WASHINGTON -- Wine lovers may buy directly from out-of-state
vineyards, the Supreme Court ruled Monday, striking down laws banning a
practice that has flourished because of the Internet and growing
popularity of winery tours.
The 5-4 decision overturns laws in New York and Michigan, which
supporters said were aimed at protecting local wineries and limiting
underage drinkers from purchasing wine without showing proof of age. In
all, 24 states have laws barring interstate shipments.
The court said the state bans are discriminatory and anticompetitive.
"States have broad power to regulate liquor," Justice Anthony
Kennedy wrote for the majority. "This power, however, does not allow
states to ban, or severely limit, the direct shipment of out-of-state
wine while simultaneously authorizing direct shipment by in-state
producers."
"If a state chooses to allow direct shipments of wine, it must do so
on evenhanded terms," he wrote in an opinion joined by Justices Antonin
Scalia, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.
The wine industry is booming, with an estimated $21.6 billion in
sales and tourists flocking to wineries for tastings and tours. The
recent hit movie "Sideways" took a lighthearted look at California's
love affair with the grape.
While wineries have proliferated, there also has been consolidation.
Smaller wineries say they can't compete with huge companies unless they
can sell directly to customers over the Internet or by allowing
visitors to their wineries to ship bottles home.
The Supreme Court case centered on the 21st Amendment, which ended
Prohibition in 1933 and granted states authority to regulate alcohol
sales. Nearly half the states subsequently passed laws requiring
outside wineries to sell their products through licensed wholesalers
within the state, allowing state governments to collect millions in
alcohol taxes.
But the Constitution also prohibits states from passing laws that
discriminate against out-of-state businesses. That led to a challenge
to the Michigan and New York laws.
In a dissent, Justice Clarence Thomas argued the ruling needlessly
overturns long-established regulations aimed partly at protecting
minors. State regulators under the 21st Amendment have clear authority
to regulate alcohol as the see fit, he wrote.
"The court does this nation no service by ignoring the textual
commands of the Constitution and acts of Congress," Thomas wrote. He
was joined by Chief Justice William H. Rehnquist and Justices Sandra
Day O'Connor and John Paul Stevens.
While the ruling only involves wine sales, industry groups expect
that it will soon apply to beer and other alcoholic beverages currently
regulated through state-licensed wholesalers and retailers.
In the ruling, Kennedy wrote that states do not have the authority
to regulate liquor simply to protect their economic interests.
The decision puts in doubt laws in 24 states that ban out-of-state
shipments, although the opinion suggests the laws will be upheld so
long as in-state and out-of-state wineries are treated equally.
The Washington-based Institute for Justice says the 24 states that
ban direct shipments from out-of-state wineries are Alabama, Arizona,
Arkansas, Connecticut, Delaware, Florida, Indiana, Kansas, Kentucky,
Maine, Maryland, Massachusetts, Michigan, Mississippi, Montana, Ohio,
Oklahoma, Pennsylvania, New Jersey, New York, South Dakota, Tennessee,
Utah and Vermont.
The cases are Granholm v. Heald, 03-1116; Michigan Beer & Wine
Wholesalers Association v. Heald, 03-1120; and Swedenburg v. Kelly,
03-1274.
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