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Can New Laws Block Biz Expansion Plans?

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By Ephrat Livni, Esq. on April 18, 2016 1:02 PM

You do a great business in your home state and are considering expanding to neighboring locations. But beware. Your business expansion plans can be thwarted with new legislation and prospective competitors might work very hard to guard their territory, lobbying lawmakers to keep your business out.

That is what happened to Chicago's Binny Beverage Depot. The Illinois liquor chain planned to expand to Indiana, where its competitors were "fat, happy and lazy," according to company CEO Michael Binstein. But it won't be moving as soon as expected, reports The Chicago Tribune, because a new Indiana law just passed requiring more of local liquor store owners.

The Indiana Law

The law passed in Indiana has made the residency requirements for liquor store sales more onerous. This extended residency requirement -- to sell liquor in the state, a corporation must have an actual presence there for five years -- put a wrench in Binny's expansion plans, and that was what Indiana liquor distributors reportedly wanted.

According to The Chicago Tribune, Indiana lawmakers were influenced by liquor lobbyists who wanted to block Binny from coming in. Maybe the competitors were not as lazy as Binstein thought after all. Regardless, they have now succeeded in halting outside competition. "The retailers and their lobbyists amassed at the border to keep us out," Binstein said. "Indiana's is a free lunch system, not a free enterprise system."

Some local lawmakers disagree of course, saying they supported the measure because people who live in the community know how to serve it. State Representative Tom Dermody explained, ""I don't think it's protecting [Indiana liquor store owners] as much as it is, hey, these guys live in our communities and they do it well."

Planning an Expansion?

If you are considering an expansion of your business, speak to a lawyer. State and local laws vary and you may find you save a lot of time and money by doing a little research in advance. Get guidance. Consult with an attorney.

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