(CN) – The South Carolina Supreme Court struck down a state law limiting retailers from opening more than three liquor stores, finding that lawmakers went too far by enacting the regulation.
Wednesday’s ruling comes as a result of Total Wine & More’s parent company challenging the statute in 2015 after the South Carolina Department of Revenue denied its application for a fourth liquor license.
The parent company, Retail Services & Systems Inc., owns liquor stores in Charleston, Columbia and Greenville and had been eyeing Aiken for its next location.
Its 2015 lawsuit filed against the Department of Revenue and ABC Stores of South Carolina, an alcohol retailer trade group, was dismissed in Aiken County Circuit Court. A judge there ruled that the state constitution gives lawmakers broad power to regulate alcohol sales.
The law at issue was intended to protect existing small to medium-sized businesses from big-box stores that have the ability to engage in aggressive sales tactics such as price cutting and excessive advertising. The state argued that “economic protectionism” is the law’s purpose.
But Retail Services & Systems argued that establishments that serve alcohol on their premises aren’t subjected to licensing caps, so retailers shouldn’t be either.
Reversing the lower court, the South Carolina Supreme Court ruled 4-1 Wednesday that the liquor license limit is unconstitutional because it only provides economic protection for a certain class, and unfairly prevents Retail Services & Systems from “operating in its chosen field of business.”
“[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,” Justice Jean Toal wrote for the majority.
The court found that the South Carolina Constitution only grants the General Assembly the authority of “police power.”
“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,” Toal wrote.
Chief Justice Donald Beatty and Justices Kaye Hearn and Costa Pleicones joined Toal in the majority.
Justice John Kittredge was the lone dissenter, saying the liquor law is constitutional because all businesses are subject to the regulation regardless of their size.
He argued that protecting against the dangers of aggressive sales tactics is a justifiable reason for state lawmakers to pass such regulations under its “police powers.”
“While restaurants and liquors stores may both sell alcohol, common sense dictates that the former, which sell single servings of alcohol for on-site consumption and must comply with numerous regulations inapplicable to liquor stores, and the latter, which sell large quantities of alcohol for off-site consumption, implicate the dangers associated with the sale and consumption of alcohol in vastly different ways,” Kittredge wrote.
Retail Services & Systems did not respond Friday to a request for comment.