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.
The two-year residence requirement is being challenged by a literal mom and pop who moved to Memphis to own a liquor store, as well as by retail giant Total Wine, which is based in Maryland.
The oral argument, coincidentally, was held on the 100th anniversary of the ratification of the 18th Amendment, which banned the nationwide sale of alcohol from 1920 to 1933. The 21st Amendment, which ended Prohibition, returned the power over alcohol regulation to the states.
Justice Neil M. Gorsuch had the line of the day when he worried that the next step after getting rid of residency requirements — a majority of the states have them — would be expanded online sales of alcohol without state involvement.
Isn’t the next business model “to try and operate as the Amazon of liquor?” Gorsuch asked Washington lawyer Carter G. Phillips, representing Total Wine.
That might be Amazon’s dream, Phillips said. But Total Wine wants more bricks-and-mortar operations like the one it owns in Knoxville and in 22 other states.
The case requires the court to harmonize the 21st Amendment’s authorization to states to regulate distribution of alcohol within its borders with the dormant-commerce clause, which forbids states from erecting barriers to out-of-state economic interests.
Tennessee’s law says retail licenses may be issued only to those who have been “a bona fide resident of this state during the two-year period immediately” preceding application. Moreover, it requires those renewing the one-year license to have been a resident for a decade.
The state’s attorney general has written that the law is probably unconstitutional, and the state did not enforce it for six years. But a trade group, the Tennessee Wine and Spirits Retailers Association, objected to an out-of-state application in 2016 and is defending the law in court.
It lost at the U.S. Court of Appeals for the 6th Circuit, and the Supreme Court agreed to review it.
Washington lawyer Shay Dvoretzky, representing the retailers, said the 21st Amendment gave states “virtually complete control over how to structure the liquor distribution system” within their borders, and protected them from dormant-commerce clause claims.
Several justices, most vocally Sonia Sotomayor and Samuel A. Alito Jr., were skeptical.
Under questioning, 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?”
Illinois Solicitor General David L. Franklin represented more than 30 states supporting Tennessee, and he, too, received tough questioning.
Justice Elena Kagan proposed finding that the dormant-commerce clause applied would still allow states to defend their laws. They could, for instance, show that “we have real health and safety concerns here, and our law is well tailored to address those concerns,” she said.
Franklin resisted. That would still “embroil the courts in the kind of line drawing that the 21st Amendment was designed to relieve them of.”
Gorsuch told Phillips the case would be easy except that “alcohol has been treated differently than other commodities in our nation’s experience, for better or worse.”
Phillips, speaking for Total Wine and Doug and Mary Ketchum, the Utah couple who moved to Memphis to buy a liquor store, said the court need not settle all questions about the states’ powers to find that Tennessee’s law is extreme.
Kagan said it was not that easy.
“We’re leaving a lot of things for another day, but they all seem to be demanded by the principles that you’re asking us to adopt,” she said.
The case is Tennessee Wine and Spirits Retailers Assoc. v. Blair.