Horse shit. Discrimination is the essence of freedom. Forcing people to serve other people they don't want to serve is the essence of tyranny. You harm no one by failing to serve them. The idea that you do is ridiculous.There's a old legal saying that 'Your right to swing your fist ends at the nose of another man'.
What you believe in private, or espouse in public, is simply your business.
However, when your beliefs turn into actions that actively do harm to others, you've reached the other man's nose.
Equal accommodation is the cornerstone of freedom. In the land of the free, you're not free to do harm to others without consequences.
Is this freedom?
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No, on the previous example - "by order of the police department".
But yes on the replacement. Everyone should be free to decide who they serve. That said, I find the bias expressed in the sign repulsive and would actively engage in boycotting any business that would put up such a sign.