Amendment 21 — Modern Doctrine On State Power Over Alcohol And Discrimination Against Interstate Commerce

prev | next

Twenty-First Amendment , Section 2:

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 the early 2000s, the Supreme Court confirmed that the Twenty-First Amendment does not authorize the states to regulate alcoholic beverages contrary to general Dormant Commerce Clause principles.[1](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn1amd21 " Granholm v. Heald, 544 U.S. 460, 465–66, 487 (2005). ") In 2005, the Court held that discrimination in favor of local products can be upheld only if the state “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” [2](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn2amd21 " Id. at 487, 489, 493 (invalidating Michigan and New York laws allowing in-state but not out-of-state wineries to make direct sales to consumers). This is the same test the Supreme Court applies outside the context of alcoholic beverages. See Maine v. Taylor, 477 U.S. 131, 138 (1986) (noting that once discrimination against interstate commerce is established, “the burden falls on the State to demonstrate both that the statute ‘serves a legitimate local purpose,’ and that this purpose could not be served as well by available nondiscriminatory means” ) (quoting Hughes v. Oklahoma, 441 U.S. 322, 336 (1979)). ") This interpretation stemmed from the Court’s conclusion that the Twenty-First Amendment restored the states’ pre-Prohibition powers “to maintain an effective and uniform system for controlling liquor by regulating its transportation, importation, and use” in a manner that did not discriminate against out-of-state goods.[3](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn3amd21 " Granholm, 544 U.S. at 484–85. According to Justice Anthony Kennedy’s opinion for the Court, these pre-Prohibition state powers were framed by the Wilson and Webb-Kenyon Acts, and the Twenty-First Amendment evidenced a “clear intention of constitutionalizing the Commerce Clause framework established under those statutes.” Id. (citation omitted); accord Tenn. Wine & Spirits Retailers Ass’n v. Thomas, No. 18-96, slip op. at 21 (U.S. June 26, 2019). However, in Tennessee Wine, the Court rejected the suggestion that a law should be deemed constitutional under the Twenty-First Amendment merely because it—or a similar law—predated Prohibition. Tenn. Wine & Spirits Retailers Ass’n, slip op. at 30. The Court clarified that pre-Prohibition laws that were “never tested” in the Supreme Court could have been held invalid then and, consequently, might remain invalid in modern times. Id. ")

Consequently, in Granholm v. Heald, the Supreme Court struck down regulatory schemes in Michigan and New York that discriminated against out-of-state wineries.[4](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn4amd21 " Granholm, 544 U.S. at 493. ") Both states employed a “three-tier system” requiring separate state licenses for producers, wholesalers, and retailers.[5](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn5amd21 " Id. at 466–67. ") The Court first affirmed its prior cases holding that, as a general matter, “States can mandate a three-tier distribution scheme in the exercise of their authority under the Twenty-first Amendment .” [6](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn6amd21 " Id. at 466 (discussing North Dakota v. United States, 495 U.S. 423, 432 (1990) (plurality opinion); id. at 447 (Scalia, J., concurring)). ") However, within their three-tier systems, Michigan and New York accorded certain advantages to in-state wineries by creating special licensing systems allowing them to ship wine directly to in-state consumers.[7](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn7amd21 " Id. at 469–70. ") While recognizing that both states possessed significant authority to regulate the importation and sale of liquor, the Court wrote that the challenged systems “involve[d] straightforward attempts to discriminate in favor of local producers . . . contrary to the Commerce Clause,” and that these schemes could not be “saved by the Twenty-first Amendment .” [8](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn8amd21 " Id. at 488–89. ")

The states argued in Granholm that their restrictions on out-of-state wineries’ direct shipments passed muster under Dormant Commerce Clause principles because they advanced two legitimate local purposes: “keeping alcohol out of the hands of minors and facilitating tax collection.” [9](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn9amd21 " Granholm v. Heald, 544 U.S. 460, 489 (2005) ") The Supreme Court rejected these claims, concluding that there was insufficient evidence to show that prohibiting direct shipments would solve either of these problems.[10](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn10amd21 " Id. at 490–91. ") The Court also suggested that the states could achieve “their regulatory objectives . . . without discriminating against interstate commerce.” [11](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn11amd21 " Id. at 491. ")

The Court struck down another discriminatory regulatory regime in Tennessee Wine and Spirits Retailers Ass’n v. Thomas.[12](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn12amd21 " No. 18-96 (U.S. June 26, 2019). ") In that case, the Court considered specific aspects of Tennessee’s three-tier system.[13](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn13amd21 " Id. at 2–3. ") In particular, Tennessee would issue new retail licenses only to individuals who had been residents of the state for the previous two years.[14](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn14amd21 " Id. at 3. Some additional aspects of Tennessee’s regulatory scheme had been invalidated by the lower courts, and the state did not defend those provisions on appeal to the Supreme Court. Id. at 1. ") In defense of the law, a trade association representing Tennessee liquor stores argued that the case was not governed by Granholm.[15](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn15amd21 " Id. at 26. ") In its view, Granholm’s analysis was limited to laws that discriminate against out-of-state products and producers, whereas Tennessee’s provision concerned “the licensing of domestic retail alcohol stores.” [16](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn16amd21 " Id. ") The Court disagreed, explaining that instead, Granholm established that the Constitution “prohibits state discrimination against all ‘out-of-state economic interests.’” [17](https://www.law.cornell.edu/constitution-conan/amendment-21/modern-doctrine-on-state-power-over-alcohol-and-discrimination-against-interstate-commerce#fn17amd21 " Tenn. Wine & Spirits Retailers Ass’n v. Thomas, No. 18-96, slip op. at 27 (U.S. June 26, 2019) (quoting Granholm v. Heald, 544 U.S. 460, 472 (2005)). The Supreme Court also characterized the association’s reading of the Twenty-First Amendment as “implausible.” Id. at 26. Although the association conceded that Section 2 of the Twenty-First Amendment could not shield discriminatory laws that addressed the importation of alcohol, it argued that Section 2 authorized discriminatory laws addressing the licensing of domestic retail stores. Id. The Court noted that the Twenty-First Amendment specifically prohibits the “importation” of alcohol into a state in violation of that state’s laws but does not literally address states’ ability to license domestic retailers. Id. The majority argued that “if § 2 granted States the power to discriminate in the field of alcohol regulation, that power would be at its apex when it comes to regulating the activity to which the provision expressly refers.” Id. at 26–27. However, becau