Wine & Spirits Daily // June 28, 2019
On June 27, 2019, the US Supreme Court struck down Tennessee’s residency requirement to obtain a liquor license in the Tennessee Wine and Spirits Retailers Association v. the Tennessee Alcoholic Beverage Commission (and Total Wine & More) case [see WSD 06-26-2019].
TRADE GROUP RESPONSES A MIXED BAG
The Wine & Spirits Wholesalers of America said they disagree with the ruling, but are glad that the opinion advocated for the importance of the three-tier system and the role it plays in public health and safety. Your editor got on the horn with WSWA chief Michelle Korsmo to discuss it further.
“WSWA’s position has long been that the states have the authority to determine how best to regulate alcohol within their borders,” Michelle tells WSD, adding that Tennessee’s two-year residency requirement was “within the state’s authority” because “that was part of what the 21st Amendment was about. The opinion that came down from the court looked at it differently.”
“In the next few years, we’ll go through that process of figuring out what it all means and how it applies to specific situations,” she says, adding that in the dissent, penned by Justice Neil Gorsuch, he “really questioned whether or not the court was helping bring clarity to the system.”
When asked what her biggest takeaway from the ruling is, she said, “for me, the critical aspect of health and safety in the states’ regulations of beverage alcohol.”
“It takes time for it to all work out and it’s an evolution,” she says, “I think that it’s reasonable for us to assume that this is a new lens and a new filter through which beverage alcohol regulation is judged.”
Similarly, the American Beverage Licensees also disagrees with the ruling. “It is disappointing that the Court did not recognize the full weight of the Twenty-first Amendment and the societal intent of the Tennessee residency laws when balanced against the Dormant Commerce Clause,” says ABL executive director John Bodnovich in a statement.
ABL notes that the majority opinion did acknowledge the limit of its ruling: “Because we agree with the dissent that, under [Section 2], States ‘remai[n] free to pursue’ their legitimate interests in regulating the health and safety risks posed by the alcohol trade, each variation must be judged based on its own features.”
“In light of the ruling, and as we look to what the future may hold for the retail alcohol community, accountability, transparency and compliance will be of the utmost importance,” says John.
Meanwhile, the National Beer Wholesalers Association did not explicitly say whether or not they agree or disagree with the ruling. Rather, the group focused on the fact that the court pointed out the importance of the three-tier system.
“The Court was deliberate in clarifying that this case was not a ruling on the three-tier system. It reaffirms that the basic model and essential features of the three-tier system are legitimate,” says NBWA chief Craig Purser. “It recognizes that requiring industry participants to be physically present in the states where they operate – something NBWA believes to be essential to the three-tier system – is legitimate as well. More broadly, the court’s decision establishes a framework for state regulators and responsible industry participants to advance and support legitimate state laws that are essential to an orderly alcohol marketplace.”
On the other hand, the National Association of Wine Retailers is over the moon with the ruling.
“The decision is a historic wine for both free trade and wine consumers across the country,” says NAWR executive director Tom Wark. He goes on to say that “while we expect the opponents of free trade and supporters of protectionism to fight this evolution in the American marketplace, we are equally confident that this Supreme Court decision will lead to greater access to the hundreds of thousands of wines many consumers do not currently have access to due to protectionist wine shipping laws.”