Supreme Court Gives Win To Out-of-State Retailers

Is it time to party yet?

Hold on to the cake and balloons, it’s not party time yet for wine and spirits retailers in US. While it’s true that this decision by the US Supreme Court is a huge win for the industry, it isn’t an immediate change in the shipping environment unfortunately. As with most laws and things dealing with bureaucracy, the changes will move at a snail’s pace. Until then, let’s break it down what it actually means.

In a 7-2 decision, the Justices struck down a Tennessee law that prohibits anyone from possessing a liquor license unless they have held residency for at least two years. That may seem narrow in scope, but it is important to note what was/wasn’t included in the written opinion.

Ok, kids, who’s ready for a lesson on the United States Supreme Court? When The Court makes a decision on a case, it produces a majority opinion and dissenting opinion. If there are Justices who disagree with the reasoning but agree with the outcome, they can write their own opinion that gives differing reasoning, this typically dilutes the overall effect of the decision. Good news for all of us then, since all Justices in the majority agreed with Justice Alito’s opinion. 

“And Granholm never said that its reading of history or its Commerce Clause analysis was limited to discrimination against products or producers. On the contrary, the Court stated that the Clause prohibits state discrimination against ‘all out-of-state economic interests.” – Justice Alito

In the majority opinion, Justice Alito made several distinctions, including the one above, that will topple any state’s law that prohibits out-of-state retailers from shipping product into their states. Don’t start getting the packing tape and boxes out just yet. The result of this means that states will have to redefine their now unconstitutional laws to either let EVERYONE ship into their state or NO ONE. Legal experts are saying that it’s safe to expect that at least some states will fall along with the likes of Texas and prohibit all shipping of wine and liquor in the state, while others will open it the nation.

Justice Alito showed how much he is a friend to the industry just with his choice of one key word: alcohol. In his written opinion he did not choose to use “wine” or “wineries” but rather stuck with “alcohol” intentionally leaving the interpretation very broad and in theory applying the ruling to liquor as well.

So what are the next steps? Well industry groups will now likely start taking the states with these types of laws to court over their unconstitutional nature, forcing the state legislatures to act on rewriting their laws. Expect real changes to take affect in 2-3 years at the very earliest stages but many will take much longer.

Who are we kidding? Break out the Champagne, this is a good day.

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