The federal court in Austin, Texas, appears to have given a real boost to out-of-state-based businesses operating with liquor permits in Texas. The court, in the Southern Wine and Spirits of Texas, Inc. case, issued an injunction against the Administrator of the Texas Alcoholic Beverage Commission ("TABC") from enforcing all state residency requirements relating to Texas liquor permits. The court concluded that the current Texas state residency requirements violate the Commerce Clause of the U.S. Constitution, insofar as they bar nonresidents from directly or indirectly holding permits issued by the TABC. The court reasoned that these residency requirements simply amount to economic protectionism that insulate local permit holders from outside competition.

How does this impact your business? Depending on whether the TABC appeals the judgment, this ruling could mean that, in the very near future, "non-Texans" will be permitted to be officers and directors of Texas entities holding alcoholic beverage permits in the state. Gardere is closely monitoring this matter in the courts and is consulting with TABC staff to determine if and when our clients may change officers and directors if appropriate. Once a definitive decision has been made by the TABC, we will let you know and be available to consult further with you.