How the Tennessee Wine v. Byrd SCOTUS Case Could Impact Wine Shipments

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As previously highlighted, the Supreme Court is considering a challenge to Tennessee’s residency requirement, which mandates that state liquor retailers must be residents of the state for 2-9 years before opening a store. As Liza Zimmerman recounts for Forbes, the case could have profound implications on interstate wine shipments:

For the first time in more than a decade, the U.S. government has shown a willingness to reevaluate how wine and spirits are sold, both within and between various states in the country.

In fact, the case of Tennessee Wine and Spirits Retailers Association v. Clayton Byrd (Tenn. v. Byrd) represents only the second such move by the high court since the repeal of Prohibition in 1933.

When Prohibition was repealed, the U.S. government decided that the safest way to regulate alcohol sales was by giving each state the right to decide how wine and spirits were sold within its borders. That resulted in a fractured legal arrangement in which almost every state handled the sale and shipment of drinks differently…

The biggest issue about the case is how the court may reevaluate the legal intricacies of interstate shipping. Retailers, with brick-and-mortar locations in distant states, had long been allowed to ship into other states. This was a right that most store owners thought had been set in stone by the 2005 Supreme Court case of Granholm v Heald.

However, as retailers in certain states and wholesalers began to worry losing a share of their revenue to out-of-state players, they put more pressure on shipping services such as UPS and FedEx to follow the letter of the law to the finest degree. As of a year ago, the bulk of major interstate shippers have been shipping into only 14 states and the District of Columbia….

Read the whole article here.

Wineries in California Can Finally Post Pictures of Events on Social Media

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Under California’s antiquated tied-house laws, it was illegal for wineries to post photos on social media to advertise events like tastings at bars or restaurants. According to Wine Business, that is finally about to change:

California wine producers who want to promote an upcoming tasting at a hotel, bar, restaurant, wine shop or other licensed retailer in the state may soon be able to post a photo on social media of that venue before the event on social media. 

Assembly Bill 2452 which Gov. Jerry Brown signed into law on Sept. 22, gives wineries and alcohol producers the opportunity to post the photos ahead of the special event. The new law takes effect Jan. 1.

The bill was introduced to update tied-house rules that prohibited alcohol producers from posting photos of a venue hosting a special wine tasting event. Posting a photo of such a venue was prohibited advertising – an illegal gift of “something of value” to the retailer under “tied-house” rules. 

Assemblywoman Cecilia Aguiar-Curry, D-Winters, sponsored the bill, saying the tied-house law is outdated.

"In today’s world of technology, social media, and fast-paced communication, prohibiting a winery or brewery from utilizing the full scope of social media is a competitive disadvantage. By allowing the limited use of photographs and sharing of website information, A.B. 2452 brings the law into the 21st century,” Aguiar-Curry said in an email…

Read more here.

New Jersey Regulators Back Off Onerous Brewery Rules

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We reported last week that New Jersey was planning to implement onerous new rules on craft breweries, such as limiting the number of events they could host during a calendar year. But now the state’s Division of Alcohol Beverage Control has announced that it will delay enactment of the rules (at least for now):

More than a week after levying a special ruling against microbreweries in New Jersey, the state Division of Alcohol Beverage Control is putting new regulations directed to the industry on hold.

ABC Director David Rible announced Tuesday the division would not enforce the special ruling issued in September that issued new regulations to businesses holding a limited brewery license.

"We want to make sure that we get this right," Rible said. "We are committed to supporting the state's growing craft beer industry, while also balancing the concerns of other stakeholders and ensuring compliance with state law."

Rible says suspending the special ruling will once again allow the ABC, craft brewers, legislators, alcohol beverage license holders, and other people affected by the division's decision to continue discussions to see if changes need to be made to the 2012 law that paved the way for so many new microbreweries to open across the state…

Read the rest here.

Michigan's Out-of-State Wine Rules Struck Down Again

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In the landmark 2005 case of Granhom v. Heald, the U.S. Supreme Court ruled that Michigan’s law forbidding out-of-state wineries from shipping directly to Michigan consumers was unconstitutional. In the aftermath of the case, Michigan and other states interpreted the decision narrowly, declaring that while it applied to wineries, it did not apply to wine retailers. In a new lawsuit, a federal judge rejected this line of reasoning, as recapped by Wine Spectator:

After two years of legal volleys, lawyers challenging restrictions on wine direct shipping notched an important victory on Sept. 28. A federal judge in Michigan has ruled that the state's prohibition on direct-to-consumer wine shipping from out-of-state retailers is unconstitutional. If the ruling stands, Michigan residents will be able to purchase wine from stores anywhere in the country and have it shipped to their homes.

