The US Supreme Court is expected to rule this summer in Tennessee Wine & Spirit Retailers Ass’n v. Blair, which marks the first time in 14 years that the Court has taken up a case involving the wine industry. One hundred years to the day since the passage of the 18th Amendment, which ushered in the short-lived Prohibition era, the Supreme Court heard oral argument on January 16, 2019, in a case involving the constitutionality of Tennessee’s effective 12-year durational residency requirement for out-of-state retailers, such as Total Wine, to obtain a license to operate a store within the state.
Although the 21st Amendment (Amendment) repealed Prohibition, its reach and interplay with the dormant Commerce Clause has been a question that courts have wrestled with since its passage. While the text of the Amendment appears to give states unfettered discretion to regulate alcohol, the Supreme Court has held on numerous occasions that such discretion is constrained by the dormant Commerce Clause, which proscribes states from favoring in-state commerce at the expense of out-of-state commerce. Once again, the high court is faced with a line-drawing inquiry, which could have ramifications for direct-to-consumer shipping of wine (and other alcohol), depending upon how broadly the Court rules.
BackgroundThe Text of the 21st Amendment
It may surprise some to know what the text of the Amendment actually says. The relevant portion the Supreme Court will address provides that “[t]he transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”[1] The plain text would seem to suggest that states have carte blanche to regulate the sale and importation of alcohol as they see fit, an interpretation that the appellants have adopted in Blair.
In 2005, the last time the Supreme Court interpreted the Amendment, it struck down state laws in Michigan and New York that allowed only in-state winemakers to ship directly to consumers within each state’s borders, but prohibited out-of-state winemakers from doing the same, holding that such discriminatory laws violated the Commerce Clause of the US Constitution.[2] In so holding, the Court split 5-4, albeit along nontraditional lines. It is not often that you see Justices Kennedy, Scalia, Souter, Ginsburg, and Breyer on one side (the majority), and Justices Thomas, Rehnquist, Stevens, and O’Connor on the other (minority).
Notwithstanding the text of Section 2 of the Amendment, the majority held that pre–18th Amendment, states could not discriminate between in-state and out-of-state alcohol, so the Amendment merely restored that preexisting interpretation.[3] The decision also left intact the constitutionality of the so-called “three-tier distribution system,” whereby producers sell their products to wholesalers, who in turn pass those products on to retailers (often after a substantial markup). But if states choose to provide a direct-to-consumer option from an in-state winery to a consumer, they must do the same for an out-of-state winery.
Justices Stevens and O’Connor dissented, with Justice Stevens observing that in modern times, most people view alcohol as simply another commodity, but at the time of the Amendment’s passage, alcohol was viewed as a “special category” that deserved different treatment, considering the potential for abuse by consumers.[4] He recalled the then-current intense debate surrounding the interpretation of the Amendment, which has been lost in today’s climate and observed, “Indeed, the fact that the Twenty-first Amendment was the only Amendment in our history to have been ratified by the people in state conventions, rather than by state legislatures, provides further reason to give its terms their ordinary meaning.”[5] It is unlikely that the populace would have interpreted the text of the Amendment the way that the majority did, as people would have taken the plain text at face value.
Justice Thomas penned a separate and forceful dissent, in which Justices Rehnquist, Stevens, and O’Connor joined, arguing that the text of the Amendment could not be clearer. Under the Amendment, states have absolute authority to...
