Court: Tennessee Liquor Law Violates Commerce Clause

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By William Vogeler, Esq. on June 26, 2019 3:06 PM

The U.S. Supreme Court struck down a Tennessee law that required retailers to have two years' residency before they could get a license to sell liquor in the state.

In Tennessee Wine & Spirits Retailers Association v. Thomas, the justices said the residency requirement violated the Commerce Clause. States may regulate alcohol sales, but they may not engage in economic protectionism.

The Supreme Court said the 21st Amendment, which repealed Prohibition and left alcohol regulation to the states, did not save Tennessee.

Impact Beyond Tennessee

The decision will have an impact far beyond the Volunteer State. According to reports, 34 other states have similar laws.

Total Wine, a national chain, successfully challenged the Tennessee law in federal court and opened a superstore in Knoxville with an assortment of more than 10,000 wines, spirits, and beers. The Tennessee Wine and Spirits Retail Association then petitioned the High Court to reverse the U.S. Sixth Circuit Court of Appeals.

In a 7-2 decision, the Supreme Court held that Tennessee's residency requirement violated the Commerce Clause. It is not shielded by the Twenty-first Amendment, the majority said.

"Because Tennessee's 2-year residency requirement for retail license applicants blatantly favors the State's residents and has little relationship to public health and safety, it is unconstitutional," Justice Samuel Alito Jr. wrote for the court.

Economic Protectionism

The decision voids Tennessee Code Section 57-3-204, which provides that a person must have been a bona fide resident for two years before applying for a liquor license.

A law in Illinois, which restricts out-of-state retailers in marketing and shipping liquor, faces a similar fate. The Seventh Circuit revived a lawsuit challenging that law last year, warning that states cannot engage in "unlawful economic protectionism."

Illinois argued that the 21st Amendment gave states the right to regulate liquor sales. The state law protects residents and "the economy of this State," the law says.

"The first reason touches the core of the Twenty-first Amendment, while the second smacks of protectionism," the Seventh Circuit said.

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