Can someone own stock in alcohol manufacturers, wholesalers, and retailers at the same time in Oklahoma if their stake stays under 15%?

Plain-English summary

Senator Roger Thompson asked whether three companion statutes to State Question 792 (37A O.S. §§ 3-119, 3-120, 3-121) are constitutional. Those statutes allow a person or entity to own up to 14.99% of the stock in companies that operate in different alcohol tiers, for example, owning shares in both a brewery and a liquor store.

The Attorney General said the statutes are unconstitutional. Article 28A, § 2(A)(1) prohibits "any common ownership" across the manufacturing, wholesaling, and retail tiers, and the Final Ballot Title approved by voters in 2016 told them they were voting for a system in which a person or company "can have an ownership interest in only one area" of the alcohol business. Even a single share of stock counts as an "ownership interest." So the 15% allowance in the statutes goes beyond what the Constitution and the ballot title permit.

The AG explicitly notes the opinion is "advisory only" because Oklahoma case law (State ex rel. York v. Turpen, 1984) holds that AG opinions finding a statute unconstitutional are not binding until a court agrees. As of this opinion's date, the three statutes remain on the books, but enforcement against them is in question.

What this means for you

If you own or invest in Oklahoma alcohol businesses

If you have stock holdings (even small ones) across multiple tiers, this opinion is a flag that a court could later find your structure unconstitutional. Two practical implications:

• Audit your cap table. If you, your family, or affiliated entities own equity in companies in two different alcohol tiers (manufacturer + wholesaler, or wholesaler + retailer), document the holdings and look for restructuring options. The opinion does not have force of law on its own, but a regulator or a competitor can use it as a roadmap for litigation.
• Watch for ABLE Commission action. The Alcoholic Beverage Laws Enforcement Commission (ABLE) is the agency that administers tier separation. The AG's view does not automatically bind ABLE, but ABLE may align its enforcement posture with the AG's reading. If you have a license application or renewal pending, expect more scrutiny of cross-tier ownership.
• Plan for the litigation path. Because this is an "advisory only" opinion, the actual constitutional question must be settled by a court. Until that happens, the statutes still purport to allow up to 15%. A business that relied on the 15% safe harbor may want to consult Oklahoma alcohol counsel about whether to restructure now or wait.

If you are the ABLE Commission or its general counsel

The opinion does not change the statute on the books. But it is signal that the chief legal officer of the State considers your enabling statute partly unconstitutional. Two paths:

• Continue applying the statutes until a court holds otherwise, recognizing that any enforcement choices may be challenged.
• Treat the AG's view as guidance when drafting new rules or interpreting tie-breakers in license disputes.

If a license dispute arises that turns on the cross-tier ownership question, expect declaratory judgment litigation. The AG's reasoning (ballot title is dispositive of voter intent) is directly importable into briefing.

If you are an Oklahoma legislator

The opinion implies a constitutional repair would require either a constitutional amendment (resubmitting the question to voters) or repealing/narrowing §§ 3-119, 3-120, and 3-121 to align with the all-or-nothing reading of art. 28A. The opinion does not map a legislative fix because the AG views the Constitution as already settled.

If you are a competitor of a multi-tier-owned business

The opinion is a litigation tool. A retailer concerned that a competitor has indirect manufacturing ownership, for instance, can use the AG's reasoning to seek declaratory or injunctive relief. The "advisory only" tag does not weaken the substance; it just means the question must be teed up in court.

If you are a small brewer or winery

The Constitution preserves narrow exceptions for brewers obtaining beer wholesaler licenses, winemakers selling wine directly at the winery, and "small brewer[s] as defined by law." Those exceptions are unaffected by the opinion. If you operate under one of those carve-outs, the cross-tier prohibition does not reach your specific authorized activity.

Common questions

Q: What does "common ownership" mean here?
A: The AG reads it broadly. Even one share of stock counts. The opinion rejects the more restrictive reading (significant ownership giving control) used in agriculture statutes and federal regulations, because the Final Ballot Title told voters the prohibition was on any ownership interest, not just controlling stakes.

Q: Why does the ballot title carry so much weight?
A: Under Fent v. Fallin (2014), the Oklahoma Supreme Court treats the ballot title as a "contemporaneous construction" that "weighs heavily" in determining the meaning of a constitutional provision approved by voters. The text and the title are read together. The AG essentially holds that the title resolves any ambiguity in the words "any common ownership."

