Bottoms Up! It Turns Out that Texas Is Not as Libertarian a State in All Aspects As Is Commonly Believed

The direct result of a new law will discourage out-of-state entrepreneurs from opening new breweries with taprooms in Texas and limit the growth of existing ones

complains Carine Martinez-Gouhier, a research analyst in the Center for Economic Prosperity at the Texas Public Policy Foundation, in the Austin American-Statesman. Although the Lone Star state ranks near the top for economic freedom,

Special interests are at work to obtain government favors, the bitter fruit of which can be partially seen in the recent shakeup at the Texas Alcoholic Beverage Commission.

 … The law requires that the contract [with a licensed distributor] be exclusive and open-ended and does not allow manufacturers to “cancel, fail to renew, or otherwise terminate” the contract with the distributor but for good cause. Clearly, distributors do not welcome competition.

As if that wasn’t enough, the Texas Legislature has made it illegal for producers to sell their territorial rights to distributors. They must give them away, while distributors can resell these rights to a competitor for a profit.

Also, most breweries cannot sell for off-premises consumption, meaning you cannot buy a beer to bring home. The brewery, instead, mist sell to a distributor — and you, the final consumer, must buy the beer from a retailer at a substantial markup.

 … Breweries with existing taprooms falling outside the scope of the tightened regulation were grandfathered. But future breweries in this situation would:

• Be limited in how much of their brewery they can sell to other brewers or beer manufacturers.
• Be required to sell their beer to a distributor first — to then immediately buy it back from the distributor at a markup to sell it on their premises to final consumers.

Can you guess who benefits from these restrictions? Not the consumers, nor the craft brewers.

 … The reason that Texans generally cannot buy their beer directly from brewers: distributors do not want them to. It is high time we look more closely at the negative effects the three-tier system of alcohol regulation has on Texans and the Texas economy.