Tennessee Wine and Spirits Retailers Association v. Thomas
139 S. Ct. 2449, 204 L. Ed. 2d 801 (2019)
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Rule of Law:
Section 2 of the Twenty-first Amendment does not permit states to enact durational-residency requirements for retail liquor-store licenses that discriminate against out-of-state interests. State laws regulating alcohol are not shielded from the dormant Commerce Clause if their predominant effect is economic protectionism rather than the advancement of a legitimate public health or safety interest.
Facts:
- Tennessee state law required applicants for an initial retail liquor store license to have been residents of the state for the preceding two years.
- The law also imposed a ten-year residency requirement for license renewals and required that all stockholders of a corporation seeking a license be state residents.
- In 2012, after the Tennessee Attorney General issued an opinion that the requirements were unconstitutional, the Tennessee Alcoholic Beverage Commission (TABC) stopped enforcing them.
- In 2016, Tennessee Fine Wines and Spirits, LLC (Total Wine), owned by Maryland residents, applied for a retail liquor license in Tennessee.
- Around the same time, Affluere Investments, Inc. (Affluere), owned by individuals who had only recently moved to Tennessee, also applied for a license.
- The Tennessee Wine and Spirits Retailers Association (the Association), a trade group of in-state liquor retailers, threatened to sue the TABC if it granted licenses to Total Wine and Affluere.
Procedural Posture:
- The executive director of the Tennessee Alcoholic Beverage Commission (TABC) filed a declaratory judgment action in a Tennessee state court to determine the constitutionality of the residency requirements.
- The case was removed to the United States District Court for the Middle District of Tennessee.
- The District Court held that the residency requirements were unconstitutional, siding with Total Wine and Affluere.
- The State of Tennessee declined to appeal the District Court's ruling.
- The Tennessee Wine and Spirits Retailers Association, which had intervened in the case, appealed the decision to the U.S. Court of Appeals for the Sixth Circuit.
- A divided panel of the Sixth Circuit affirmed the District Court, finding the two-year residency requirement for initial licenses unconstitutional.
- The Association (petitioner) sought, and the U.S. Supreme Court granted, a writ of certiorari to review the Sixth Circuit's decision.
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Issue:
Does Tennessee's two-year durational-residency requirement for applicants seeking a retail liquor-store license violate the dormant Commerce Clause?
Opinions:
Majority - Justice Alito
Yes, Tennessee's two-year durational-residency requirement violates the dormant Commerce Clause. The requirement blatantly favors the state's residents and is not shielded by Section 2 of the Twenty-first Amendment, as its predominant effect is economic protectionism with little relationship to public health and safety. The dormant Commerce Clause prohibits state laws that unduly restrict interstate commerce, particularly protectionist measures. While the Twenty-first Amendment grants states leeway to regulate alcohol for public health and safety, it does not immunize laws that discriminate against out-of-state economic interests. The Court's precedents, including Bacchus and Granholm, have established that protectionism is not a legitimate state interest under the Twenty-first Amendment. Tennessee failed to provide concrete evidence that the residency requirement serves public health or safety, and less discriminatory alternatives exist to ensure retailers are accountable and sell alcohol responsibly.
Dissenting - Justice Gorsuch
No, the Tennessee law does not violate the dormant Commerce Clause. Section 2 of the Twenty-first Amendment constitutionalized the Webb-Kenyon Act, thereby removing dormant Commerce Clause restrictions on state laws regulating the in-state distribution of alcohol. Historically, states have imposed residency requirements on alcohol retailers for over 150 years to ensure compliance with local laws and norms, a practice understood to be permissible after the amendment's ratification. The majority improperly second-guesses Tennessee's legislative judgment, which reasonably concluded that residency requirements promote accountability and responsible sales. The Court’s decision in Granholm was limited to discrimination against out-of-state products and producers and expressly preserved the state's authority to structure its in-state distribution system, which includes retailers.
Analysis:
This decision significantly curtails the power of states to regulate alcohol under the Twenty-first Amendment, extending the dormant Commerce Clause's nondiscrimination principle from producers (as in Granholm) to in-state retailers. The ruling invalidates protectionist residency requirements and signals that other state laws regulating alcohol distribution that favor in-state economic actors are vulnerable to constitutional challenges. It reinforces a framework where states must present concrete evidence that such discriminatory laws are necessary to achieve legitimate public health or safety goals, making it harder to defend laws whose primary effect is to insulate local businesses from competition. The decision will likely prompt litigation against other features of state-based, three-tiered alcohol distribution systems.
