Retailing

Kosar and Dieterle on the Meaning of the Tennessee Wine SCOTUS Case

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As we noted last week, the Supreme Court struck an important blow for freedom in its Tennessee Wine v. Thomas decision, which held that Tennessee’s requirement that liquor store owners be residents of the state was unconstitutional. R Street’s Jarrett Dieterle and Kevin Kosar explain in a piece for USA Today how the implications of this decision could be far reaching, especially when it comes to direct-to-consumer alcohol shipping:

Just after the 100th anniversary of Prohibition’s start — and over 85 years since its repeal — Americans could be forgiven for assuming that government remains blissfully removed from their cocktail glass. Unfortunately across the country, states and local governments still enforce a bevy of outdated and oftentimes downright silly alcohol laws. While these laws have proved notoriously difficult to get rid of, a new Supreme Court decision issued could spell the end for a broad swath of cronyist and antiquated booze rules — and perhaps be the first step toward a more national alcohol marketplace…

The court’s holding might seem limited to the unique circumstances of Tennessee’s law, but it has the potential to be a game changer in the world of booze. The biggest change could involve the shipment and transportation of alcohol.

Unlike just about every other product on the market today — nearly all of which can arrive at your door in two days — direct-to-consumer alcohol shipping is incredibly limited. While a previous Supreme Court case allowed wineries to ship their bottles to consumers in neighboring states, very few states allow out-of-state retail stores — not to mention breweries and distilleries — to engage in interstate shipments.

Under the logic of the court’s holding in Tennessee Wine, however, allowing in-state shipments of alcohol while forbidding out-of-state shipments violates the Constitution. If more of these laws are challenged accordingly, it could mean that a Michigander could soon be able to have her favorite Vermont beer shop send IPAs directly to her door…

Read the whole piece here.

The Supreme Court Just Struck a Blow for Alcohol Freedom

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The Supreme Court finally released its long-awaited decision in Tennessee Wine v. Thomas this week. The case involved a challenge to Tennessee’s “durational residency requirement” law, which said that in order to operate a retail alcohol store in Tennessee, the store owner must have been a resident of the state for 2 years. And in order to renew the license, which was required annually, the owner needed to be a resident of the state for 10 years. The law even required that all officers and directors of companies that ran alcohol retail stores—as well as 100% of all stockholders—to be state residents.

The Court, in a 7-2 decision, struck down the Tennessee law for violating the U.S. Constitution’s so-called Dormant Commerce Clause. To put it simply, this doctrine holds that states cannot discriminate against out-of-state economic interests while favoring in-state economic interests. The Tennessee residency requirement obviously favored in-staters over out-of-staters, but the law’s defenders argued that the 21st Amendment to the U.S. Constitution (which repealed Prohibition but granted broad powers to state governments to regulate alcohol) immunized laws like Tennessee’s from constitutional scrutiny. While the Court emphatically rejected that argument, its holding also could have broader implications:

Before Americans can enjoy a nationally cohesive alcohol shipping marketplace, however, much work remains. Many states still discriminate against out-of-state retailers interested in shipping alcohol—laws which will almost certainly be challenged in light of the Court’s decision. And nearly every state still labors under a three-tier system of alcohol distribution, which mandates a role for wholesalers when it comes to most alcohol sales. Furthermore, the U.S. Post Office forbids the shipment of alcohol entirely (although some private carriers permit it).

Therefore, governments around the country will have to take proactive steps to liberalize their alcohol shipping laws and streamline them in a way that makes interstate alcohol shipping more achievable. But for now, the Supreme Court’s decision in Tennessee Wine can be seen as an early step toward a more robust interstate shipping market for booze.

DrinksReform.org will have more coverage of the Tennessee Wine case and its aftermath in the weeks ahead!

Texas Passes Brewery and Liquor Store Reforms

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Texas is known for its arcane alcohol rules, including its infamous “consanguinity exception,” which restricts the number of liquor stores an individual can own to 5 outlets, but then creates a loophole that allows family members to join together to own more. The state also was known for prohibiting breweries from selling to-go beer. Both those restrictions have no been loosened by recent legislation, as reported by the Texas Tribune:

Texas on Saturday joined the rest of the nation when Gov. Greg Abbott signed a law letting adults buy beer to go from home-grown craft breweries.

