Business

SC high court overturns liquor license limit

South Carolina Supreme Court
South Carolina Supreme Court mwalsh@thestate.com

South Carolina’s liquor license laws restricting the number of stores a licensee can operate in the state is discriminatory and unconstitutional, the state Supreme Court ruled Wednesday.

In a 4-1 decision, the justices reversed a 2014 lower court ruling that had upheld the state’s longtime power and practice of limiting the number of retail outlets to three per licensee.

Maryland-based Total Wine & More challenged the law after the S.C. Department of Revenue denied it a license to open a store in Aiken, a fourth in the state.

Total Wine operates liquor stores in Charleston, Greenville and Columbia. The revenue agency, which also is South Carolina’s tax collection department, denied a fourth license, citing the statute that limits the number to three.

“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,” acting Justice Jean Toal wrote for the court in reversing the initial decision by a lower court judge.

“(E)conomic protectionism for a certain class of retailers is not a constitutionally sound basis for regulating liquor sales,” the ruling states.

The decision will not be final for 15 days pending a request by the revenue agency for the justices to reconsider their ruling, said Total Wine attorney Dwight Drake of Columbia.

Barring any change by the court, Total Wine plans to open stores in Aiken and elsewhere, the attorney said.

The General Assembly exceeded the scope of its constitutional power by enacting the law, the justices said.

Attorneys for Total Wine pointed out “the (state) provisions do not limit the number of liquor stores that can be licensed in a certain area – only the number (that) can be owned by one person or entity.”

The statute also violated equal protection under the law because it created “arbitrary distinctions,” treating large retailers that may want to operate more than three liquor stores differently than smaller retailers who may choose to operate fewer, the justices ruled.

The circuit court, in its initial ruling, said the three-license restriction was justified because it preserved the right of small, independent liquor dealers to do business. Attorneys representing the revenue agency and ABC Stores of South Carolina, had repeatedly claimed in oral arguments that protecting small businesses was the only justification for the law.

“Ultimately,” the justices wrote, “(the revenue agency’s) position amounts to ‘it’s just liquor,’ which is not a legitimate basis for regulation. Under this rationale, market regulation – no matter how oppressive – cannot ever be said to be unconstitutional.”

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