Supreme Court strikes down Tennessee liquor sales law in win for big retailers

The Supreme Court on Wednesday struck down strict residency requirements for retailers of beer, wine and liquor in Tennessee, clearing the way for more retail options for consumers and, potentially, lower prices.

Justice Samuel Alito, writing for the 7-2 majority, called Tennessee’s two-year residency requirement, and similar restrictions nationwide, unconstitutional because it discriminates against non-residents.

The Constitution’s so-called dormant commerce clause limits states' ability to discriminate against out-of-state business interests.

“If a state law discriminates against out-of-state goods or nonresident economic actors, the law can be sustained only on a showing that it is narrowly tailored to “‘advance a legitimate local purpose,’” Alito wrote.

“The provision at issue here expressly discriminates against nonresidents and has at best a highly attenuated relationship to public health or safety,” he said.

Justices Neil Gorsuch and Clarence Thomas dissented in the case.

Tennessee law had mandated that an individual reside in the state for at least two years in order to obtain a one-year sales license from the Tennessee Alcoholic Beverage Commission. To renew, the retailer must have lived in the state for at least 10 consecutive years. The rules also apply to corporations and their "officers, directors and stockholders."

National retail chain Total Wine and More challenged the law along with Doug and Mary Ketchum, small business owners who moved to Tennessee from Utah in 2016 and wanted to open a wine store to help support their daughter, Stacie, who has cerebral palsy.

The Tennessee Wine and Spirits Retailers Association, backed by 35 states, asked the justices for a review. They argue residency requirements are permissible under the 21st Amendment – which ended Prohibition -- and are essential to maintaining public safety, welfare and accountability in liquor markets.

They also contended that local sellers know the community best and have its interests at heart.

A federal district court sided with Total Wine and the Ketchums. The Court of Appeals affirmed that decision. And the state of Tennessee did not appeal the ruling.

“Alcohol occupies a complicated place in this country’s history,” Gorsuch wrote in his dissent. “Over time, the people have adopted two separate constitutional Amendments to adjust and then readjust alcohol’s role in our society. But through it all, one thing has always held true: States may impose residency requirements on those who seek to sell alcohol within their borders to ensure that retailers comply with local laws and norms.”

“Today and for the first time, the Court claims to have discovered a duty and power to strike down laws like these as unconstitutional. Respectfully, I do not see it,” Gorsuch said.