Smaller brewpubs already can sell beer to go. Abbott's action means that beginning on Sept. 1, the state's giving that right to breweries, too…

[The legislation also] expands the number of liquor store permits that an individual can own, getting rid of a loophole that favored blood connections. However, publicly traded companies like Walmart, Costco, Walgreens and Kroger still won't be permitted to sell liquor in Texas. That issue's now pending before the 5th U.S. Circuit Court of Appeals.

Also, a push to amend HB 1545 to let stores sell wine and beer on Sundays starting at 10 a.m. rather than noon failed, as did a separate proposal to allow liquor sales on Sundays…

Read more here.

Utah Partially Repeals Its Weak Beer Laws

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In December of last year, R Street’s Jarrett Dieterle took to the pages of The Salt Lake Tribune to call on Utah politicians to scrap the state’s ‘weak beer’ law, which forbids grocery stores from selling beer over 3.2 percent alcohol by weight. According to the Tribune, Utah lawmakers have reached a deal to raise the limit to 4.0 percent, although they were unable to secure a full repeal:

Utah lawmakers have struck a deal to let higher-alcohol beer be sold in Utah grocery and convenience stores.

House members signed off on the measure Wednesday by a 61-14 vote, sending the bill back to the Senate for a final vote that is expected to occur Thursday.

This second substitute bill would boost the cap on retail beer from 3.2 percent to 4 percent by weight, a level that would include the majority of beer that already is in retail outlets, said bill sponsor, Sen. Jerry Stevenson, R-Layton…

The initial version of SB132 would have hiked the alcohol limit on retail beer from its current 3.2 percent by weight to 4.8 percent. Utah’s predominant faith, The Church of Jesus Christ of Latter-day Saints, opposed that plan.

Last week, that proposal, which already had been approved by the Senate, was gutted by a House committee and replaced with language that would create a task force to study the issue.

Wednesday’s version is a blend of the two bills. 

Read the rest here.

R Street: It's Time for Texas to Permit Sunday Liquor Sales

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We recently discussed West Virginia’s passage of legislation legalizing Sunday liquor sales, and now Texas is considering doing the same thing. R Street’s Josiah Neeley, a resident of the Lone Star state, wrote for the American Spectator about why Texas lawmakers should embrace this reform:

Texas laws governing alcohol have their own quirks. Take Sunday sales, for example. Texas is one of a handful of states that maintains a ban on certain types of alcohol sales on Sundays. Whatever the original motivation of the Sunday sales ban, the current version is so shot through with exemptions as to make it arbitrary and senseless. Sales of hard liquor on Sunday are prohibited, but only if they are for off-site consumption. Bars can still serve hooch, and stores can still sell wine and beer. It goes without saying that you can still buy as much liquor as you want on Monday through Saturday and then drink it on Sunday…

Folks who favor economic liberty want these anachronistic rules wiped away. Meanwhile, voters worried about Texas’ public coffers can also take heart—permitting drinks sales each day of the week may generate more sales tax revenue. And consumers certainly would like these needless hassles eliminated.

While modest, bills like these are a sign that Texas’ attitudes towards liquor aren’t encased in amber. Times change, and the laws governing drinks should reflect that…

Read the whole piece here.

Connecticut Considers A Pair of Beer Bills

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After anti-brewery legislation that would have forced state brewers to choose between off-premises and on-premises sales was killed earlier this year, Connecticut lawmakers are now considering several pro-beer bills. According to the Hartford Courant, these would include bills to increase the amount of off-premise beer brewers can sell and allow larger retailers to sell beer in the state:

Advocates for craft brewers and distillers, distributors, restaurants and package stores showed up a legislative hearing Thursday to voice their concerns and support regarding several proposed bills they say will have an impact on their businesses.

Key among the proposed legislation is a bill that would increase the amount of beer craft brewers can sell for off-premises consumption from 9 liters to 23 liters per day…

Another proposed change would allow big-box stores such as Target and Walmart to sell beer…

Read more here.

Texas Legislature Considers Reforming "Blue Laws"

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Under current Texas law, liquor stores (but not grocery stores and other retail outlets) are prohibited from opening on Sundays. According to ABC 7, state lawmakers are considering repealing this antiquated blue law:

New legislation introduced in the Texas House would repeal so-called "blue laws" and allow liquor stores to open on Sunday.

