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Direct shipment of out-of-state wines

By Robert S. Sargent, Jr.
web posted September 30, 2002

The Congress shall have power to regulate commerce...among the several states. (Article I, Sec. 8, United States Constitution.)

The transportation or importation into any state...for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited. (Sec. 2, 21st Amendment to the Constitution repealing the 18th Amendment, which prohibited alcoholic beverages from being manufactured or sold in the United States.)

On April 5 of this year, District Judge Graham Mullen struck down North Carolina's laws prohibiting direct shipment of out-of-state alcohol. After describing the three-tier system in North Carolina -- ([1] manufacturers who sell to [2] wholesalers who sell to [3] retailers) -- Judge Mullen says "The Constitutional difficulty arises not with North Carolina's three-tier system, but rather with North Carolina's failure to apply the system to in-state and out-of-state wineries uniformly." His problem is that, since North Carolina allows its own wineries to sell directly to the consumer, the law discriminates against out-of-state wineries. "The Court resolves this matter by balancing two provisions of the Constitution: the Commerce Clause and the Twenty-First Amendment."

This is good, because being a wine lover, I'm licking my chops at the prospect of being able to order my favorite wine on-line. Finally, the courts are coming to their senses and applying the Commerce Clause to antiquated laws that allows states to systematically discriminate against other states.

So I re-read the 21st Amendment, and immediately there's a problem. Sec. 1 says: "The eighteenth article of amendment to the Constitution of the United States is hereby repealed." If that were all the amendment had said, there wouldn't be a problem. The matter of regulating liquor would have reverted to the states with the Commerce Clause trumping any violations. Ordering wine on-line would be as simple as ordering books or clothes. But the 21st Amendment stated further: "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." Does this mean that "the laws thereof" must conform to the Commerce Clause? It doesn't say so.

One of the precedents that Judge Mullen relies on is Bacchus Imports, Ltd. V. Dias (1984) in which Hawaii exempted an excise tax on a brandy made from indigenous shrubs. All other liquor had a 20 per cent tax. So I turn to that opinion hoping for clarification. Written by Justice Byron White, he refers to Sec. 2 of the Amendment: "...one thing is certain: The central purpose of the provision was not to empower States to favor local liquor industries by erecting barriers to competition." But, how does he know this?

Justice White turns to the original Senate sponsor of the Amendment, Senator Blaine, and quotes him: "the purpose of (Sec.) 2 was 'to restore to the States...absolute control (my emphasis) in effect over interstate commerce affecting intoxicating liquors...'" Then to prove Blaine didn't really mean "absolute control," White points out that Blaine espoused varying interpretations. He further quotes Blaine: "So to assure the so-called dry States against the importation of intoxicating liquor into those States, it is proposed to write permanently into the Constitution a prohibition along that line." Somehow, to Justice White, this 2d, narrower view cancels out the first, "absolute control" view. It's pretty obvious to me, the "prohibition" in the second quote, is Sec. 2 of the 21st Amendment, which gives the states "absolute" control.

All of the legal arguments one sees against the various state's prohibitions against direct shipments focus on violations of the Commerce Clause, rather than on the original meaning of the 21st Amendment. You would have to re-write Sec. 2 to fit those arguments: "The transportation or importation into any State...for delivery or use therein of intoxicating liquors, in violation of the laws thereof, except when those laws violate the Commerce Clause of the United States Constitution, is hereby prohibited."

Justice White would have profited from the words of Justice Brandeis in State Board of Equalization v. Young's Market Co. (1936). "The amendment which 'prohibited' the 'transportation or importation' of intoxicating liquors into any state 'in violation of the laws thereof,' abrogated the right (my emphasis) to import...so far as concerns intoxicating liquors. The words used...confer upon the state the power to forbid all importations which do not comply with the conditions which it prescribes. The plaintiffs ask us to limit this broad command. (To do that) would involve not a construction of the amendment, but a rewriting of it."

As an article in the recent Wine Spectator points out, "Over the past several months, three U.S. district judges, in decisions that could have far-reaching consequences, have overturned what they called discriminatory interstate shipping bans in Virginia, North Carolina and Texas." The trend seems to be turning in favor of the consumer, but I've changed my mind: The policy is right, but the law is wrong. I now feel that we wine lovers should get out of the courts to change policy, and instead turn to our state legislators. They can change the law and as always, that's the proper place for policy changes.

Robert S. Sargent, Jr. can be reached at rssjr@citcom.net.

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