Supreme Court Toasts Economic Liberty in Tennessee Wine Case - Cheers!

This morning, in a win for wine-drinkers and freedom-lovers alike (but I repeat myself), the Supreme Court struck down a heavily restrictive Tennessee law that prevented anyone but longtime state residents from getting liquor licenses. The provisions required applicants for an initial license to have lived in the state for two years and for a renewal of that to reside for 10 years, and prevented corporations from getting licenses unless all stockholders were residents. This hurt both would-be small business owners and large distributors like Total Wine & More (one of the parties; full disclosure: I have reserve status in its loyalty program).

It’s terrific that a lopsided majority of justices (7-2) thus preserved economic liberty and interstate commerce, as against a flawed claim that the 21st Amendment (which repealed prohibition and gave states the power to regulate the importation of alcohol) somehow gives states the power to impose otherwise unconstitutional business regulations. As Justice Samuel Alito put it in his majority opinion, Section 2 of the 21st Amendment “is not a license to impose all manner of protectionist restrictions on commerce in alcoholic beverages.”

To put a finer point on it, states’ power to regulate alcohol doesn’t include the power to protect established businesses against newcomers that want to serve Volunteer State consumers. When a state law discriminates against interstate commerce or favors in-state economic interests over out-of-state interests, the Supreme Court has generally struck down the statute without further inquiry. This fundamental rule stems from the Framers’ concern that, left unchecked, states would enact commercial regulations favoring their own residents at the expense of non-residents. To prevent that type of differential treatment between state residents and non-residents, the Framers adopted both the Commerce Clause and the Privileges and Immunities Clause. As the Court has recognized, the clauses have a “mutually reinforcing relationship” that ensure citizens of their right to access the markets of other states on equal terms.

In legal terms, the negative or “dormant” Commerce Clause means that, just as Congress has the power to regulate (“make regular”) interstate commerce, states can’t interfere with that commerce. Now, Justice Neil Gorsuch (here joined by Justice Clarence Thomas) has other views, being skeptical of this unwritten or implied constitutional doctrine – and actually that’s the only constitutional jurisprudence on which I’ve ever found myself in disagreement with him. (Here Gorsuch adds a special solicitude for alcohol, given state practice after ratification of the 21st Amendment.)

In any case, the justices can now have a gulp of wine ahead of tomorrow’s climactic end to an otherwise low-key term. I, meanwhile, am off to Total Wine, which coincidentally just sent me a marketing email.

The case is Tennessee Wine & Spirit Retailers v. Thomas. See here for more background and to read Cato’s brief.