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US Supreme Court overturns Tennessee alcohol law in landmark ruling

The US Supreme Court has ruled that the current protectionist alcohol licensing laws in Tennessee are “unconstitutional” in a move that could have wider implications for interstate wine sales across the country.

Wide View of the United States Supreme Court with American Flag – Washington DC

In a ruling on Wednesday (26 June), the Supreme Court overturned a law in Tennessee which effectively prevented alcohol retailers not resident in the state from setting up operations.

The case, Tennessee Wine & Spirits Retailers Association v. Blair, was brought about when major US retailer Total Wine & More attempted to open a site in the state of Tennessee. In response to Total Wine’s efforts, a group of existing retailers within the state banded together to try and block the move arguing that that the law required licence holders to be resident in the state for a period of time.

Before this ruling, those applying for an alcohol licence must have been a resident in Tennessee for two years before getting an initial license. The initial licence expired after one year, after which the person must have been resident in the state for 10 consecutive years in order to renew.

The ruling noted: “Because Tennessee’s 2-year residency requirement for retail license applicants blatantly favours the State’s residents and has little relationship to public health and safety, it is unconstitutional.”

It also commented that the rule for corporations based outside of Tennessee wanting to set up in the state was “also extraordinarily restrictive”.

“A corporation cannot get a retail license unless all of its officers, directors, and owners of capital stock satisfy the durational-residency requirements applicable to individuals. In practice, this means that no corporation whose stock is publicly traded may operate a liquor store in the State,” it said.

The court added that the Tennessee Wine & Spirits Retailers Association had exhibited an “overly broad understanding” of the law.

“The provision allows each State leeway to enact the measures that its citizens believe are appropriate to address the public health and safety effects of alcohol use and to serve other legitimate interests, but it does not license the States to adopt protectionist measures with no demonstrable connection to those interests,” it said.

The case was first heard in the Supreme Court back in January. Many believe that if the residency requirement is overturned, it might open up the possibility of interstate wine sales across the US, something effectively banned since Prohibition was repealed in 1933 and the 21st Amendment was signed allowing states to regulate sales and shipment of alcohol.

However, others argue that it will take more to challenge the existing three-tier alcohol sales system in the US. 

A previous case heard in 2005, Granholm v. Heald, gave wine producers permission to sell and ship their products to out-of-state customers. US commentators have stated that Total Wine’s case could mean that this permission would be extended to retailers.

Total Wine’s case was backed by the National Association of Wine Retailers and others, including a group of 81 consumers who filed a brief in support. 

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