Friday, August 2, 2013

Another attack on state's protectionist alcohol laws

Posted By on Fri, Aug 2, 2013 at 6:55 AM

MACADOODLES: Lawsuit seeks to expand its presence in Arkansas.
  • MACADOODLES: Lawsuit seeks to expand its presence in Arkansas.

City Wire has a good report on a federal lawsuit arising from the newly opened liquor market in Benton County. A prospective retailer has challenged the Arkansas law that prevents franchising of retail liquor stores and multiple ownerships as a burden on interstate commerce.

The plaintiff wants to run a Macadoodles, the retail chain that had to win a legal fight to open its store in Washington County and which has long enticed huge Arkansas business just across the Arkansas line in Missouri.

The link gives you lots more of the legal ins and outs.

Key points include that 1) there's a grandfather clause in Arkansas law for related ownerships and 2) it's well-known that there are families with related stores that already operate in Arkansas and, it is suspected, take advantage of combined buying power not readily available to single-permit owners.

Lurking in the background, too, is behemoth Walmart, whose heirs paid for the campaign to open Benton County to retail liquor stores and which is currently restricted to a single liquor outlet, on a nominally separate premises in Fayetteville. It took a long legal battle for Walmart to get that single outlet; it thirsts to sell more booze here. The situation exists because of Arkansas's protectionist liquor laws. They are aimed, first, at protecting profit margins of wholesalers.

The interstate commerce clause is a mighty tool against state discrimination in commerce. Hard to see the compelling state interest in protecting wholesalers' profit at the expense of higher retail prices for consumers. But lawyers are ready to explain.

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