Supreme Court Judges: Will TN Case Open a Can of Worms?

The Supreme Court convened today to hear oral arguments in the case of Tennessee Wine and Spirits Retailers Association versus the Tennessee Alcoholic Beverage Commission and Total Wine & More over the state’s residency requirements. This case has garnered a lot of attention because it could potentially determine whether states have the constitutional right to discriminate against in-state and out-of-state retailers.

HOW WE GOT HERE. In 2016, Total Wine & More challenged Tennessee’s residency requirement that forces retailers to reside in the state for at least two years before allowing them to apply for a liquor license. Then the Tennessee Wine & Spirits Retailers Association got involved (in opposition to Total Wine) and filed a federal lawsuit seeking clarification from the courts [see WSD 02-26-2018].

The lower court ruled in favor of Total Wine, and then the US Court of Appeals for the Sixth Circuit upheld the ruling, essentially declaring that the residency requirement for retailers is discriminatory. Now it’s up to the Supreme Court to weigh in.

Your editors sifted through the transcript of this afternoon’s hearing and below are a few things that stood out to us.

The justices grilled both sides’ attorneys, so it’s hard to tell which way they could be leaning, but all parties involved in this case emphatically agree that no one is looking to fundamentally change the three-tier system. (Phew!)

The attorney representing Tennessee retailers attempted to persuade the justices that there is history and precedent for allowing states to govern alcohol however they choose. “All along the way, this Court recognized the states’ power to do so as part of their virtually complete control over how to structure the liquor distribution system,” said attorney Shay Dvoretzky.

Although the justices were pretty hard on him, Justice Stephen Breyer did agree that history would favor their side of the case.

This case is only specifically looking at the residency laws, but multiple justices raised concerns that ruling in favor of Total Wine could open up a can of worms that could challenge other state laws that regulate the sale and distribution of alcohol. Namely, if the residency requirement is ruled unconstitutional, will e-commerce companies and out-of-state retailers be able to use this case as a jumping off point to argue a physical location isn’t necessary at all?

“I’m trying to figure out what kind of opinion we could write, Mr. Phillips, that says you win, but then, when the next case comes along and the next case is somebody that says we don’t like this brick-and-mortar stuff, we don’t want to have any physical presence at all, and the state is preventing that, and in doing so, the state is discriminating against out-of-state companies,” said Justice Elena Kagan.

Stay tuned. We’ll have more after we’re able to fully digest today’s hearing.

BRAND WINERY AND ESTATE VINEYARDS GETS NEW OWNERS

Jim Bean and Christine O’Sullivan have purchased the Brand winery and vineyards on Pritchard Hill in Napa Valley from Ed and Deb Fitts for an undisclosed sum.

Brand winery was founded in 2005 and is planted to blocks of cabernet sauvignon, cabernet franc and petit verdot. The portfolio includes three wines: Cabernet Sauvignon, a Proprietary Blend and Brio.

“We are thrilled to take our experience as growers to the next level with one of the most distinctive an expressive wine estates in Napa Valley,” says Jim. Christine adds, “we care passionately about the acquisition of this rare property and feel honored to be part of its future.

WSD BRIEFS:

MGPI BRANDS EXPAND TO TEXAS. MGP Ingredients is taking its Till American Wheat Vodka, George Remus Straight Bourbon Whiskey and Rossville Union Straight Rye Whiskey to the Lone Star State through Republic National Distributing Co. All three brands are now available across 13 states.

OPICI WINES ADDS SPANISH PRODUCER TO PORTFOLIO. Spanish wine producer El Coto de Rioja has appointed Opici Wines as its exclusive national importer, joining Opici’s Spanish Collection. “We have long observed this leader in the Rioja category and are very proud they have chosen to become part of our group. We look forward to working closely with our partners to develop the brand,” says managing director Don Opici. The El Coto collection ranges in price between $11 and $58.

CALLING ALL HANDS. You, dear readers, are what keep Wine & Spirits Daily going. So help us help you and take a quick survey as we strive to improve and continue to bring you the most up-to-date industry news and insights.

Until tomorrow,
Your Editors

Emily Pennington – emily@winespiritsdaily.com
Sarah Barrett – sarah@winespiritsdaily.com

“You can’t cross the sea merely by standing and staring at the water.” – Rabindranath Tagore

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