Supreme Court

Supreme Court Strikes Down Nonsensical Tennessee Liquor Law

Tennessee's residency requirement for retail license applicants "blatantly favors the state's residents and has little relationship to public health and safety," Justice Alito wrote.

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Tennessee can no longer impose a two-year residency requirement for those seeking to obtain a retail liquor license, the U.S. Supreme Court ruled 7-2 Wednesday.

The case hinged on whether the 21st Amendment—which repealed Prohibition—gave states full regulatory reign over the sale of alcoholic beverages, no matter how protectionist their policies might be. Writing for the majority, Justice Samuel Alito said that it did not.

"Because Tennessee's two-year residency requirement for retail license applicants blatantly favors the state's residents and has little relationship to public health and safety, it is unconstitutional," he wrote.

That was good news for Doug and Mary Ketchum, who relocated to Tennessee in 2016 in order to run Kimbrough Wines & Spirits, a Memphis alcohol store the couple agreed to purchase while they still lived in Salt Lake City, Utah.

The couple wanted better air for their severely disabled daughter, Stacie, who suffered a collapsed lung while living in Salt Lake City. When they heard about a chance to buy Kimbrough Wines & Spirits, they applied for a license to run the store. Despite the fact that Tennessee had a law on the books requiring two years of state residency to obtain a liquor license, the Tennessee Alcoholic Beverage Commission agreed to approve their application and that of another out-of-state applicant, Total Wine. Tennessee's attorney general had, by that time, issued two opinions declaring the law unconstitutional.

Things were fine until the Tennessee Wine & Spirits Retailers Association—which lobbies for regulations that benefit state alcohol industry incumbents—sued the Tennessee Alcoholic Beverage Commission to stop both the Ketchums and Total Wine, a privately owned retail alcohol chain, from getting a Tennessee liquor license.

"In-staters are terrified that somebody like Total Wine is going to come in and compete with them," Institute for Justice attorney Anya Bidwell, who represents the Ketchums, tells Reason. The Retailers Association lost in the lower courts but kept appealing in hopes that they could block competition from out of state.

On paper, the law not only required that alcoholic retailers be in-state residents for two years in order to obtain a liquor license, but it also stipulated that they live there for 10 in order to renew. Liquor licenses require annual renewal, meaning that, if the Ketchums had succeeded in getting a license after their first two years, they would have lost it for the next seven.

In his dissent, Justice Neil M. Gorsuch said the majority was engaging in judicial activism and projecting their own policy prescriptions onto the 21st Amendment.

"Like it or not, those who adopted the 21st Amendment took the view that reasonable people can disagree about the costs and benefits of free trade in alcohol," he wrote. "Under the terms of the compromise they hammered out, the regulation of alcohol wasn't left to the imagination of a committee of nine sitting in Washington, D.C., but to the judgment of the people themselves and their local elected representatives."

The post-Prohibition era amendment ultimately repealed the ban on alcohol, but states also used it—and still do use it—to mold consumer behavior around the consumption of alcohol. Tennessee's liquor license requirements, passed in 1939, were no different.

"People don't realize there were still a lot of those pro-Prohibitionist forces at play in that era," C. Jarrett Dieterle, Director of Commercial Freedom at the R Street Institute, says. "There were still a lot of efforts to limit people's access to alcohol."

That's not lost on Gorsuch, who tipped his hat to pro-temperance regulation in his dissent. "Tennessee's residency requirement reduces competition in the liquor market by excluding nonresidents or recent arrivals," he wrote. "But even that effect might serve a legitimate state purpose by increasing the price of alcohol and thus moderating its use, an objective states have always remained free to pursue under the bargain of the 21st Amendment."

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  2. There he is….

    Gorsuch is good, but clearly not perfect. The state has no interest in trying to control alcohol consumption.

    1. Uh, he is perfect. The law is dumb and unfair, but not UNCONSTITUTIONAL.

      It’s a right reserved to the state

  3. Come on. With everything that has been dragged into the interstate commerce clause, a law explicitly banning one type of interstate commerce is somehow not going to get an unanimous judgement?

  4. The relevant part of the 21st Amendment is:

    “Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

    Let’s say this means they can prevent people like the Ketchums from importing booze from out of state.

    But what if they want to sell only Tennessee whiskey? Then what would be the conflict with the 21st Amendment?

    1. Here’s Gorsuch’s reply:

      “The Court suggests that Tennessee’s residency requirement may fall outside the terms of the Amendment because retailers may not be involved in the “transportation or importation” of liquor into the State. Ante, at 26. But the parties do not dispute that “transportation or importation” into the State is involved here. And understandably so: Unless the liquor stores intend to sell only Tennessee-made liquor (and no one so alleges), it is hard to see how transportation or importation would not be involved. “

      1. OK, then, it seems Gorsuch is right and alcohol is a clearly-intended exception to the general principle of a nationwide free-trade zone.

        In other words, by the terms of the 21st Amendment, alcohol is a special kind of product not subject to the usual Commerce Clause analysis.

        I’m not saying that was a good compromise back when the 21st was ratified, but there it is in black and white.

        1. “In other words, by the terms of the 21st Amendment, alcohol is a special kind of product not subject to the usual Commerce Clause analysis.”

          Just the same as medical care is some special kind of economic good.
          IJ wishes to disagree, and won in that disagreement; the bucks that used to go to Reason go to IJ instead.
          IJ ROCKS!

          1. “Just the same as medical care is some special kind of economic good.”

            Uh, what?

            1. Try again Eddy; you made the claim, I made the analogy. You seem confused.

              1. My claim was this – “by the terms of the 21st Amendment: – whose text I quoted – “alcohol is a special kind of product not subject to the usual Commerce Clause analysis.”

                Now explain the analogy to health care.

                1. Again, here is Amendment 21, Sec. 2:

                  “Section 2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”

                  Can you find the medical-care counterpart? Do you realize why you need to do this for your analogy to make any sense?

  5. alcoholic retailers? shouldn’t they seek treatment if they’re alcoholics?

  6. Reading Gorsuch’s opinion it seems that he doesn’t like the law, but feels the Constitution doesn’t give him the authority to rule it unconstitutional. I am not reading that he supports the law but rather he doesn’t feel the court has the authority to overturn the law. Not an ideal view from libertarian standpoint but from a Constitutional standpoint better than most justices, who seem opposed to judicial activism right up until it’s their pet cause being decided. His opinion still seems pretty consistent with his stated ideals. The 21A didn’t entirely undo the evils of the 18th. It was a compromise, and like most compromises, less than ideal.

  7. So scratch one more rent-seeking state law. How many more to go?

    1. No, the rent seeking is very much still present, only now it is not just for the exclusive benefit of TN residents.

    2. lol The rent seeking is the exclusive distributorships that almost every state has. A bar that runs out of beer can’t run and buy some from the Kroger next door like they can ketchup or lettuce

  8. Gorsuch is Hell bent on gutting government where he can….and it GREAT!

    Who knows how he would have voted if he needed to be the final vote of a majority in this case. He is clearly setting up the 21st Amendment clause giving states unlimited power over alcohol to be fully repealed if enough Americans get pissed off.

  9. That’s not lost on Gorsuch, who tipped his hat to pro-temperance regulation in his dissent. “Tennessee’s residency requirement reduces competition in the liquor market by excluding nonresidents or recent arrivals,” he wrote. “But even that effect might serve a legitimate state purpose by increasing the price of alcohol and thus moderating its use

    There it is, folks. A conservative’s full-throated defense of the rational basis test.

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