiting breweries from selling their products at the point of production while allowing wineries and brewpubs to do so.
2. Regulations prohibiting brewpubs from selling their products to distributors and retailers while allowing wineries and microbreweries to do so
3. Regulations treating foreign breweries as the first American source of supply of malt beverages while treating importers as the first American source of supply of wine and distilled spirits.

Again, the sections struck down were mostly unique to Texas but there may be follow up questioning about similar federal laws.    Also, the judge made it clear that his opinion that it was limited to the challenged three sections of the ABC Code and should not be seen as an invitation to strike down the entire statute; ” Within this limitation, however, nothing in this opinion should be construed as preventing Texas or TABC from prohibiting, through appropriate statute or regulation, any undue collusion, financial or otherwise, between producers and retailers. “