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Theodore A. Gebhard*

Today the U.S. Supreme Court handed down its decision in Tennessee Wine and Spirits Retailers Association v. Thomas, Executive Director of the Tennessee Alcohol Beverage Commission et al., 588 U.S. 504-57 (June 26, 2019).  In an earlier post on this site, I discussed this case in the context of the amicus brief (Law & Economics Scholars Brief) that five amici curiae, of which I was one, submitted to the Court in this matter.  Please see the earlier post for appropriate background on the case and the amicus brief.)

In an opinion written by Justice Alito, the Court found that “the predominant effect of [Tennessee’s] 2-year residency requirement [that applicants for licenses to sell alcoholic beverages at retail must satisfy] is simply to protect the Association’s members from out-of-state competition.”  588 U.S. at 543.  This finding is wholly consistent with the discussion set out in the Law & Economics Scholars Brief. 

Because the predominant effect of the durational residency requirement is to discriminate against out-of-state potential competitors, the Court held that the “provision violates the Commerce Clause and is not saved by [Sec 2 of] the Twenty-first Amendment,” as the scope of state regulatory powers under Sec. 2 does not extend to implementing such anticompetitive impediments.  Id. “Where the predominant effect of a law is protectionism, not the protection of public health or safety, it is not shielded by Sec. 2” 588 U.S. at 539-40.

Interestingly, Justice Gorsuch, joined by Justice Thomas, dissented, finding that because Sec. 2 of the 21^st Amendment provides states with broad powers to regulate the sale of alcohol that they otherwise would not have respecting other goods and services, the explicit language of the Amendment provides sufficient scope to encompass the kind  of regulation at issue in this matter notwithstanding its effect on competition. The adopters of the 21^st Amendment “left us with clear instructions that the free-trade rules this Court has devised for ‘cabbages and candlesticks’ should not be applied to alcohol.” 588 U.S. at 557. Justices Gorsuch and Thomas would accordingly find Tennessee’s durational residency requirement constitutional.

Read the entire opinion here.

* Theodore A. Gebhard is an attorney and economist.  See his mini-bio on the Contributors page.