The U.S. Supreme Court is likely to overhaul the state regulation of retail alcoholic beverage licenses when it decides whether the state of Tennessee may limit the granting of liquor licenses only to individuals who have resided in state for 2 years or more. Many states and even counties have similar suspect restrictions, including Maryland.
The debate about alcohol’s place in American society is as old as the country. The first President once denounced alcohol as “the source of all evil—and the ruin of half the workmen in this Country.” George Washington, Letter to Thomas Green (Mar. 31, 1789). But the second President “enjoyed a tankard of hard cider with his breakfast every morning.” Thomas R. Pegram, Battling Demon Rum 8 (Ivan R. Dee 1998). That dichotomy persists because alcohol is not an ordinary article of commerce; it is arguably both widely enjoyed and dangerously misused. Centuries of regulatory experience confirm that there is no right answer; every approach, ranging from laissez faire to absolute prohibition, comes with tradeoffs. Weighing them necessarily depends on difficult value judgments and conditions that vary from time to time and place to place. Because striking the right balance requires appreciation of local factors, it makes sense to leave the regulation of alcohol to state and local officials. In general, that is precisely what the U.S. Constitution does, but ..
The 21st Amendment of the Constitution ratified in 1933 ending Prohibition (.. which was created by the 18th Amendment) provides that “[t]he transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.” U.S. Const. amend. XXI, § 2. 2.
The Commerce Clause of the Constitution provides that “[t]he Congress shall have Power . . . [t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” U.S. Const. art. I, § 8, cl. 3.
And the offending Tennessee law provides, “No retail license under this section may be issued or transferred to or held by, to any individual: (A) Who has not been a bona fide resident of this state during the two-year period immediately preceding the date upon which application is made ..”
The issue as stated in the U.S. Supreme Court briefs is: Whether the 21st Amendment empowers states, consistent with the dormant commerce clause, to regulate liquor sales by granting retail or wholesale licenses only to individuals or entities that have resided in-state for a specified time.
The local Total Wine affiliate prevailed, overturning the limitation, at the federal District Court and that decision was affirmed by the Sixth Circuit Court of Appeals.
Betting on the outcome of a Supreme Court case is somewhere between divination and a guess. And the January 16th oral argument revealed no clear winner. There was general acquiescence that, if Total Wine was seeking to sell something else, for example milk, Tennessee’s limitation clearly would be unconstitutional, because it violates the Commerce Clause by discriminating against out of state applicants. The crux of the matter before the Justices, then, was whether the 21st Amendment trumps and permits the Tennessee law. It is probable the majority is unconvinced that states have complete latitude to regulate alcoholic beverages beyond the express language of the 21st Amendment, and Tennessee’s residency requirement is likely to fall.
A decision in the case is expected by summer in Tennessee Wine and Spirits Retailers Association v. Blair.