Supreme Court Voids Residency Rule for Liquor Store Owners

(Bloomberg) -- The U.S. Supreme Court struck down a Tennessee law that imposed residency requirements on people seeking to run liquor stores, saying the measure unconstitutionally discriminated against out-of-state business people.

Tennessee required people to live in the state for two years to get a retail liquor license and for 10 years to get a license renewed.

Writing for the 7-2 court, Justice Samuel Alito said the states can’t engage in economic protectionism in their liquor regulations. A liquor trade group that supported the law had argued that the Constitution’s 21st Amendment, which repealed Prohibition in 1933, overrides the usual protections for interstate commerce.

The goal of the 21st Amendment “was not to give states a free hand to restrict the importation of alcohol for purely protectionist purposes,” Alito wrote.

Justices Neil Gorsuch and Clarence Thomas dissented.

The law was challenged by a couple who bought a liquor store after moving to the state to care for their disabled daughter and by a company affiliated with the Total Wine chain.

The case was unusual in that Tennessee hadn’t been enforcing its rule and didn’t take part in the Supreme Court case. The dispute landed in court only when the Tennessee Wine and Spirits Association, which represents competing retailers, threatened to sue if the state issued a license to Total Wine for a proposed store.

The Supreme Court hadn’t addressed the reach of the 21st Amendment since a 2005 ruling said states can’t bar out-of-state wineries from shipping directly to customers. A 5-4 majority said the 21st Amendment didn’t authorize that sort of discrimination.

Critics said Tennessee’s requirements were the nation’s strictest. An initial license lasted only a year, so anyone seeking to maintain a business long-term also had to meet the 10-year requirement for renewals. The rules applied to the directors, officers and shareholders of businesses that own stores.

The case is Tennessee Wine and Spirits v. Blair, 18-96.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Laurie Asséo, Justin Blum

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