The Federalism Project

American Enterprise Institute

Granholm v Heald/Swedenburg v Kelly

Do state regulations that permit in-state wineries, but not out of state wineries, to ship alcohol to consumers violate the dormant Commerce Clause in light of the Twenty-first Amendment?

The so-called “dormant” Commerce Clause limits to what states may do to impede their sister states’ trade. As a general rule, states may not brazenly discriminate against out-of-state producers who wish to engage in commerce within their borders. As the Supremes observed in 1949, “Neither the power to tax nor the police power may be used…with the aim and effect of establishing an economic barrier against competition with the products of another state or the labor of its residents. Restrictions so contrived are an unreasonable clog upon the mobility of commerce.”

In Granholm, the logic of the dormant Commerce Clause meets the 21st  Amendment, which gives states’ considerable leeway to regulate liquor according to local preferences. Since the late 1930’s, the Supremes have wrestled with the contours of state power in this area. In Granholm, the Justices will consider whether state laws that permit direct (Internet) wine shipments by in-state producers but not by out-of-state wineries run afoul of Commerce Clause principles.

Rhetoric around these cases is pitched, with advocates for the wineries championing liberty and free trade and their opponents (including 35 states) defending state integrity and health and safety concerns.

The economics are easy: click here for the explanatory brief by the AEI-Brooking Joint Center.  The constitutional question is extremely tricky, and the circuits have split.  Click here for the 2nd and 6th circuit opinion

Swedenburg v. Kelly

Warnings from the Wine and Spirits Wholesalers

Liberty gets a plug from Free the Grapes

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