A sobering decision: South Carolina Supreme Court ruling changes liquor license limits

By Dan Ballou

South Carolina historically has limited the number of liquor licenses a retailer could own to three.  A recent court ruling, though, will dramatically change the regulatory landscape in which liquor retailers operate, if the ruling stands.

The three-store rule had been justified by the broadly defined “police” power of the General Assembly to regulate the sale of alcohol to protect the health, safety and morals of the state.  The rule’s practical effect was to protect small “mom and pop” liquor stores from the economic advantages held by larger retailers in the highly competitive retail market.

Suddenly, all of that appears to have changed. On March 29, 2017, the South Carolina Supreme Court overturned the three-store rule in a case brought by Maryland-based Total Wine & More, one of the largest wine and liquor retailers in the country.

Total Wine had challenged the three-store limit in a case against the South Carolina Department of Revenue, the state’s alcohol sales regulatory body, and ABC Stores of South Carolina, a trade association representing smaller independent liquor stores.

In its ruling, the Supreme Court found that the three-store rule violated Total Wine’s due process and equal protection rights by unfairly protecting existing retail liquor stores. Writing for the majority, acting Justice Toal concluded that “[t]he licensing limits do not promote the health, safety, or morals of the state, but merely provide economic protection for existing retail liquor store owners.”

For many years, larger retailers have sought to enter the package store market in South Carolina, but the three-location limit hindered those efforts substantially.  This decision opens the door to not just Total Wine, but to a wide variety of retailers who are expected to enter or expand their presence in the liquor marketplace in this state.

The case, however, is not over. ABC Stores of SC has asked the Court to reconsider its ruling. Additionally, the General Assembly is expected to consider measures to protect the interests of the smaller independent stores.

Daniel J. Ballou is Senior Counsel with Morton & Gettys LLC in Rock Hill, SC. His practice includes land use & zoning and business and corporate law as well as litigation.

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