This just came down from the Court. I plan to read it this morning and may offer some observations later today.
By a 7-2 margin, the 6th Circuit is affirmed, which held that Tennessee's 2-year residency requirement for operating a retail liquor store was unconstitutional under the Commerce Clause and was not saved by Section 2 of the 21st Amendment.
While many blogs and wine writers thought this case might have authorized nationwide direct wine shipments, that question was never before the Supreme Court in Tennessee Wine and Spirits v. Thomas—and no such rule was declared. The Court instead was tasked with balancing a state’s right to regulate alcohol within its borders under Section 2 of the 21st Amendment, on the one hand, with a prohibition gleaned from the Commerce Clause that empowers Congress to regulate interstate commerce (i.e. goods crossing state lines or theoretically could cross state lines), on the other.
Specifically, Tennessee imposed a state law that required the owner of a retail liquor store to be a resident of Tennessee for two years prior to applying for the license. Over time, the Court has developed a concept called the “Dormant Commerce Clause,” which basically is a negative inference of the Commerce Clause: if Congress regulates interstate commerce, then States have cannot enact state laws that negatively impact interstate commerce by discriminating against out-of-state interests.
A straightforward example of this tension in the alcohol context can be found in Granholm v. Heald, which you may be familiar with. There, the Court struck down a set of direct-shipment laws that favored in-state wineries over out-of-state competitors. The laws plainly favored in-state wineries over out-of-state wineries, which is facially discriminatory, and direct-shipments across state lines clearly implicated and affected interstate commerce.
Under a typical analysis under the Dormant Commerce Clause, the state advancing the discriminatory law would have to show that there were no non-discriminatory alternatives to achieve the same result as the challenged law. But this case presented another example of a party arguing a State's discriminatory law should be saved under Section 2 of the 21st Amendment irrespective of the Dormant Commerce Clause because Section 2 grants States nearly unfettered power to regulate all aspects of alcohol within their borders. In a 7-2 majority opinion, the Supreme Court rejected that argument in part because the record was devoid of any evidence that non-discriminatory alternatives to the law could not have achieved the same result.
This case is almost certainly not the last of its kind. One notable line from Justice Alito’s majority opinion is: “States remain free to pursue their legitimate interests in regulating the health and safety risks posed by the alcohol trade, but each variation must be judged based on its own features.” This suggests future state laws in the alcohol context will be judged on a case-by-case basis, and that further casts doubt that the Court will sanction nationwide direct wine shipments anytime soon. But I would be happy to be wrong on that one.
Thank you for this insightful analysis! I also was confused why so many articles in the past few months seemed to infer that this decision would alter interstate shipping laws. I know that Amazon posted an advertisement for an alcohol lobbyist (with the safe assumption that they are chomping at the bit eliminate laws that prohibit interstate retail shipping) but that seems like a long term endeavor at best, as you mentioned. It seems unlikely that states that tightly control even in-state sales, like Utah and Alabama, will suddenly be amenable to shipments of wine via FedEx and UPS to their residents from wine stores in other states.
I'm also a little puzzled why wine retailer associations would even be lobbying hard for interstate shipping laws to be dismantled, since the main benefactors of this scenario would likely be Amazon, Wine.com and the ilk. If Amazon could use their Whole Foods licenses and massive buying power to ship to anyone in the US, it seems like a lot of independent wine stores would go the way of small, independent book stores (or even mid-size bookstore chains for that matter!) -- that is, out of business. The interstate wine shipping laws may be cumbersome for many US citizens in certain states and prevent them from enjoying the wide range of wines available to residents of other states, but they also likely protect many independent retail stores in states where residents cannot accept deliveries from out-of-state retailers.
Rachael Ryan Common misconception, but indie bookstores are thriving in the wake of Amazon. It's places like Borders and Barnes & Noble that took it in the shin.