Contraband Cabernet

Yesterday the U.S. Court of Appeals for the 2nd Circuit upheld New York state's ban on direct shipment of alcoholic beverages to consumers from out-of-state suppliers. Two dozen states maintain such bans, which, among other things, prevent wineries in other states from selling directly to the public. For small wineries, that is often the only viable method of distribution.

A district court had overturned New York's ban, finding that it exceeded the state's authority under the 21st Amendment (which repealed Prohibition and gave states special permission to regulate alcohol sales) and erected a trade barrier that violated the Commerce Clause. The 2nd Circuit disagreed, finding that the ban is not mere protectionism but "serves valid regulatory interests" by making sure that all distributors are licensed and have a physical presence in New York.

Three other appeals courts have overturned similar bans in North Carolina, Texas, and Michigan, setting up a conflict that the Institute for Justice, which brought the New York case, expects the Supreme Court to resolve. I.J.'s Clint Bolick predicts "this decision will be a momentary blip on the legal radar screen."