US Supreme Court judges ruled this week that Tennessee state officials had unfairly discriminated against out-of-state wine retailers by requiring prospective wine sellers to be resident in the state for two years prior to opening up.
Judges sided with the challengers, which included wine retail giant Total Wine, by seven to two in a decision that could improve choice for wine lovers.
Some legal and wine trade experts believe the case could prove as significant as the 2005 ‘Granholm v Heald’ ruling that paved the way for out-of-state wineries to sell direct to consumers.
‘The decision is a historic win for both free trade and wine consumers across the country,’ said Tom Wark, executive director of the National Association of Wine Retailers.
‘Most important is the Court’s decision that the non-discrimination principles laid out in the Supreme Court’s 2005 Granholm v. Heald decision overturning bans on winery shipping also apply to retailers.’
However, the latest ruling was unlikely to put an end to disputes over alcohol selling rules both between and within states, as shown by the state-by-state legal wrangling that has followed Granholm v Heald.
Wark said that his organisation would now begin ‘the work of persuading states to change their retailer wine shipping laws so they come into compliance’.
But wholesalers, keen to protect existing distribution systems within states, were likely to be watchful of attempts to change laws and have long argued that the so-called three-tier distribution system is important to ensure responsible alcohol selling.
‘The vast majority of state alcohol laws are not impacted by this ruling,’ said the president and CEO of Wine & Spirits Wholesalers of America (WSWA), Michelle Korsmo.
It said it disagreed with the Supreme Court decision, but highlighted passages in the ruling that referred to the importance of alcohol regulation in protecting public health and safety.
A key battleground in the latest Supreme Court ruling was the scope of the 21st Amendment, set up after Prohibition to allow states to regulate alcohol sales, with an eye on responsible and safe consumption.
The Supreme Court rejected a 21st Amendment defence on the Tennessee residency requirement, ruling that it could not be used to override the federal Commerce Clause.
Among its reasons, the Court said, ‘There is also no evidence to support the claim that the requirement would promote responsible alcohol consumption because retailers who know the communities they serve will be more likely to engage in responsible sales practices.’
The WSWA’s Korsmo said, ‘Since alcohol is unlike any other consumer good, the 21st Amendment was enacted to give states authority to regulate alcohol as they see fit and that authority remains broad.
‘In exercising that authority, states have enacted the three-tier [distribution] system to promote accountability, public safety, and economic competition.’
See the full Supreme Court ruling here.