Q: What are the constitutional exceptions?
A: Article 28A, § 2(A)(1) lists three: (1) a brewer can obtain a beer wholesaler license, (2) a winemaker can sell wine directly to customers physically present at the winery, and (3) "a small brewer as defined by law." Outside those carve-outs, no overlap is allowed.

Q: Does this opinion strike down the statutes?
A: No. AG opinions concluding a statute is unconstitutional are advisory only under State ex rel. York v. Turpen (1984). The statutes remain on the books until a court agrees with the AG.

Q: How would this be challenged in court?
A: Likely through a declaratory judgment action by an interested party (a competitor, a regulator, a license applicant), or as a defense in an enforcement action. Once a court rules, the statutes are either enjoined or upheld.

Q: What if I already own stakes across tiers under the 15% safe harbor?
A: You should consult counsel. A practical risk-management posture: assume the 15% allowance may not survive litigation, evaluate divestiture options, and document any business-purpose justification you have if challenged.

Q: Was there industry pushback?
A: The Institute for Responsible Alcohol Policy (a state trade group) had previously litigated related questions in 2020. The opinion essentially aligns the AG with the strict-tier-separation camp.

Background and statutory framework

Before 2016, Oklahoma's alcohol regulation lived in Article 28 of the Constitution. State Question 792, passed by 65.62% of voters in November 2016, repealed Article 28 and replaced it with Article 28A, which "fundamentally changed how Oklahoma regulates the sale and distribution of alcohol" (Inst. for Responsible Alcohol Pol'y, 2020). The new Article allowed grocery stores to sell wine and beer, allowed liquor stores to sell limited non-alcohol items, and reaffirmed the three-tier structure (manufacturer / wholesaler / retailer) with a strict prohibition on common ownership across tiers.

The Legislature passed Senate Bill 383 to flesh out the new framework. SB 383 added §§ 3-119, 3-120, and 3-121 to Title 37A. Each of those sections includes the same 15% threshold language: a person can own up to (but not including) 15% of the stock in a company in a different alcohol tier. That is the language the AG concluded is unconstitutional.

The constitutional analysis turns on three textual cues:

1. The word "any" before "common ownership" gets the full force of "every" or "all," precluding even minimal overlap.
2. The Final Ballot Title said an ownership interest can exist in "only one" tier, with no "common ownership" qualifier.
3. The closing sentence of § 2(A)(1)(c) says "no other member of one tier may own an interest in a business licensed in a different tier," and a stockholder counts as a "member."

The AG also flags that other Oklahoma statutes (agriculture) and federal regulations (Medicare) define common ownership as requiring significant ownership giving control, but rejects those definitions for the alcohol context because the ballot title controls.

Citations and references

Constitution and statutes:
- Okla. Const. art. 28A, § 2 (Common ownership prohibition)
- 37A O.S. § 3-119 (Alcohol tier ownership)
- 37A O.S. § 3-120
- 37A O.S. § 3-121

Cases:
- Institute for Responsible Alcohol Policy v. State, 2020 OK 5, 457 P.3d 1050 (history of Oklahoma alcohol law and Article 28A)
- Fent v. Fallin, 2014 OK 105, 345 P.3d 1113 (ballot title is contemporaneous construction)
- State ex rel. York v. Turpen, 1984 OK 26, 681 P.2d 763 (AG opinions finding unconstitutionality are advisory only)
- Reherman v. Okla. Water Res. Bd., 1984 OK 12, 679 P.2d 1296 (presumption of constitutionality)

Source

• Landing page: https://oklahoma.gov/oag/opinions/ag-opinions/2023/ag-opinion-2023-2.html
• Original PDF: https://oklahoma.gov/content/dam/ok/en/oag/opinions/ag-opinions/2023/ag_opinion_2023-2.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

GENTNER DRUMMOND
ATTORNEY GENERAL

ATTORNEY GENERAL OPINION
2023-2

The Honorable Roger Thompson
Oklahoma State Senate, District 8
537 State Capitol
2300 N. Lincoln Blvd.
Oklahoma City, OK 73105

March 15, 2023

Dear Senator Thompson:

This Office has received your request for an Official Attorney General Opinion in which you ask, in effect, the following question:

Do the statutory provisions found in 37A O.S.2021, §§ 3-119, 3-120 and 3-121 permitting up to a 15% ownership of stock between the alcoholic beverage manufacturing, wholesaling, and retailing tiers violate the prohibition on any common ownership between the alcoholic beverage manufacturing, wholesaling, and retailing tiers found in Oklahoma Constitution Art. 28A, § 2(A)(1)?

