Two Supreme Court cases have reshaped the way alcoholic beverages, particularly wine, can be marketed to consumers. And combined with the effects of the coronavirus pandemic, breweries and distilleries may also become more involved in direct-to-consumer sales.
Granholm v. Heald, decided in May 2005, is considered the wine industry’s South Dakota v. Wayfair, acting as the trigger for 46 states now allowing direct-to-consumer shipments from wineries. In Granholm, the Supreme Court narrowly held that New York and Michigan laws that allowed wineries within the state to ship wine directly to consumers, but prohibited out-of-state wineries from doing likewise, were unconstitutional.
Prior to the case, Michigan and New York, like many other states, regulated the sale and importation of wine through three-tier systems that required separate licenses for producers, wholesalers, and retailers. Under the systems, in-state, but not out-of-state wineries could make direct sales to consumers. The combination of an increasing number of small wineries and a decreasing number of wine wholesalers led to a growth in direct sales to consumers because small wineries did not produce enough wine or have sufficient consumer demand for wholesalers to carry their products.
The court held that both Michigan and New York laws discriminated against interstate commerce in violation of the Commerce Clause, said Carroll.
More recently, in Tennessee Wine and Spirits Assn. v. Thomas, decided in June 2019, the court ruled that a Tennessee law requiring anyone applying for a retail license to sell alcohol to have lived in the state for at least two years. “Granholm was thought to apply only to producers. This clarified that Granholm was not limited to producers,” Carroll said. “Laws dealing with retailers and wholesalers are also subject to challenge.”
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by roger Russell
June 9, 2020