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SUPREME COURT UPHOLDS STATES'
BROAD AUTHORITY States Must Treat In-State and Out-of-State
Alcohol Producers the Same: Court Holds Three-Tier System: "Unquestionably
Legitimate" WASHINGTON, D.C. (May 16, 2005)-The Supreme Court today upheld a state's right to regulate the sale and distribution of alcohol within its own borders but said states must also treat in-state and out-of-state alcohol producers the same. In a 5-4 ruling, the Court struck down laws in Michigan and New York that restricted out-of-state alcohol producers from bypassing the states' regulatory regimes that require face-to-face transactions. In doing so, the Court rejected the states' argument that in-state producers could be more easily regulated and, therefore, could be permitted to ship via mail order or over the Internet. Today's ruling forces states to decide whether to allow everyone or no one to sell alcohol through the mail or over the Internet. Writing for the Court, Justice Kennedy said, the three-tier system is "unquestionably legitimate." The Court embraced a state's right to protect its residents and watch over the way alcohol is sold and distributed within its borders. "'The Twenty-first Amendment grants the States virtually complete control over whether to permit importation or sale of liquor and how to structure the liquor distribution system.' A State which chooses to ban the sale and consumption of alcohol altogether could bar its importation; and, as our history shows, it would have to do so to make its laws effective," Justice Kennedy added. "The Court today affirmed a state's right to regulate the sale and distribution of alcohol and said in doing so they must treat in-state, out-of-state and presumably out-of-country producers all the same," President and CEO Juanita D. Duggan said. "That means states have a choice between supporting face-to-face transactions by someone licensed to sell alcohol or opening up the floodgates." "State policies are protected under the Twenty-first
Amendment when they treat liquor produced out of state, the same
as its domestic equivalent," Justice Kennedy added. More than 30 states had sided with New York and Michigan arguing that the existing controls allow local officials to place limits on the number of vendors licensed to sell within a state; enable officials to investigate meaningfully who those vendors will be; empower states to better enforce their laws regarding illegal sales, particularly sales to minors; and provide concrete assurance that those privileged to sell alcohol actually collect the required taxes. "WSWA supports state efforts to strengthen - not weaken - alcohol laws by making all producers play from the same set of rules that ensure accountable, responsible alcohol sales," Duggan said. "Face-to-face ID checks by those licensed to sell alcohol are the best way to do that."
In addition to more than 30 state attorneys general, Michigan and New York were backed by two associations of state alcohol regulators whose job it is to enforce the nation's alcohol distribution laws. In a friend of the court brief, the attorneys general had urged the Court to reinforce their long-established right to regulate alcohol sales. In the Michigan case, the state had asked the Supreme Court to overturn an appeals court ruling that struck down its longstanding ban on home shipments of alcohol by unlicensed out-of-state alcohol producers and retailers. Such shipments, according to the state, bypass Michigan's alcohol tracking and distribution system-known as the three-tier system-which protects citizens from the unregulated, unaccountable and anonymous sales of alcohol. In the New York case, the 2nd Circuit Court of Appeals had sided with New York, affirming the state's constitutional right under the 21st Amendment to ensure out-of-state alcohol producers comply with New York's alcohol laws. In addition to the briefs by the states, a diverse group including educators, medical professionals, religious groups and traffic safety officials also filed an amicus brief supporting Michigan. According to their brief, the group was joined together by the "threat of deregulation, the concomitant expansion of alcohol access by underage persons, and the catastrophic consequences of this increased access." Among the various groups supporting the states' legal arguments were: the Michigan Association of Secondary School Principals, American Trauma Society, American Values, Committee for a Constructive Tomorrow, Concerned Women for America, Eagle Forum, Kids First Coalition, National Association of Evangelicals, Neighborhood Activists Inter-Linked Empowerment Movement (NAILEM), 60 Plus, Traffic Safety Association of Macomb County, and Traffic Safety Association of Michigan. Last fall, the Massachusetts Attorney General netted several online alcohol retailers and leading overnight delivery companies for allegedly providing beer, wine and liquor to underage college students. Some of the alcohol was delivered in plain brown boxes. Other boxes were clearly labeled as containing alcohol and required an adult signature, but the delivery truck drivers apparently ignored the requirement. Investigations by other state law enforcement agencies and news outlets across the country, including Kentucky, Maryland, Virginia, and Tennessee, revealed similar findings. In addition, the National Academy of Sciences issued a report confirming that children who use alcohol get it through the Internet or through home delivery, and that the number is likely to grow. The NAS said, "…An argument can be made for banning Internet and home delivery sales altogether in light of the likelihood that these methods will be used by underage purchasers…"
# # # WSWA is a national trade association representing
the wholesale tier of the wine and spirits industry and supports
government policies that ensure sales and deliveries of alcohol
are conducted only by those licensed by the state and in compliance
with state and federal law.
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Karen
Gravois Elliott