• Freedom
  • Innovation
  • Growth

Even in Conservative Texas, Lawmakers Limit Free Market

Fort Worth Star Telegram

You probably remember that one of Gov. Greg Abbott’s more amusing responses to the COVID-19 pandemic was to allow home delivery of cocktails and mixed beverages from restaurants. We may not have needed to go to church or get our hair cut or have our children educated, but we couldn’t be expected to go without our cocktails.

But why was there a law against delivery of cocktails in the first place — especially in light of Amazon, Drizly, GrubHub and Door Dash?

Major disruptions have a way of highlighting outdated regulations. Laws and rules tend to accumulate over time until an earthquake comes along and exposes all the accreted layers. The Internet was one such earthquake, while COVID was the latest. Now, we can get drinks delivered to our door and parents are paying more attention to their kids’ schools.

It’s not a surprise that states have messy alcohol sales and distribution regimes. As a legal intoxicant, alcohol is complicated. Between Prohibition, the “bootleggers and Baptists” coalition, and concerns about drunken driving, states have legitimate health and safety reasons for regulating alcohol.

But don’t think Texans enjoy anything approaching a rational, competitive, market-oriented regime for the sales and distribution of alcohol. Spirits regulation is just another policy area in which reality doesn’t match the rhetoric from supposedly free-market, limited-government Texas politicians.

While some of Texas’s alcohol regulation is legitimately related to health and safety, far too much arose to protect powerful liquor business interests against competition. Five families control most of the retail sale of liquor in Texas; middleman distributors are required by Texas law; and myriad other accumulated regulations result in exponentially higher prices and less choice and convenience for Texas consumers.

You can’t order a bottle of Texas whiskey to be delivered to your house. You can’t buy a rum and Coke in a can at a convenience store, even though you can buy beer and wine. You can’t pick up a bottle of vodka after a tour of a Texas distillery on a Sunday afternoon. And on any other day, you can’t buy more than two bottles.

These aren’t for safety’s sake. They are economic regulations designed to protect powerful vested interests. Package stores don’t want Texas consumers to be able to purchase from the boutique producers who make up Texas’s burgeoning distillery industry. But they don’t want to carry their products, either, leaving Texas distillers unreasonably hindered in their entrepreneurial aspirations.

If you think Republicans who control the Legislature have any interest in breaking up the cartel of powerful business interests and implementing free-market principles that benefit Texas consumers, think again. The vested interests are too strong, and Texas Republican legislators are too passive. I’ve seen it in action.

This legislative session, bills were introduced that would have allowed direct-to-consumer shipment of spirits, selling spirits-based ready-to-drink cocktails in convenience stores, bottle purchases at distilleries on Sundays, purchase of more than two bottles from a distillery you’ve toured. I testified in favor of all of these bills.

Shortly before the hearing began, word came down that “a deal had been struck.” Facing these bills, the package stores’ lobbyists cut a deal with the distillers’ association that would allow distilleries to sell a whopping four rather than two bottles to a customer, so long as the distillers would promise to not ask for any more regulatory relief for eight years. And that was that. The deal sailed through the House and Senate and has been sent to Abbott’s desk.

This is not how laws and policy are supposed to be made. When business interests cut a deal to benefit themselves and legislators rubber-stamp it into law, that’s more like a cartel and less like representative democracy.

But here’s the more corrupt deal: So long as Texas Republicans fight the culture wars, their voters will give them a pass on everything else. That leaves politicians free to do the bidding of entrenched business interests to the detriment of Texas consumers and free-markets.