April 19, 2018

Washington Post: It’s time to end Virginia’s prohibition on happy hour promotions

By Anastasia P. Boden Attorney

Published in The Washington Post April 19, 2018.

It’s easy to understand why restaurateurs and bar owners like hosting happy hour: The specials bring in more customer traffic at non-peak times, creating an opportunity to increase sales not only of alcoholic beverages but also appetizers and meals.

But it’s not always easy to understand the restrictions states and localities impose on happy hour specials. While many states place legal constraints on drink promotions, the rules in Virginia, which restrict how restaurants can advertise happy hour promotions, are among the more nonsensical in the nation.

Now, one Northern Virginia restaurant owner is fighting to challenge this unconstitutional violation of his free speech rights in court.

The Virginia Alcohol Beverage Control Board places a number of restrictions on how a restaurant or bar can promote drink specials, often in ways that defy common sense. For instance, a bar owner is allowed to reduce the price of drinks by 50 percent, and he can say that the drink is “half-off.” But he’s not allowed to state the price as “two for one,” even though that’s mathematically equivalent. (“We understand that it can seem confusing,” the ABC helpfully admits on its website, a tacit recognition that the rules are poorly formulated).

Our restaurateur is also only allowed to advertise promotions using two approved (and rather generic) phrases: “happy hour” and “drink specials.” If he wants to offer discounted wine by the glass on a creatively titled “Wine Down Wednesday,” or use the popular phrase, “Turn Down for What Tuesday,” he’s breaking the law and subject to fines and penalties, including suspension of the establishment’s liquor license. Worse, he’s not allowed to advertise prices or discounts, rendering any happy hour advertisement essentially useless to consumers.

Local restaurateur Geoff Tracy, owner of Chef Geoff’s Tysons Corner and two other popular D.C.-area restaurants, has had enough. Represented by the Pacific Legal Foundation, he’s challenging the Virginia ABC in court with the goal of having the state’s restrictions on happy hour advertising struck down.

Tracy rightly points out that the law is essentially a form of government censorship: “The fact that you can have a happy hour, but you can’t talk about it, seems strange,” Tracy says.

These restrictive state laws are a burden on business owners, many of whom are already struggling to prosper in a highly competitive industry. Profit margins in the restaurant business are notoriously slim, and the rate of business failures is high. Advertising restrictions create compliance costs. Complicating the matter is the fact that Tracy can freely advertise his other two restaurants’ happy hour however he wants, because they are subject to D.C. and Maryland law. Policymakers should think carefully about regulations and restrictions that may strangle a burgeoning small business that could instead be serving customers, creating jobs and generating local tax revenue.

Unnecessarily harassing entrepreneurs is bad enough. But even more alarming is the cavalier treatment of restaurateurs’ constitutional free speech rights, which are just as vital in the commercial realm as they are in the political arena.

Proponents of restrictions on happy hour advertising argue that the laws are a public safety measure aimed at reducing consumption and discouraging underage drinking. But the supposed harms of alcohol advertising are largely speculative. A 2015 study of alcohol advertising’s effects by researchers at the University of Texas found that “there is either no relationship or a weak one between alcohol advertising and total consumption of beer, wine and liquor.” The researchers did find that advertising is more likely to affect consumers’ choice among brands of beverages, but it has little effect on overall consumption.

The simple reality is this: It is perfectly legal for a business to host happy hour specials in Virginia. As such, business owners should have the latitude to communicate about those specials to their customers in the way they think most effective.

If Virginia lawmakers feel the need to protect consumers from the allegedly sinister influence of alcoholic beverages, they have other, more effective tools at their disposal. For instance, a public awareness and education campaign can be an effective way to discourage irresponsible behaviors such as binge drinking or drinking and driving. Such an approach would be within the purview of legitimate government activity, while respecting commercial operators’ First Amendment rights.

In some respects, the Virginia laws on happy hour advertising seem like a remnant from the bygone era of Prohibition, a distant echo from when alcohol sales were outlawed nationwide in what came to be recognized as a misguided social experiment. Virginia’s restrictions on happy hour advertising may be less sweeping in their scope, but they reflect a similarly meddlesome and censorious regulatory outlook. It’s time for Virginia policymakers to rethink and repeal these absurd rules — or for the courts to strike them down.

Anastasia Boden is a lawyer with the Pacific Legal Foundation, a non-profit organization that litigates for individual rights and economic liberty.

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