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Supreme Court Rules Tennessee Residency Requirements for Retailers Unconstitutional

Supreme Court Rules Tennessee Residency Requirements for Retailers Unconstitutional

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In a case that attracted national attention, the U.S. Supreme Court, by a 7-2 decision, struck down Tennessee’s residency requirements for stores selling wine and spirits.

It’s a win for retailers looking to enter the state and for Tennesseans, who can expect more places to buy wine as well as more choices.

The court ruled in the case of Tennessee Wine & Spirits Retailers Association (TWSRA) vs. Russell F. Thomas that “Tennessee’s two-year residency requirement cannot be sustained… The provision expressly discriminates against nonresidents and has at best a highly attenuated relationship to public health or safety.”

How Tennessee’s case got to the Supreme Court

The case began when the TWSRA, which represents more than 500 retailers in the state, threatened to sue the Tennessee Alcoholic Beverage Commission (TABC) if it granted licenses to two retailers—the well-known chain Total Wine and Spirits and a mom-and-pop wine shop, Kimbrough Fine Wine & Spirits, in Memphis that Doug and Mary Ketchum had bought.

The Ketchums were in the process of moving to the state for their daughter’s health.

The TWSRA made good on their threat and sued Total Wine, the Ketchums and the TABC. The association argued that the 21st Amendment, ending Prohibition, gives states the right to regulate liquor sales by granting retail or wholesale licenses only to individuals or entities that have resided in-state for a specified time.

The 21st Amendment, according to the TWSRA, should outweigh the Commerce Clause, which gives the federal government the right to regulate interstate commerce.

“So, we went to federal district court, and we won there,” says Doug. “Then the [TWSRA] appealed it to the [U.S.] circuit court, and we won there.”

But it was only with the pro-bono help of the Institute for Justice that the Ketchums could have their day in the Supreme Court.

The outcome

“The ruling means the 21st Amendment is not a blank check and the states’ power to regulate alcohol is not unlimited,” says the Ketchum’s lawyer Michael Bindas. “States cannot discriminate in order to protect favored economic interests.”

It was a narrow ruling, according to Bindas, dealing only with whether retailers should be required to have a physical presence in the state.

“But the broad principle is that states cannot adopt protectionist laws and proclaim they are shielded by the 21st Amendment,” says Bindas.

That means Tennessee residents can expect to see more wine shops opening, and with the increased competition, more choices to be had.

Published on June 26, 2019




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