I'll use Texas as an example. If you were in Texas, I'd recommend writing a politely and professionally worded email to the executive director and each commissioner of the Texas Alcoholic Beverages Commission. Essentially alert them to what's going on, and suggesting that the regulations be changed to prohibit it. It could be as simple as requiring all "drag queen" performances comply with Texas' sexually oriented business statute. That alone would probably nuke all drag queen story hours at alcoholic establishments.

You might have a harder time convincing the state government in Michigan that this is degenerate behavior.

I'll use Texas as an example. If you were in Texas, I'd recommend writing a politely and professionally worded email to the executive director and each commissioner of the Texas Alcoholic Beverages Commission. Essentially alert them to what's going on, and suggesting that the regulations be changed to prohibit it. It could be as simple as requiring all "drag queen" performances comply with Texas' sexually oriented business statute. That alone would probably nuke all drag queen story hours at alcoholic establishments.