The Granholm case in 2005 said that states couldn’t discriminate between in-state and out-of-state shipments from wineries. But as we know, states have been closing down shipments from retailers, which has a much bigger impact on wine sales.
Total Wine wanted to open in Tennessee but there’s a rule that you have to be a resident for two years before you can sell in the state. Even better, corporations and other businesses can’t get retail licenses unless all of the directors, officers and shareholders are residents of Tennessee for at least nine years! So the law is clearly there to protect incumbents.
Total Wine challenged that law and won. The state appealed and lost as the court knocked down the residency requirement. So it’s at the Supreme Court.
Even if Total wins, it’s not a clean win for retailer shipping though. But at least it will address the issue of retailer rights and wine sales. Ten years hence, maybe we’ll have another case and a clean ruling on interstate wine sales from both wineries and retailers.
My goal is to eventually become a Supreme Court justice solely so I can overturn the out of state retail protection racket that colon-crushes Texas residents. I just want to buy a damn bottle of wine from K&L. Is that too much to ask?
As described it’s of little interest to the consumer; if Total wins it might put a slight wrench in a state’s right to regulate sales of alcohol, but apart from that it is one behemoth making its way into the system. No new here folks!
I would be interested in hearing someone expand on that. My layman’s understanding of Granholm is that the basis for the Supreme Court ruling on that one was that the case involved interstate commerce and therefore the 21st Amendment did not apply. This would appear to be a matter that is completely within state jurisdiction, and upholding this decision would appear to chip away at the precedents which effectively give states complete control over intrastate alcohol distribution. That seems like it would be a big deal for the consumer if it sets a precedent for overturning other state regulations (e.g. the NY law which prohibits individuals to own more than one liquor outlet - another law that TWS would dearly love to overturn).
I am no expert on the Commerce Clause, but this clearly looks like discrimination against out-of-state residents setting up businesses. Off the top of my head, I’d think you could argue that that violates the CC, and maybe even due process. You can make someone wait six months to collect welfare benefits, but nine years to open a business? That seems hard to rationalize under the state’s 21st Amendment powers to regulate the transport and sale of alcohol. If you can’t discriminate against out-of-state wineries, how can you discriminate against out-of-state companies setting up retail operations in the state if they’re complying with other laws.
I agree. But allowing them to set up doesn’t mean you’ll allow out of state retailers to ship in, which is going to be the next issue that needs to be settled. As Neal says though, a lot depends on the rationale of the Court. And of course, a lot depends on the tenacity of the wholesalers and incumbent retailers as they try to exclude competitors.
Isn’t the Court prone to narrow rather than sweeping decisions?
I would have thought Granholm, which is about inter- vs. intrastate shipping for wineries, would be more relevant precedent for a case about retailers shipping to individuals. Or is it that a decision about rights of corporations to sell within a state could be applied to shipping?
I also wonder why a big retailer hasn’t already had a case about shipping heard by the SC. None of them are big enough to finance it? Not enough of a problem for them to make it worth it? Haven’t been able to meet the criteria? SC isn’t interested?
Depends. In theory, the common law tradition is to decide cases on the narrowest possible grounds. But sometimes those grounds can have quite sweeping implications. And sometimes the justices are inclined to speak in broad terms.
The latter, as I read it. Total Wine isn’t trying to ship in; they’re trying to open a store.
In Granholm, there was clear discrimination against out-of-state wineries. The states did not prohibit sales by in-state wineries. The law was clearly intended to benefit home-state wineries, not to regulate alcohol.
There’s a stronger argument that states can regulate alcohol sales within and into the state if they don’t discriminate. The 21st Amendment empowers the state to regulate transportation and sales, which encompasses retailers. So you have to find a conflict with some other constitutional clause.
It may have been hard to find the right facts to litigate. The rationale for the three-tier system is that the state needs to be able to control distribution (which is authorized by the 21st Amendment), so as long as that holds up, it’s hard for an out-of-state retailer to argue for the right to ship. Put another way, if the court allowed interstate shipments, that would completely undermine the rationale for the three-tier system. I think courts would be reluctant to go there given the broad powers states were given by Repeal.
There aren’t that many liquor chains that operate across state lines, which is probably another reason it hasn’t come up.