I. BACKGROUND

The Oklahoma Supreme Court in Institute for Responsible Alcohol Policy v. State ex rel. Alcoholic Beverage Laws Enforcement Commission, 2020 OK 5, ¶¶ 3-4, 457 P.3d 1050, 1052-53, previously provided a thorough background on the history of Oklahoma's alcoholic beverage laws and the approval of Article 28A of the Oklahoma Constitution. That background is incorporated into this Opinion by reference.

In summary, Article 28A of the Oklahoma Constitution was placed on the November 2016 ballot as State Question 792 after it was passed by a joint resolution of the Oklahoma Legislature. State Question 792 was ultimately approved by the people of Oklahoma with 65.62% of the vote. It went into effect on October 1, 2018. It "fundamentally changed how Oklahoma regulates the sale and distribution of alcohol."

As it relates to this Opinion, a key portion of the approval process for Article 28A of the Oklahoma Constitution was the "Final Ballot Title for State Question No. 792" prepared by a prior Administration of this Office consistent with 34 O.S.Supp.2015, § 9. The Final Ballot Title for State Question No. 792 (the "Final Ballot Title") stated as follows:

This measure repeals Article 28 of the Oklahoma Constitution and restructures the laws governing alcoholic beverages through a new Article 28A and other laws the Legislature will create if the measure passes.

The new Article 28A provides that with exceptions, a person or company can have an ownership interest in only one area of the alcoholic beverage business—manufacturing, wholesaling, or retailing. Some restrictions apply to the sales of manufacturers, brewers, winemakers, and wholesalers. Subject to limitations, the Legislature may authorize direct shipments to consumers of wine.

Retail locations like grocery stores may sell wine and beer. Liquor stores may sell products other than alcoholic beverages in limited amounts.

The Legislature must create licenses for retail locations, liquor stores, and places serving alcoholic beverages and may create other licenses. Certain licensees must meet residency requirements. Felons cannot be licensees.

The Legislature must designate days and hours when alcoholic beverages may be sold and may impose taxes on sales. Municipalities may levy an occupation tax. If authorized, a state lodge may sell individual alcoholic beverages for on-premises consumption but no other state involvement in the alcoholic beverage business is allowed.

With one exception, the measure will take effect October 1, 2018.

(Emphasis added).

Section 2 of Article 28A of the Oklahoma Constitution now states, in pertinent part, that "[t]here shall be prohibited any common ownership between the manufacturing, wholesaling and retailing tiers, unless otherwise permitted by this subsection." OKLA. CONST. art. 28A, § 2(A)(1)(a).

The Oklahoma Legislature passed companion legislation to State Question 792, Senate Bill No. 383, which added §§ 3-119, 3-120 and 3-121 of Title 37A to the Oklahoma Statutes, that are at issue in this Opinion. These statutes generally address the limitations on the rights and ownership interests between the alcoholic beverage manufacturing, wholesaling, and retailing tiers. All three statutes have an identical prohibition against owning "fifteen percent (15%) or more of the stock" in legal entities that participate in different alcoholic beverage tiers from one another. Stated another way, the subject statutes would permit owning 14.99% of the stock in a legal entity conducting business in the alcohol manufacturing tier while simultaneously owning an unlimited amount of the stock in a separate legal entity conducting business in a separate tier, e.g., the alcohol wholesaling or alcohol retailing tier. This Opinion addresses whether these statutes permitting a limited amount of ownership in more than one alcoholic beverage tier violate the prohibition in OKLA. CONST. art. 28A, § 2(A)(1) against any common ownership in more than one alcoholic beverage tier. In this Office's opinion, they do.

II. DISCUSSION

The Final Ballot Title provided to the voters when passing State Question No. 792 is dispositive to the issues presented in this Opinion. It informed voters, with limited exceptions that are not applicable here, that State Question No. 792 would limit a person or company to "an ownership interest in only one area of the alcoholic beverage business—manufacturing, wholesaling, or retailing" tiers. Therefore, for the reasons set forth below, this Office concludes that the statutory provisions found in §§ 3-119, 3-120 and 3-121 of Title 37A of the Oklahoma Statutes permitting up to a 15% ownership of stock between the alcoholic beverage manufacturing, wholesaling, and retailing tiers violate the prohibition on any common ownership between the alcoholic beverage manufacturing, wholesaling and retailing tiers found in OKLA. CONST. art. 28A, § 2(A)(1).

