Alcohol regulation

The Twenty-First Amendment to the U.S. Constitution is famous because it repealed prohibition. The second section, which prohibits the transportation or importation of alcohol into a state in violation of state law, is less well-known. Despite this section’s broad language and the Supreme Court’s repeated affirmation that the states’ three-tier system of regulating alcohol (manufacturers sell to wholesalers; wholesalers sell to retailers; retailers to consumers) is constitutional, the Supreme Court has limited states’ ability to regulate the distribution of alcohol.

The question the Supreme Court will decide in Tennessee Wine & Spirits Retailers Association v. Byrd is whether Tennessee’s law requiring alcohol retailers to live in the state for two years to receive a license violates the Constitution’s dormant Commerce Clause. The dormant Commerce Clause prevents states from “discriminat[ing] against interstate commerce” or “favor[ing] in-state economic interests over out-of-state interests.”

According to Tennessee Wine & Spirits “[a]t least twenty-one States impose some form of durational-residency requirement for liquor retailers or wholesalers. And many States impose other residency-based requirements on those entities.”