Robert Epstein, lawyer for Cap n' Cork, an Indiana chain of wine stores and plaintiffs in the case, hopes it is a bellwether for the shipping options of wine lovers across the country. "What has been accomplished is a first step in opening up shipping by retailers around the country to out-of-state clients," Epstein told Wine Spectator.

Lebamoff Enterprises, Inc. et al v. Snyder et al is one of three similar cases undertaken by the Indianapolis-based law firm Epstein, Cohen, Seif & Porter. The other two were filed in Illinois and Missouri. In each, the plaintiffs argue that state bans on out-of-state retailer direct shipping violate the U.S. Constitution's dormant Commerce Clause and Privileges and Immunities Clause…

Read more here.

Oklahomans Finally Can Enjoy Strong Beer

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The moment Oklahomans have long been waiting for is finally here. Grocery stores and gas stations in the state are now officially allowed to sell wine and stronger-ABV beer, as TulsaWorld reports:

Moments after the clock struck midnight Monday, two young women approached QuikTrip cashier Tou Yang to purchase some full-strength Pacifico beer.

The women had stopped in because they were hungry, Yang said, but when they learned they would be the first customers at the 51st Street and 129th East Avenue store to legally buy stronger beer, they headed to the coolers in the back.

“They were pretty stoked, actually,” Yang said.

Most grocery stores and convenience shops will now offer cold, strong beer and wine after changes to Oklahoma’s liquor laws took effect Monday. Along with signifying the end of 3.2 beer, the changes allow liquor stores to refrigerate beer, sell nonalcoholic items and stay open longer, among myriad other changes

Read the rest here.

Tennessee's Liquor License Residency Requirement Heads to SCOTUS

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Tennessee law requires owners of retail liquor licenses to have resided in the state for multiple years before being able to obtain a license. A court case challenging this residency requirement has been working its way through the court system for several years, and last week the U.S. Supreme Court agreed to hear the case. Shanken Daily News reports:

The Supreme Court of the United States has agreed to take on the case involving Total Wine & More’s entry into the Tennessee market, which the Tennessee Wine and Spirits Retailers Association (TWSRA) is fighting on the grounds that Total hasn’t fulfilled the state’s residency requirements. Total Wine asserts that Tennessee’s residency requirement is discriminatory against out-of-state residents and therefore in violation of the Constitution’s Dormant Commerce Clause.

Under Tennessee law, corporations and other business entities may not obtain a retail liquor license unless every director, officer, and shareholder of the business has been a Tennessee resident for at least nine years. Total Wine challenged the law successfully on Commerce Clause grounds in both federal district and appeals courts, and noted in its brief to the Supreme Court that Tennessee’s own attorney general “twice opined that this residency statute violated the Dormant Commerce Clause and could not be enforced.” In the meantime, Total was granted a license by the Tennessee Alcoholic Beverage Commission and opened its first store in Knoxville earlier this summer...

Read the rest here.

New Jersey Slaps New Rules on Craft Breweries

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Last week, the New Jersey Division of Alcohol Beverage Control issued a “special ruling” that imposes a bevy of limits and restrictions on craft breweries in the Garden State. NJ.com details the changes:

Say goodbye to weekly trivia nights, food truck Fridays and Eagles on the TV at your local craft brewery.

A new ruling issued by the state cracks down on what brewery owners will be allowed to do and now requires them to obtain special permits from the state — a decision that the craft beer supporters in New Jersey say will severely set back the burgeoning industry. However, restaurant and bar advocates say the rules will put brewery owners more in line with others in the alcohol industry.

The “special ruling” issued Monday by the New Jersey Division of Alcohol Beverage Control will affect the 88 limited breweries that are now operating in the state — many of which have opened since the state relaxed some of its laws in 2012 — as well as the 23 operations who have applications pending…

Some of the changes breweries are facing include the following:

  • Breweries can now only hold 25 “special events,” such as paint and sip nights, trivia nights, live televised sporting events and live music nights.

