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the Constitution of the United States is hereby repealed."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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