Wine retailers have issued a Petition for Writ of Certiorari to the Supreme Court and are hoping it will review the decision of the Fifth Circuit Court of Appeals in Wine Country Gift Baskets v. Steen. The Supreme Court’s prerogative will have a major impact on the future of direct-to-consumer sales and the discriminatory ability of states to legislate outside of the Commerce Clause when enacting laws regarding the sale of alcohol.
The primary issue in this case is the ability of out-of-state retailers to ship directly to consumers in Texas. Texas’ three-tier system allows for in-state retailers to sell directly to consumers, but treats out-of-state retailers differently and does not grant the same privilege. In Granholm v. Heald, the Supreme Court held that laws in which states discriminate between the ability of in-state and out-of-state wineries to sell wine direct-to-consumers was unconstitutional in light of Commerce Clause restrictions that favor equal treatment. The trial court in Gift Baskets agreed with this, stating in the opinion, “in all but the narrowest circumstances, state laws violate the Commerce Clause if they mandate differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” The purpose of the Commerce Clause is essentially to level the playing field between businesses by preventing states from insulating themselves and hindering the growth of interstate commerce in order to benefit in-state businesses.
The Court of Appeals, in a weak and largely unjustified opinion in the face of precedent set by Granholm, reversed the trial court decision in Gift Baskets. The opinion stated that due to the 21st Amendment, which ended Prohibition and placed the regulation of alcohol sales in the hands of states themselves, a law allowing in-state wine stores to sell directly to consumers but not out-of-state retailers could be enforced. Granholm held that even though the 21st Amendment vests the regulation of alcohol in the hands of states, the Commerce Clause still applies in situations of interstate commerce such as this.
The interplay between this case and the future of the controversial HR 5034 bill, which seeks to grant states the ability to avoid Commerce Clause restrictions, will dictate the freedom wineries and retailers have to sell to consumers going forward.
Tom Wark at the Fermentation blog, also the Executive Director of the Specialty Wine Retailers Association, has an excellent piece analyzing the current constitutional situation regarding HR 5034 and Gift Baskets, available here. The SWRA also released a press release on the recent petition to the Supreme Court.
Image credit to Simon Howden / FreeDigitalPhotos.net
Tags: commerce clause, Direct to consumer, Gift Baskets v. Steen, wine, wine law, wine retail