  • Breweries are limited to 12 special permits a year to sell products off the brewery premises such as festivals, athletic events, and other civic events.

  • Breweries are limited to 52 private parties (birthdays, weddings, anniversaries) a year.

  • They must electronically notify the ABC 10 days prior to holding the event

The breweries did gain the ability to sell items such as water, soda, pre-packaged crackers, chips, nuts and other similar snacks.

Customers can still bring in their own food, but the brewery can no longer have restaurant menus available, or coordinate with other vendors, such as food trucks, to provide food…”

Read more here.

A New Challenge to Florida's Wall of Separation Law

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Early last year, Florida lawmakers tried to repeal an antiquated state law requiring any grocery or chain store wishing to sell distilled spirits to do so in a separate retail location away from other products. The so-called “Whiskey and Wheaties” reform bill passed the state legislature, only to be vetoed by Gov. Rick Scott. R Street testified in favor of the reform bill and wrote several op-eds on the issue (here and here). Large retailers such as Wal-Mart and Target have now initiated an administrative challenge in an effort to get the law overturned:

Target and Walmart are heading to court to get an administrative law judge to give them what Gov. Rick Scott wouldn’t: The ability to sell whiskey and Wheaties in the same store. 

The big-box retailers late Monday filed an administrative challenge against the state’s Division of Alcoholic Beverages And Tobacco (ABT).

At issue: The state’s obscure, 24-year-old “Restaurant Rule,” which restricts eateries and other businesses that have ‘consumption on premises’ liquor licenses from selling anything other than items “customarily sold in a restaurant.” The plaintiffs say the rule is “not supported by logic or necessary facts.”

For over eight decades, Florida law — enacted after Prohibition — has required retailers to sell hard liquor in a separate store, though beer and wine can be sold in grocery aisles…

Read the rest here.


Maryland Booze Laws Task Force 2.0

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As covered previously, Maryland convened a task force last year—led by outspoken state comptroller Peter Franchot—that recommended an ambitious package of reforms to the state’s outdated and anticompetitive alcohol laws. Given Franchot’s outspoken nature, the recommendations created a bit of a firestorm in Annapolis, and even led resistant state legislators to float the idea of stripping Franchot’s office of its power to oversee alcohol regulation in the state. Now, rather than adopting the recommendation’s of Franchot’s task force, Maryland has convened a new one:

A new task force is reviewing alcohol regulations in Maryland, and the members are looking at everything from production and sales to the impact of alcohol on public health.

But mainly, they'll be looking at whether it's the Office of the Comptroller that should continue regulating the industry and enforcing liquor laws.

The Task Force to Study State Alcohol Regulation, Enforcement, Safety and Public Health results from legislation passed by the Maryland General Assembly this year. It includes legislators, designees of the state Health Department and Maryland State Police and representatives of the Licensed Beverage Association, Mothers Against Drunk Driving, the medical community, manufacturers, wineries and craft brewers, local law enforcement and members of the public…

Read more here.


R Street's Jarrett Dieterle Interviewed About Illinois Beer Reform

  IL Gov. Bruce Rauner

IL Gov. Bruce Rauner

Illinois recently enacted legislation allowing breweries in the state to offer products from outside alcohol producers, such as other nearby cideries or breweries. R Street’s Jarrett Dieterle was interviewed by the Heartland Institute about the law:

C. Jarrett Dieterle, a senior fellow with the R Street Institute, says the previous requirement was derived from an outmoded, government-mandated scheme of alcohol transport and sales.

“It all is derivative of the three-tiered system of alcohol distribution," Dieterle said. “There are different manifestations of the three-tiered system, but the general idea is that producers—the brewers and distillers of the world—produce the alcohol and then the distributers distribute it, and then the retailers sell it in stores, restaurants, taprooms, or pubs. The Illinois law was a vestige of that system, in a particularly stringent form, where basically the brewers had to go through a distributer to sell their own beer in their own taproom.”…

More freedom of distribution means more choices for consumers, Dieterle says.

“If you go to a brewery and all they can sell is beer, a gluten-free person can’t drink there, but if they’re allowed to sell cider from a cidery down the road, then it creates a better experience and helps the brewery and the cidery,” Dieterle said. “It’s a beneficial arrangement where the biggest winner is the consumer.”…

The whole article is available here.