State Rep. Richard Peña Raymond, D-Laredo, has introduced House Bill 1100, which would allow package stores (a.k.a. liquor stores) to be open seven days a week…

42 states allow the sales of spirits on Sunday. Texas already allows Sunday sales of all other alcohol beverages for all other retailers, including bars, restaurants, clubs, grocery and convenience stores and hotels…

Read more here.

R Street's Jarrett Dieterle Explains Tennessee Wine v. Blair SCOTUS case

Oral arguments were held yesterday in the important Supreme Court case challenging Tennessee’s durational residency requirement for liquor licenses (for more on how the oral arguments went see here). The case involves the intersection of the U.S. Constitution’s 21st Amendment and the Dormant Commerce Clause, and R Street’s Jarrett Dieterle filmed the following short explainer video about the case for the Federalist Society:


SCOTUS Hears Oral Arguments In Tennessee Wine v. Blair

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On Wednesday, the Supreme Court heard oral arguments in the important alcohol case challenging Tennessee’s durational residency requirement (previously discussed on DrinksReform.org here). The Tennessee law at issue requires liquor retailers in the state to have had an in-state presence for 2 years before they will be granted a license (and an in-state presence of 10-years in order to be able to renew the license each year). According to the Washington Post, several of the Justices expressed skepticism toward the Tennessee law:

Supreme Court justices indicated Wednesday that they thought Tennessee’s tough residency requirements for those who want to run liquor stores have more to do with protecting in-state economic interests than guarding against the evils of alcohol.

But they also wondered how far they could go, since the Constitution gives states an especially pivotal role in regulating booze…

Several justices, most vocally Sonia Sotomayor and Samuel A. Alito Jr., were skeptical.

Under questioning, [Tennessee Wine attorney] Dvoretzky said neither a 10-year residency requirement nor a hypothetical requirement that an applicant’s grandparents be residents would be a violation of the dormant-commerce clause, nor even a statute that said the restriction was for the “exclusive purpose of protecting in-state retailers.”

Justice Brett M. Kavanaugh said the text of the constitutional amendment gives the states power over the “transportation or importation” of liquor into their states. “Why isn’t that most naturally read to allow states to remain dry . . . but not to otherwise impose discriminatory or, as Justice Alito says, protectionist regulations?” [More here].

As the popular SCOTUSBlog noted, however, it’s still unclear how the case will ultimately come out since several of the Justices were silent and Justice Ruth Bader Ginsburg was absent from the hearing. A final decision from the Court is expected by the summer.

For more on the case and what it entails, check out this explainer video R Street’s Jarrett Dieterle filmed with the Federalist Society.

The Good and Bad of Recent Colorado Alcohol Reforms

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Colorado’s recent reform to allow grocery stores to sell beer stronger than 3.2 percent took effect on January 1st of this year. While this ushered in a much-need change, Derek Draplin for Watchdog.org detailed another provision of the reform that’s more problematic (and interviewed R Street’s Jarrett Dieterle about is as well):

Other parts of the new law could spell trouble for smaller retailers, such as those in rural areas or mom-and-pop restaurants that currently sell carry-out cans of 3.2 percent alcohol beer in addition to serving beer.

SB 243 eliminated "on-off premise licenses," which allowed retailers to sell beer for consumption off-site, like a 6-pack of the 3.2 percent beer, and also sell and serve beer, like at a restaurant. The new law requires retailers to pick between the two types of licenses.

Small mom-and-pop retailers like The Last Stand in Weldona now face a tough choice if a legislative fix doesn’t come soon…

Jarrett Dieterle, director of commercial freedom policy for the R Street Institute, which runs the alcohol policy website DrinksReform.org, told Watchdog that flexible licensing schemes are important for localities and states to adopt.

“In general, states and localities should consider ways to increase the flexibility of alcohol licensing options,” Dieterle said. “Creating more flexibility and less rigidity in licensing schemes would allow different types of establishments to adopt models that work for them and their communities.”

Read the rest here. A bill to fix this problem and allow on/off-premise beer licenses in rural areas was just introduced in the Colorado legislature.