Alcohol Laws and Regulations often Problematic

Laws regulating the marketing, sale and consumption of alcohol should be reasonable, consistent and clear -- everyone would agree with that principle.

Unfortunately, laws concerning alcohol tend to have grown in a complex and inconsistent way since the repeal of National Prohibition in 1933. The case of the Texas Alcohol Beverage Commission (TABC) is a good example of the problem that exists across the U.S.

The alcohol laws and their interpretations are difficult if not virtually impossible to master. Allen Shivers, who headed the TABC for six years says of the alcohol code: “No one understands it. It’s at least as complicated as the IRS code.” He says that if three experienced TABC agents are given the same facts and situation, “you’d have at least five different interpretations of the Alcohol Beverage Code.”

The results are frustrating if not unfair to those who are trying to comply with the complex rules. A TABC agent chastised a restaurant owner about a flagrant violation of law: the restaurant’s outdoor tables had umbrellas with wine names and the Italian tricolors. That constitutes illegal advertising.

“For water carafes, the establishment had carefully removed all the labels from used tequila bottles of a particularly classic design. The agent looked all over the seemingly clear, clean containers, until he spotted a tiny etching of the maker’s logo in the base of the carafe -- and ordered all of them banished.” The restaurant owner said the agent carried on like a felony had been committed.

One bar owner had to involve the Texas Parks and Wildlife Department to convince a TABC agent that the fish in his aquarium were not the dangerous piranhas that the agent falsely insisted that they were.

Another bar displayed a banner proclaiming it the winner of a Best of Houston category for serving a particular beer. “That display lasted only until a TABC officer ordered it removed immediately. The apparent violation: the sign mentioned the name of the bar and the beer it served.”

The mission statement of the TABC asserts that the “code is an exercise of the police power of the state for the protection of the welfare, health, peace, temperance and safety of the people of the state.” (Emphasis added.)

In reality, the code raises the costs of doing business, leads to higher prices, and reduces choices for the consumers in the state. For example, the law requires that beer can be sold only in certain size containers. Although a 12-ounce can is acceptable, an 11.67 ounce can -- common in much of the world -- is prohibited. Thus, consumers are needlessly denied access to many beers brewed in Canada, Holland, Belgium New Zealand, Japan and other countries.

A review of the TABC by a state legislative commission used such words as “over regulated,” outdated,” “inefficient,” poorly guided,” and “inconsistent.” The review found problems with everything from the way the agency conducts inspection and levies fines to marketing enforcement practices” that it described as out of touch. The agency actually agreed with the criticisms and the desirability of change.

It would be hard for anyone to defend many of the code’s provisions. For example:

  • An underage person who attends a party where alcohol is available to other underage person but who does not drink in order to serves as a Designated Driver can be arrested, charged and convicted of illegal possession of an alcoholic beverage. The TABC considers the abstainer to be in possession of alcohol, even though the person never touches any. The agency argues that the person is in an environment in which it is possible to possess alcohol. The result of this logic is to discourage designated driving and to increase the risks of alcohol-related injuries and fatalities. Of course it makes law enforcement much easier because it no longer requires guilt to obtain convictions.
  • Publicly traded corporations are prohibited from owning liquor stores because of a TABC rule from the 1940’s. It’s doubtful anyone knows why the rule was ever established.
  • TABC regulations require any establishment that sells beer and wine to pay 8.25% sales tax. However, if the same establishment also sells any distilled spirits, it must pay a 14% tax on all alcoholic drinks and other sales. Thus, it must pay an effective sales tax of about 16%. This almost doubling in sales taxes is simply because it sells distilled spirits.
  • A winery cannot legally list on its web page the stores that sell its wine.
  • A winery cannot legally give directions to its location over the telephone.
  • No deliveries of any kind can legally be made to any winery after 5:00 p.m. or on weekends. This can ruin truckloads of valuable grapes that arrive after 5:00 p.m. on a Friday.
  • The TABC analyzes all new alcohol products, thus unnecessarily duplicating a function already performed by federal agencies. This increases costs and needlessly delays the introduction of new products.

The TABC is to be commended for recognizing the indefensible nature of its code and operations, which are often not only often misguided but also counterproductive.

References

  • Nowell, Scott. Poured out. With archaic and self-serving laws, reforms don’t come easy for the Texas booze industry. Houston Post, April 7, 2005.