Supreme Court Strikes Down Tennessee Liquor Law

WASHINGTON — The Supreme Court on Wednesday struck down a Tennessee law that barred newcomers to the state from operating liquor stores. The majority rejected the argument that the 21st Amendment, which ended Prohibition in 1933, allowed the state to restrict liquor sales in many ways, including by imposing a two-year residency requirement for people seeking retail liquor licenses.

Justice Samuel A. Alito Jr., writing for the majority in the 7-to-2 decision, said that the amendment did not authorize states to discriminate against new residents. “Because Tennessee’s two-year residency requirement for retail license applicants blatantly favors the state’s residents and has little relationship to public health and safety,” he wrote, “it is unconstitutional.”

In dissent, Justice Neil M. Gorsuch wrote that the majority was replacing the amendment’s requirements with its own ideas about sound economic regulation.

“Like it or not, those who adopted the 21st Amendment took the view that reasonable people can disagree about the costs and benefits of free trade in alcohol,” Justice Gorsuch wrote. “Under the terms of the compromise they hammered out, the regulation of alcohol wasn’t left to the imagination of a committee of nine sitting in Washington, D.C., but to the judgment of the people themselves and their local elected representatives.”

The passage seemed to offend Justice Alito. “This is empty rhetoric,” he responded.

The law was challenged by a Utah couple, Doug and Mary Ketchum, who moved to Memphis in the hope that the weather there would be better for their disabled daughter, and by Total Wine, a large retailer. A federal appeals court struck down the two-year residency requirement, saying it violated the Constitution by discriminating against new residents.

The law’s defenders said it imposed reasonable restrictions, giving the state time to conduct background checks and investigations. They added that people with local roots were more likely to act responsibly.

The key question in the case, Tennessee Wine and Spirits Retailers Association v. Thomas, No. 18-96, was whether the 21st Amendment authorized the state law. (The amendment says that “the transportation or importation into any state, territory or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.”)

In general, Justice Alito wrote, “removing state trade barriers was a principal reason for the adoption of the Constitution.” The 21st Amendment, he wrote, did not undercut that basic idea.

Justice Alito noted that the Tennessee law contained even more extreme provisions, including ones imposing a 10-year residency requirement of people seeking to renew liquor licenses and extending the residency requirements to all of a corporation’s officers, directors and owners. That last provision, he wrote, would mean that “no corporation whose stock is publicly traded may operate a liquor store in the state.”

Neither the trade association defending the two-year residency requirement in the Supreme Court nor state officials were willing to argue in favor of the more extreme provisions.

“If we viewed Tennessee’s durational-residency requirements as a package,” Justice Alito wrote, “it would be hard to avoid the conclusion that their overall purpose and effect is protectionist. Indeed, two of those requirements — the 10-year residency requirement for license renewal and the provision that shuts out all publicly traded corporations — are so plainly based on unalloyed protectionism that neither the association nor the state is willing to come to their defense.”

Even viewed in isolation, Justice Alito wrote, the two-year residency requirement “poorly serves the goal of enabling the state to ensure that only law-abiding and responsible applicants receive licenses.” Potential applicants need not signal their desire to obtain a license during the two-year period or become educated about liquor sales while they live in Tennessee, Justice Alito wrote.

Nor did he think much of the argument that the provision favors established residents who were more likely to act responsibly in deciding when to decline to sell to people prone to alcohol abuse. “For one thing, it applies to those who hold a license, not those who actually make sales,” Justice Alito wrote. “For another, it requires residence in the state, not in the community that a store serves.”

In his dissent, which was joined by Justice Clarence Thomas, Justice Gorsuch responded that the state law might address alcohol abuse indirectly.

“Tennessee’s residency requirement reduces competition in the liquor market by excluding nonresidents or recent arrivals,” he wrote. “But even that effect might serve a legitimate state purpose by increasing the price of alcohol and thus moderating its use, an objective states have always remained free to pursue under the bargain of the 21st Amendment.”