If you work in the beverage-alcohol industry, you probably have heard someone at some point refer to the 2005 Granholm decision. In the Granholm case, to put simply, there were states that allowed in-state wineries to direct ship their wine to consumers in the same state, but prohibited out-of-state wineries from direct shipping to those consumers. Not surprisingly, the out-of-state wineries saw this as unfair, so they sued the states, arguing that the states’ laws prohibiting out-of-state wineries from direct shipments while allowing in-state wineries to directly ship to consumers violated the dormant Commerce Clause – and was merely a form of economic protectionism. The U.S. Supreme Court found that the states’ laws did violate the dormant Commerce Clause. From Granholm, we know that a state could not treat in-state suppliers different from out-of-state suppliers without being able to show a really good, justifiable reason for doing so, despite the powers granted to the states under the 21st Amendment. But the question remained as to whether the principles outlined in Granholm applied equally to retailers, particularly in light of the 21st Amendment.
This is where the case of Tennessee Wine and Spirits Retailers Association comes into play. The syllabus preceding the Court’s opinion provides a helpful and concise summary:
Note: The case did not decide the legitimacy of an in-state presence requirement.
How does this decision impact the industry? Well, for starters, it answers the question left open by Granholm as to whether the dormant Commerce Clause principles applied to producers in that case extend to the wholesale retail tier – that answer is yes, at least to an extent.
Moreover, “‘mere speculation’ or ‘unsupported assertions’ are insufficient to sustain a law that would otherwise violate the Commerce Clause,” and the Court apparently requires “concrete evidence” to show that a measure promotes public health and safety. Lastly, the Court requires “evidence that nondiscriminatory alternatives would be insufficient to further [public health and safety] interests.”
But the questions remain open of what constitutes “concrete evidence” or what evidence is sufficient to show that nondiscriminatory alternatives were unavailable.