Monday, May 16, 2005

A Victory for Free Interstate Commerce

The Supreme Court ruled that states that allow in-state wineries to sell directly to its citizens must allow out-of-state wineries to do the same. Link.
The court said the state bans are discriminatory and anticompetitive.

"States have broad power to regulate liquor," Justice Anthony Kennedy wrote for the majority. "This power, however, does not allow states to ban, or severely limit, the direct shipment of out-of-state wine while simultaneously authorizing direct shipment by in-state producers."

"If a state chooses to allow direct shipments of wine, it must do so on evenhanded terms," he wrote in an opinion joined by Justices Antonin Scalia, David H. Souter,
Ruth Bader Ginsburg and Stephen G. Breyer.

The ruling means that legislatures in the 24 states barring out-of-state shipments will have to review their laws to make sure in-state and out-of-state wineries are treated equally. As a result, states could choose to allow wineries to sell to consumers directly, but could also bar all wineries from doing so.

This was a good call by the Court. The 21st Amendment, which ended Prohibition, gave states the power to regulate alcohol sales in the state. However, the Commerce Clause requires that states do not discriminate against interstate commerce. Taken together, these two portions of the Constitution mean that states can ban alcohol sales outright, ban certain types and allow others, and throw any other restriction they want at the industry, as long as it applies to all sellers, not just ones in the state or ones out of the state.

I have lived in several states and have seen the effects of different regulation. Alcohol was the cheapest in states where you could buy beer, wine and liquor in the supermarket. Beer and wine were reasonable, but liquor was outlandishly expensive in states where liquor could only be sold in state owned stores, or where liquor stores could only buy their supplies from a state wholesale monopoly .I also lived in one area where alcohol could be sold in bottles, but liquor by the drink was banned. These are all acceptable alternatives of the power granted by the 21st Amendment. However, no state could say, "You can buy this brand in the supermarket at whatever price they choose to charge, but this brand you must buy from our monopoly at double the price available in neighboring states." It would be no different if instead of "brand" you substituted "wines from an in-state winery" and "wines from an out-of-state winery."


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