Missouri has a general tied-house statute and has two regulations that prohibit certain types of advertisements: (1) prohibits retailers from advertising discounted prices for intoxicating liquor outside of their establishments; (2) prohibits retailers from advertising prices below the retailers’ actual cost. Advertising discounted prices or below-cost pricing is allowed inside of the retail establishment.
Missouri argued that the tied-house statute does not implicate the First Amendment and, even if it implicates the First Amendment, it passes the Central Hudson test for commercial speech, and that the advertising regulations are constitutional under Central Hudson.
The 8th Cir. found that “although the [tied-house statute] on its face does not restrict speech, its practical operation restricts speech based on content and speaker identity. The [tied-house statute] imposed content-based restrictions by limiting what producers and distributor can say in their advertisements.
The court further found that the tied-house statute “also restricts speech based on speaker identity because it allows retailers – but not producers or distributors – to run certain advertisements. Because the tied-house statute “imposes a burden on the content of speech and the identity of the speaker,” it implicates the First Amendment.
The court then looked to whether Missouri met the burden of identifying a substantial interest that justifies the challenged restriction. Missouri contended that it has a substantial interest in preventing producers and distributor from unduly influencing retailers. The court found that Missouri failed to show how the tied-house statute, as applied, alleviated to a significant degree the harm of undue influence – “Missouri has not demonstrated that the harm of undue influence is real or that the [tied-house statute] alleviates this harm to a material degree.” The court also looked to the many exemptions from the restrictions and concluded that “[a] statutory framework with such advertising exemptions and inconsistencies renders the [tied-house statute] as applied ineffective in preventing undue influence ‘in a direct and material way.’” Note: Missouri Broadcasters presented undisputed evidence showing that alcohol consumption actually decreased by 15% while overall alcohol advertising expenditures increased by approximately 400% over the last 30 years.
With respect to the regulations, the court agreed with the district court that “the State offered no empirical or statistical evidence, study, or expert opinion demonstrating how these regulations further protected the State’s interest.” The court also pointed to the fact that “Missouri did not present any evidence showing overconsumption or underage drinking is less frequent in Missouri than in states without similar advertising restrictions….Nor did it produce evidence that the rate of overconsumption or underage drinking decreased when the regulations were adopted.”