~Nearly two years ago the Supreme Court ruled on Granholm V. Heald, a case connected to wine that has been reported in the press as some sort of breakthrough. Unfortunately, the ruling was what a lot of the court’s rulings become: a narrow decision with a wide ambiguity running through it.
~In short, the Supreme Court justices said that no state can bar wine shipments direct to consumers from wineries in other states while allowing wine shipments direct to consumers from wineries within that state. To the judges, the legal choice a state has is either to allow every winery to ship direct to consumers within that particular state or to bar every winery from shipping direct to consumers.
~Giving wineries in your state a commercial advantage over wineries out of state is called protectionism.
~Either I’m an idiot, which is always a possibility, or the justices have a blind spot when it comes to alcohol, which is not so impossible, as I will show you later on. In any event, alcohol seems to be the only legal commodity that does not deserve the protection of the Commerce Clause found in Article 1, Section 8 of the US Constitution.
The Commerce Clause is a legal doctrine in U.S. Constitutional law that limits the power of states to legislate and impact interstate commerce. The U.S. Constitution reserves for Congress the exclusive power "To regulate Commerce with foreign Nations, and among the several States…”
~The above definition means that individual states are either excluded from, or limited in their ability to legislate on interstate commerce—the bench has often cited the Commerce Clause to restrict states from passing protectionist regulations and to apply undue burdens on interstate commerce.
~ Granholm V. Heald was seemingly about wine shipping. But what it has turned out to be about is the old guard being threatened and state legislators being bought. Not much new there, really.
~What the case should have been about was a conflict between the 21st Amendment to the Constitution and the Commerce Clause.
~The 21st Amendment to the Constitution is the only amendment to have repealed an earlier amendment (the 18th Amendment: Prohibition), which is not an easy thing to do since after an amendment is passed in Congress it must be ratified by the states. In this case, however, the states were handed a veritable cash cow; the real wonder is why any state had to think over ratification.
~ In its wisdom, Congress inserted into the 21st Amendment the right of individual states to regulate and control the sale and distribution of alcohol within state borders. By so doing, Congress opened a floodgate of confusion, not to mention corruption.
~State legislators were quick to see a bonanza revenue source; they imposed taxes, fees, stipulations, restrictions (which always lead to fines) and all kinds of social engineering, like Sunday “Blue Laws,” prescribed hours of operation, wine in or not in grocery stores, and so on.
~Most of all, the states were handed the freedom to create whatever system they wanted in order to provide or withhold access to alcohol. Mostly, the states built individual Byzantine empires known either as Liquor Control or Alcohol Control Boards. The boards are generally made up of political appointees, and you know what that means.
Some states opted for the three-tier system, which builds in not only a mandated middle-merchant, but also a sizable cost to the consumer and a quasi-private monopolized business that is heavily controlled by the state. In some states a retailer can buy certain wines from only one distributor--how's that for creating free competition?
Some states opted for state control. In other words, the state buys and sells alcohol. When the state is involved in commerce you have the potential for corruption, and in states that opted for this choice potential has usually become reality. Yet, at least these states did not offer the illusion that the three-tier states offered, that they were allowing competitive commerce to flourish.
Some states allowed localities to select whether or not they wanted an alcohol business in their community. This option allowed situations where a person could cross an intersection into another county and buy wine that could not be bought in the county across the street. Of course, crossing the street into the “dry” county carrying the wine in a bag might have left the person open to prosecution.
I'm sure there are other choices states could have made, but thinking any further about them gives me agita.
~Notice that through the maze of state legislative restrictions and controls, something American always got lost: free flow of commerce.
~Because the states have such power over the commerce of alcohol, the result of the recent Supreme Court ruling was not exactly an opening of wine shipments across state borders, as the always eager to recite a press release media often reported.
~What really happened is that the states created new legislation that opens shipping, but that usually makes it extremely difficult and more expensive. Imagine owning a small family winery and having to apply for fifty licenses—one for each state—in order to send wine direct to consumers in the rest of the country. That is only one costly hurdle. There are restrictions on volume, on cases shipped, and probably on the color of the box that the winery uses as packaging. I'm not being cynical; in some states a winery that submits certain tax reports on the wrong colored paper risks being cited in violation.
~As predicted, a flurry of court actions are popping up all over the USA—some exploit the glaring Supreme Court ambiguities and some want them fixed.
~In my opinion, the only thing that will definitively end the legal battles is a direct ruling by the court whether or not the 21st Amendment violates the Commerce Clause; if the court were to find that it is a violation, then a whole lot of things regarding access to wine are likely to change. But any winery willing to take on that fight has to be careful. It's not a given that a court ruling would be on the side of the Commerce Clause.
~When the Supreme Court ruled in the wine shipping case Justice Kennedy read the majority opinion. He made a fleeting reference to the Commerce Clause, calling alcohol a “special” commodity that may not deserve the same commercial protections as other legal products.
~Isn’t that great? Free and unfettered commerce is a constitutional right, but for wine it will be a right only so long as legal alcohol fits the majority morality of the Supreme Court justices or the Congress. You can’t ask for anything more beautifully hypocritical than that.
In my view, Congress should free alcohol from its unconstitutional chains.
On the other hand, Congress can pass an amendment to the constitution to make alcohol illegal—now there’s a novel approach…
Read on: commerce, 21st, 21st again, granholm, litigate,
February, 2007. All Rights Reserved.
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