US wine retailer Total Wines has successfully challenged the traditional liquor laws of South Carolina, after the state’s supreme court branded a cap on the number of stores a retailer can have as “unconstitutional”.
The decision overturns a previous ruling by the Aiken County Circuit Court in November 2014, which ruled in favour of the traditional limit. The case was brought by Total Wines parent company Retail Services & Systems Inc against the South Carolina Department of Revenue and ABC Stores of South Carolina, a trade body made up of smaller merchants, over the revenue departments refusal to issue a fourth liquor license to Total Wines, arguing that it violated due process and equal protection clauses in the constitution (bars and on-premises were not subject to a cap, so it was unconstitutional that retailers were), and that the statues were not propertly enacted with the state’s ‘police powers’. In response, lawyers for the states’ revenue agency and ABC Stores of South Carolina, argued that the law was justified as it protected small businesses in the state.
The judge in the original case upheld the Department of Revenue’s positing, ruling that the state constitution allowed lawmakers broad powers to regulate alcohol sales, but the appeal was referred to the Supreme Court because it involved a question over the constitution.
Last week the Supreme Court ruled that the South Carolina constitution granted the General Assembly policing powers, but that the liquor license limit was unconstitutional because it provided economic protection for existing retailers, and unfairly prevented Retail Services & Systems from “operating in its chosen field of business.”
“The licensing limits do not promote the health, safety, or morals of the state, but merely provide economic protection for existing retail liquor store owners,” Justice Jean Toal wrote in the ruling, according to US website Court House News.
“While we acknowledge that the state is granted broad powers with respect to regulating liquor sales, this is an example of market regulation that exceeds constitutional bounds,” he added.
The move potentially paves the way not only for Total Wines, which already has stores in Charleston, Columbia and Greenville and plans to obtain a license for a fourth shop, in Aiken County, but potentially other regional and national alcohol retailers to apply for licenses in the state.
Currently, South Carolina has a high proportion of small independently owned retailers as well as the ABC Stores, a trade body made up of smaller merchants, as a result of its Alcohol Beverage Control (ABC) Act.
The state claims to have some of the most straight-forward licensing laws in the US, in that ‘liquor’ cannot be bought from a grocery store or convenience shop, but only in a stand-alone shop licensed to sell liquor. The Alcohol Beverage Control (ABC) Act limits the number of licences a liquor store can have, as well as ensuring that any individual can only have a financial interest, or affiliates, in a maximum of three shops selling booze. This was intended to prevent the concentration of power or monopoly, as well as to prevent “indiscriminate price cutting and excessive advertising” as well as preserving the rights of small, independents merchants to do business
A proposed change to the state law that would have raised the limit to seven stores was rejected in the 2013.
Total Wines, which was founded in 1991 has previously revealed its ambition to increase the number of its stores from around 150 across twenty states now to more than 200 by 2018. It has steadily expanded from its Maryland HQ in Potomac across the East Coast to Missouri, Minnesota, Texas, New Mexico, Arizona and California.