The Supreme Court Said States Can’t Discriminate in Alcohol Sales. They’re Doing It Anyway.
This month marks the 20th anniversary of the seminal Granholm v. Heald case, in which the United States Supreme Court struck down protectionist alcohol shipping laws that discriminated against out-of-state wineries. Seen at the time as a harbinger of a truly national e-commerce marketplace for alcoholic beverages, Granholm continues to be treated more like a legal inconvenience than a binding precedent by lower courts.
In Granholm, numerous wineries challenged a Michigan law that allowed in-state wineries to ship directly to state residents but required out-of-state wineries to sell their products through wholesalers. Because the case was a consolidation of several legal challenges, it also involved a New York law that only permitted out-of-state wineries to engage in direct-to-consumer shipping if they had a “branch factory, office or storeroom within the state of New York.”
In a 5–4 decision, the Supreme Court struck down both laws as a violation of the so-called “dormant Commerce Clause,” which establishes the principle that state governments cannot blatantly favor in-state economic interests by discriminating against out-of-state economic actors.
Importantly, the law ushered in a host of state-level legislative victories that allowed wineries to ship their products directly to their customer base, thereby circumventing the notorious three-tier system of alcohol regulation.
Despite nearly always being referred to as a “landmark” ruling, Granholm has been treated more on par with an obscure 19th-century SCOTUS case that has long since been reversed. In the years immediately following Granholm, the so-called Arnold’s Wine line of cases—named after the Second Circuit’s Arnold’s Wines, Inc. v. Boyle case—came out, in which lower federal courts effectively limited the Supreme Court’s Granholm decision to alcohol producers (not retailers).
Other federal courts rejected such a cramped reading of the Granholm precedent, and eventually, the dispute forced the Supreme Court to weigh in again in the 2019 case Byrd v. Tennessee Wine & Spirits Retailers Association. In Tennessee Wine, the Court held—this time by a 7–2 vote—that a Tennessee law requiring liquor store owners to have been residents of the state for at least two years before applying for a license was u
Article from Reason.com
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