"In deciding the constitutionality of statutes, a legislative act is presumed to be constitutional and will be upheld unless it is clearly, palpably and plainly inconsistent with the Constitution." Reherman v. Okla. Water Res. Bd., 1984 OK 12, ¶ 11, 679 P.2d 1296, 1300. Constitutional provisions are interpreted "in conformity with their ordinary significance in the English language—given their commonly accepted and nontechnical meaning." Inst. for Responsible Alcohol Pol'y, 2020 OK 5 ¶ 14, 457 P.3d at 1055-56.

Here, Sections 3-119, 3-120 and 3-121 of Oklahoma Statutes Title 37A permit up to 15% ownership of stock in two or more entities that are part of separate alcoholic beverage tiers. Nevertheless, Oklahoma Constitution Article 28A, Section 2 states, in pertinent part, that "there shall be prohibited any common ownership between the manufacturing, wholesaling and retailing tiers, unless otherwise permitted by this subsection." OKLA. CONST. art. 28A, § 2(A)(1)(a) (emphasis added). The exceptions identified in OKLA. CONST. art. 28A, § 2(A) relate solely to brewers' ability to obtain a beer wholesaler license to distribute beer, winemakers' ability to sell wine directly to customers who are physically present at the winery and "a small brewer as defined by law." None of the exceptions resolves the question presented in this Opinion.

The Final Ballot Title resolved any ambiguity in the phrase common ownership, by interpreting it, along with the remaining language in OKLA. CONST. art. 28A, § 2(A)(1), to preclude owning even one share of stock in entities that participate in different alcoholic beverage tiers from one another. As it relates to ballot titles, the Oklahoma Supreme Court has made clear that:

[T]he intent of the framers and electorate is also reflected in the ballot title of the proposed amendment [to the Constitution]. The ballot title and text of the provision are to be read together, even if the text contains no ambiguities or absurdities. The ballot title is a contemporaneous construction of the constitutional amendment and weighs heavily in determining its meaning.

Fent v. Fallin, 2014 OK 105, ¶ 11, 345 P.3d 1113, 1116-17.

Further supporting this interpretation is the fact that the term "any" immediately precedes the phrase "common ownership" in the Constitution itself. "Generally, the word 'any' is defined to mean one out of many, or an indefinite number, and is given the full force of 'every' or 'all.'" Shattuck v. Grider, 1972 OK CR 37, ¶ 14, 493 P.2d 829, 832.

This interpretation is also supported by the final sentence of OKLA. CONST. art. 28A, § 2(A)(1)(c), which reiterates the prohibition: "Except as provided in this subsection, and except for a small brewer as defined by law, no other member of one tier may own an interest in a business licensed in a different tier[.]"

It would violate basic democratic principles for the Chief Law Officer of the State of Oklahoma to inform voters on the ballot that they were voting to preclude an ownership interest in different alcoholic beverage tiers and then have a new administration reverse this interpretation years after the election was completed. Therefore, this Administration feels compelled to adopt the interpretation presented to the people of Oklahoma on the ballot. The people of Oklahoma were informed that an ownership interest (which would include as little as one share of stock) in two or more alcoholic beverage tiers was precluded by the constitutional amendment. Accordingly, this Office concludes that the statutory provisions found in 37A O.S.2021, §§ 3-119, 3-120 and 3-121 permitting less than a 15% ownership of stock between the alcoholic beverage manufacturing, wholesaling, and retailing tiers clearly, palpably and plainly violate the prohibition on any common ownership between the alcoholic beverage manufacturing, wholesaling, and retailing tiers found in OKLA. CONST. art. 28A, § 2(A)(1).

It is, therefore, the official Opinion of the Attorney General that:

1. The statutory provisions found in 37A O.S.2021, §§ 3-119, 3-120 and 3-121 permitting up to 15% ownership of stock between the alcoholic beverage manufacturing, wholesaling, and retailing tiers clearly, palpably and plainly violate the prohibition on any common ownership between the alcoholic beverage manufacturing, wholesaling, and retailing tiers found in OKLA. CONST. art. 28A, § 2(A)(1). Therefore, 37A O.S.2021, §§ 3-119, 3-120 and 3-121 are unconstitutional to the extent they permit up to 15% ownership of stock in entities involved in different alcoholic beverage manufacturing, wholesaling, and retailing tiers from one another.

GENTNER DRUMMOND
ATTORNEY GENERAL OF OKLAHOMA

[Note: It has long been recognized that an Attorney General opinion finding an "act of the legislature is unconstitutional should be considered advisory only, and thus not binding until finally so determined by an action in the District Court of this state." State ex rel. York v. Turpen, 1984 OK 26, ¶ 12, 681 P.2d 763, 767. Accordingly, this opinion should be construed as advisory only.]