NEWS FOOD & TRAVEL PEOPLE COLLECTING
GRAPEVINE
I
n the biggest case involving wine in 14 years, the U.S. Supreme Court
struck down a law that imposed a durational residency requirement
on alcohol retailers in Tennessee. The 7–2 ruling, issued on June 26,
opens the door for future challenges to state alcohol laws, including
those that restrict direct shipping by out-of-state retailers.
The case, Tennessee Wine and Spirits Retailers Association v. Russell F.
Thomas, originated in 2016, when Total Wine & More, the retail giant,
and Affluere Investments, which operates a small wineshop, each ap-
plied for a retail liquor license in Tennessee. The Tennessee Wine and
Spirits Retailers Association (TWSRA) complained to the Tennessee
Alcoholic Beverage Commission that neither applicant satisfied the
state’s two-year residency requirement to obtain a liquor license.
A federal court struck the law down, finding that it unfairly discrimi-
nated against out-of-state businesses. In arguments before the Supreme
Court, the TWSRA argued that the law was protected by Section 2 of
the 21st Amendment, which gives states wide latitude to structure their
liquor laws in order to promote temperance and an orderly market.
But the justices disagreed. The majority opinion, penned by Justice
Samuel Alito, issued a strong defense of the Constitution’s Commerce
Clause, claiming Tennessee’s law existed only for economic protection-
ism and is therefore unconstitutional: “Because Tennessee’s two-year
residency requirement for retail license applicants blatantly favors the
state’s residents and has little relationship to public health and safety,
it is unconstitutional.”
Justice Neil Gorsuch delivered the dissenting opinion, joined by Jus-
tice Clarence Thomas, arguing that the Supreme Court “should not be
in the business of imposing our own judge-made ‘dormant Commerce
Clause’ limitations on state powers.”
This was the court’s the most significant case on wine since 2005’sGranholm v. Heald, which prohibited states from imposing direct-ship-
ping laws that discriminate between in-state and out-of-state wineries,
and was used as a precedent for this case.
In Tennessee Retailers, the TWSRA argued that Granholm applied only
to producers, not merchants. The majority opinion said otherwise: “Gran-
holm never said that its reading of history or its Commerce Clause
analysis was limited to discrimination against products or producers,”
wrote Alito. “On the contrary, the Court stated that the Clause prohib-
its state discrimination against ‘all out-of-state economic interests.’ ”
This is a key point for advocates of retailer direct shipping. In recent
years, a number of states have passed bans against alcohol sales by out-
of-state merchants while allowing in-state retailers to ship. Opponents
of retailer direct shipping have adopted the same line as the Tennessee
Retailers petitioner, claiming Granholm only applied to producers. The
June 26 decision denies this claim.
Additionally, the TWSRA argued that invalidating Tennessee’s law
would nullify the three-tier system of distribution. The majority opinion
disagreed, saying that Section 2 of the 21st Amendment does not allow
“every discriminatory feature that a state may incorporate into its three-
tiered scheme.”
Gorsuch wondered during oral arguments if the imminent challenges
to residency requirements could lead to an “Amazon of liquor” business
model, whereby a retailer might not even need to be physically present
within a state. In his dissent, he wrote: “If residency requirements are
problematic, what about simple physical presence laws? After all, can’t
states ‘thoroughly investigate applicants’ for liquor licenses without
requiring them to have a brick-and-mortar store in the state?”
This is a question future cases may tackle. The court still recognizes
that states can regulate alcohol in order to protect public safety. The
recent decision simply constrains that power a little more.
—Emma BalterSEPT. 30, 2019 • WINE SPECTATOR 17IST
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Supreme Court Shakes Up Wine Law
What was at stake? Tennessee law required wine merchants to
live in the state for at least two years before applying for a liquor license.
Supporters of the law cited the 21st Amendment, which overturned Pro-
hibition, as giving states the power to regulate alcohol sales to promote
temperance and maintain an orderly market.What was the ruling? In a 7–2 decision, the Supreme Court
found Tennessee’s law unconstitutional, arguing that it violated the Com-
merce Clause by unfairly discriminating against out-of-state businesses
and fostered economic protectionism, not public safety.What’s next? Several cases challenging state bans on direct ship-
ping by out-of-state wine stores are pending in lower courts. Shipping
advocates hope this ruling will undermine those bans.7–2 Decision Reshapes Wine Sales