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Missouri Liquor Residency Requirement Upheld by 8th Cir.

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By Aditi Mukherji, JD on October 01, 2013 6:29 PM

Perhaps in celebration of the recent "Boardwalk Empire" season premiere, the Eighth Circuit Court of Appeals rejected a challenge to a Missouri law borne from the Prohibition era that requires state residency for alcohol wholesalers.

OK, so the ruling has nothing to do with "Boardwalk Empire" -- but it does have everything to do with alcohol.

Southern Wine & Spirits, the largest wine and spirits distributor in the United States, unsuccessfully argued that the Missouri's liquor residency requirement for wholesalers does not advance any legitimate state interest.

Missouri's Alcohol Wholesaler Residency Requirement

Missouri has a three-tier distribution system, which was put in place after Prohibition. To comply with the system, alcohol producers and suppliers must sell their products to wholesalers or distributors, who then sell the beverages to retailers. Under Missouri law, a wholesaler must be at least 60 percent owned by Missouri residents.

Southern Wine & Spirits, which has operations in 35 states, challenged the residency requirement. But the U.S. District Court for the Western District of Missouri granted the state's motion for summary judgment last year, reports the St. Louis Post-Dispatch.

Upon appeal, the Eighth Circuit affirmed the lower court's ruling and held the requirement advances a variety of state interests. "The legislature legitimately could believe that a wholesaler governed by Missouri residents is more apt to be socially responsible and to promote temperance, because the officers, directors and owners are residents of the community and this subject to negative externalities -- drunk driving, domestic abuse, underage drinking -- that liquor distribution may produce," the Eighth Circuit's ruling stated.

'Liquor Wars'

The main takeaway here is that Missouri has broad authority to regulate the liquor distribution system within its own borders, and that it has authority to require wholesalers to be Missouri residents.

Alcohol companies made an unsuccessful attempt in the most recent legislative session to revise the state's alcohol distribution system in a heavily financed lobbying effort dubbed by some in Jefferson City as the "liquor wars," reports The Associated Press.

As the liquor wars rage on, Southern Wine & Spirits should have no difficulty in procuring libations to drown its sorrows from the loss.

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