This week the Supreme Court handed an enormous victory to Total Wines in the Tennessee Wine and Spirts Retailers Association v. Thomas. Tennessee retailers attempted to restrict the right of Total Wines to open a megastore in Tennessee because it would violate a Tennessee law that required that an applicant for a liquor retail license to “have lived in Tennessee for at least two years”.

Total Wines is not the only likely winner in this case.

In a 7-2 decision with newly appointed Justice Neil Gorsuch and Clarence Thomas dissenting, Justice Samuel Alito writing the majority opinion, states “that the 21st Amendment gives states some leeway to regulate alcohol for legitimate reasons like protecting the public health and safety, but it does not sanction regulations that don’t have any connection to health and safety and are instead intended to shield state residents from competition.” And, that is the key phrase in this opinion…” shield state residents from competition”.

I had written in an earlier post that alcohol has long been regarded as a product unique from virtually every other legally produced consumer good. Alcohol was subject to laws that were entirely arbitrary as determined by individual states even if that determination was at odds with interstate commerce elements of the Constitution. And, it appeared that many states (if not most) were acting in best interest of their indigenous commercial interests rather than in the best interests of the state’s residents.

Critically, for those who seek wines and spirits unavailable in their particular state, but available elsewhere, Justice “Alito (in his opinion) indicated that the Constitution bars states from discriminating against ‘all out-of-state economic interests’ – not just out-of-state alcohol and alcohol producers, as the retailers had argued.” Oh my…might you be able to buy from retailers as diverse as Chan’s Wine World in Florida or Sterling Cellars in New York, or any other wine/spirit retailer with an item you legitimately seek? Assuming you are over 21 with a means of assuring payment of a product, you may soon be able to scan the web…and make a purchase of a wine or spirit free from fear that your package will be confiscated.

Now, there is still the matter of a retailer’s willingness to develop a robust website and an effective shipping process. There is still the matter of shippers such as Fed Ex and UPS willing accept shipments of wine and spirits. And, there is still the matter of state taxes. If you purchase through the web, are you then obligated to pay that retailer the sales tax in the state or county in which they do business?    These are only some of the questions that need to be resolved…but the decision rendered yesterday (Wednesday, June 26th) by the Supreme Court finally permits those questions to be asked, and most importantly, for processes to emerge to resolve those questions and issues.

One of the arguments raised by Tennessee retailers in support of Tennessee statutes, was that local retailers would be likely “to promote responsible alcohol consumption”. Justice Alito counters, and six of his colleagues agree, that “If the state really wanted to promote responsible alcohol consumption… there are better options that do not discriminate against out-of-state retailers, such as requiring better training for managers and employees.” Even Justice Gorsuch “acknowledged that the residency requirement would reduce ‘competition in the liquor market by excluding nonresidents or recent arrivals’.  Justive Gorsuch recognizes that the a function of the Tennessee statute, even if unintended, was to restrict legitimate commerce protected by the Constitution.

Amy Howe posted in the SCOTUS (Supreme Court of the United States) Blog that “In his opinion, Alito indicated that the Constitution bars states from discriminating against ‘all out-of-state economic interests’ – not just out-of-state alcohol and alcohol producers, as the retailers had argued. This means that states that allow in-state retailers to ship wine to customers within the state could face an uphill battle in preventing sales from out-of-state retailers as well.”

And, that folks is what elevates this opinion, as do virtually all opinions rendered by the Supreme Court, from a local issue to one of national importance.

This decision has the potential to broaden opportunity for consumers and retailers alike. Retailers with excellent collections and robust websites could grow national markets. There is a potential threat to small stores. However, much like local hardware stores who survive, and thrive, in the era of Home Depot and Lowes, there will still be a need for smaller local wine spirits retailers. Most wine and spirits are purchased for this weekend’s party and tonight’s dinner…not made via the web.

However, we are likely entering a ‘brave new world’ in the wine and spirits industry.

Hold on…