Supreme Court rules state liquor laws are unconstitutional

The case began in 2016, when Total Wine, a Maryland-based liquor giant, and Affluere Investments, a small business owned by Doug and Mary Ketchum, each applied for licenses to sell liquor in Tennessee. The two applicants couldn’t have been more different. Total Wine describes itself as the largest independent alcohol retailer in the country. The Ketchums, who had moved from Utah for their daughter’s health, got into the business because they thought owning a store would be “kind of fun.”

After the Tennessee Alcoholic Beverage Commission (TABC) approved their petitions, the Tennessee Wine and Spirits Retailers Association (TWSRA) appealed, saying that neither applicant was legally allowed to have a license. Tennessee is one of 35 states with a residency requirement for selling liquor. In this case, the trade association pointed out, neither applicant had been living in the state for two years. Additionally, the law requires 10 years of residency to renew the license, and for all company stakeholders to be residents, too.

Lower courts found that Tennessee’s law was unconstitutional, but TWSRA took their suit against Russell F. Thomas, the commission’s executive director, all the way to the Supreme Court. The association said their law is protected by the second section of the 21st Amendment, which overturned prohibition. That particular section gives states the options to stop the import of liquor across their borders.

And again, it’s failed to persuade the court. Justice Samuel Alito, writing for the majority of the court, said the state’s two-year residency requirement, which doesn’t have an effect on public health or safety, is unconstitutional, and a violation of interstate commerce laws. Theoretically, that 86-year-old clause could be enforceable. But more recent precedents, including a 2005 court decision that gave out-of-state wineries greater latitude to ship to customers in New York and Michigan, have “rejected that view,” Alito wrote. The clause “is not a license to impose all manner of protectionist restrictions on commerce in alcoholic beverages.”

Why’s this decision important? It means that more chain liquor stores are likely to move into Tennessee, and perhaps into the 34 other states that have similar laws on the books. Small businesses and mom-and-pop liquor stores—like the one owned by the Ketchums—could be forced out of business, unable to compete. Justice Neil Gorsuch, one of the two dissenters, mused openly about the possibility of an “Amazon of liquor,” according to Wine Spectator. 

Tom Wark, executive director of the National Association of Wine Retailers, a trade association that had submitted an amicus brief, cheered the decision.

“State alcohol laws that discriminate against out-of-state retailers for the purposes of protecting in-state interests are unconstitutional and not protected by the Twenty-First Amendment. The decision is a historic win for both free trade and wine consumers across the country,” he said in a press statement. 

“With this decision, the effort to modernize and bring fairness to the distribution and wine shipping laws of the states begins in earnest. While we expect the opponents of free trade and supporters of protectionism to fight this evolution in the American marketplace, we are equally confident that this Supreme Court decision will lead to greater access to the hundreds of thousands of wines many consumers do not currently have access to due to protectionist wine shipping laws.”

In other words? Get ready to start seeing more liquor waiting for you at the doorstep.