OPINION:
If you’re a wine lover in Virginia, you should have no problem going online to order that bold Napa Cabernet you had at dinner on Saturday. But should you live across the border in Kentucky, you’re probably out of luck.
The mishmash of alcohol laws often seems baffling and arbitrary, remnants of a bygone era of bootleggers and temperance unions. This week, though, the U.S. Supreme Court has a chance to clarify the role of states in regulating alcohol sales. Tennessee Wine and Spirits Retailers Association v. Blair, scheduled to be argued on Wednesday, could wind up being a big boon for American tipplers.
In 2016, Maryland-based Total Wine sought to open a store in Tennessee. But Tennessee law requires wine-store operators to have lived in the state for two years. To renew the license a year later, they need to have lived in Tennessee for 10 years. Facing the potential of a lawsuit, Tennessee asked the courts to determine the legality of the residency requirement. Lower courts found the regulation unconstitutional.
The case hinges on the tension between the Commerce Clause, which largely limits the ability of states to discriminate against people from out of state, versus the 21st Amendment, which overturned Prohibition in 1933 but also gave states wide latitude to regulate alcohol within their borders. “If they were to say, yes, the Commerce Clause does apply to how the states issue licenses, that really opens the door — that forces the states to start to allow Internet wine sales,” says Alex Tanford, a law professor at Indiana University. He filed an amicus brief in the case on behalf of 81 wine drinkers, including a Bloomington wine-tasting club that wanted to try red wines from Argentina but could find only four samples in town, and a woman from Troy, Michigan, who sought a 1998 Chateau Margaux to celebrate her wedding anniversary but was told by her local wine shop that it had nothing that old.
The laws preventing these Midwesterners from acquiring the bottles they want date to the end of Prohibition. Back then, states set up strict oversight of alcohol in what is known in the industry as a “three-tier” system, with separate regulations and licensing of production, distribution and retail sales. In the last few decades, courts have chipped away at this regime of protectionism. A 2005 Supreme Court case, Granholm v. Heald, required states to allow shipments of wine from out-of-state wineries if they permitted in-state producers to ship wine. The case this week could determine if the principle of freer interstate commerce is extended to the other two pillars of the states’ regulatory regime: Distribution and retail. While 43 states allow out-of-state shipments from wineries, only 13 states permit out-of-state shipments from retailers.
The issue scrambles the usual ideological divide. In Granholm, Justices Anthony Kennedy and Antonin Scalia joined with three members of the court’s liberal bloc in a 5-4 decision. The challenge is applying old law to new circumstances, and there’s a lot that’s changing. The number of beer and liquor producers has more than doubled in the last five years: There are now more than 10,000 wineries, 6,000 breweries and 1,500 distilleries across the country.
Some states have made it clear that their alcohol regulations have less to do with public health and safety than with propping up retailers and their own financial interests. When the head of New Hampshire’s liquor commission pushed last year to ban out-of-state retailers from shipping to the state, he told legislators: “We are looking to protect our retailers and tax structure.” Same in Mississippi, where investigators last year conducted a sting by placing orders for illegal out-of-state wine. “We’re losing millions of [tax] dollars a year because so many companies are shipping alcohol into the state,” the state’s attorney general explained at the time.
Tom Wark, executive director of the National Association of Wine Retailers, says he testified in Texas two years ago in favor of a bill to allow retail wine shipments. But after he finished, Texas wine retailers took their turn. “They said, ’Listen, we live in this state. We don’t want outsiders coming in and selling it. That just ain’t fair.’ It was a pure, protectionist, rent-seeking argument,” Mr. Wark says. The bill died in committee.
State laws often seem to have little rationale beyond protecting the profits of local businesses (and campaign contributors). In the name of safety, Florida bans direct-to-consumer alcohol shipments, but it allows drive-through beer and wine sales, and Miami has some 24-hour liquor stores. New York doesn’t permit grocery stores to sell wine — a policy that sounds extreme except when compared with Maryland, which forbids chain grocery stores from selling beer and wine. In each of those cases, the beneficiaries of the status quo aren’t just avoiding competition. They are also leaning on government to claim immunity from the big trends that have swept across the retail landscape in the last two decades: e-commerce, consolidation, efficiency, technology and consumer choice. When Total Wine finally opened its first Tennessee store last year after a favorable lower-court ruling, a competing wine shop owner griped to the local paper: “The problem is the consumer is too tied up into convenience.”
Being unable to order the right bottle of wine tops nobody’s list of the world’s gravest injustices. But in a time when anybody can order switchblades, prescription drugs and bongs online with just a few clicks, sound public policy should allow adults to buy an out-of-state cabernet without their government blocking the way.
• Tony Mecia, a former senior writer at The Weekly Standard, is a freelance business writer in Charlotte, N.C.
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