The only commodity specifically addressed in the Constitution of the United States of America is alcoholic beverages. The Constitution explicitly grants the numerous states the authority to control the distribution and sale of alcohol within its borders. On occasion, the federal government steps in to interpret and define the constitutional language. Bird LLC v. Tennessee Wine and Spirts Retailers Association is currently before the Supreme Court of the United States and the outcome of the Court’s decision may have significant impact on the way alcohol beverage is sold in the United States.
Granholm v. Heald, a defining case in realm of alcohol beverage law, posited that wineries are permitted to direct ship to consumers (in contradiction to the firmly entrenched three tier system) in other states as long as the consumer’s home state permits its wineries to ship directly to its residents. Granholm paved the way for wineries to exploit new sales opportunities by reaching consumers through on-line marketing and sales. In fact, many retailers around the country jumped on the Granholm band wagon, setting up internet portals and began selling their wares across state lines.
But did Granholm explicitly permit such commercial activity in this highly regulated arena?
Advocates of the three tier system thought otherwise and mounted a counter offensive. Wholesalers around the country pressured their state legislatures to enforce anti-shipping regulations and put effective barriers in place for common carriers such as FedEx to deliver alcohol from retailers to consumers. As of this writing very few states permit direct to consumer sales from retailer to consumers (regardless of on-the-ground practices).
Enter our case at bar. The facts of the case are simple enough-Total Wine and More decided to open retail locations in Tennessee. Tennessee retailers pushed back against the behemoth pointing to state legislation that permitted only state residents to be licensed as retailers. The behemoth pushed back against the constitutionally of the law and now the issue is before the Supreme Court.
Of principle concern to alcohol law and industry observers is if and how the Supreme Court will re-evaluate interstate shipping as it relates to the matter at bar. A Granholm analysis will surely be brought to this case. Will the principle of the case be codified to include retailers and clearly and unmistakably permit direct to consumer sales from retailers to consumers in other states?
Advocates of the three tier system, namely wholesalers, are pushing back against the concept of direct to consumer sales by retailers. State legislators and alcohol regulators are on stand-by and may or may not align their laws with direct to consumer sales. Retailers are waiting in the wings to exploit this potential opportunity. Drinks lovers across the United States are waiting to exercise their free will and consumer choice and click on the “order” button of a retailer that may in business many thousands of miles away.
We shall see. Update to be provided once the Court issues an opinion.
