Last month, an Indiana wine retailer and a handful of consumers in Michigan filed suit in federal court to challenge a new Michigan law that bars out-of-state retailers from shipping wine into the state.
The Michigan law, passed last month, lets retailers inside the state buy a “specially designated merchant license” that will allow them to ship wines to in-state consumers. The benefits of the law, which takes effect next month, is that it’ll “make it easier for wineries and in-state retailers to ship to Michigan consumers,” reports Wine Spectator. But the law prohibits out-of-state retailers from buying permits.
If you just read that and looked up at the date stamp on this column because you thought this might be a reprint of some classic article from 2005, you’d be forgiven.
Wasn’t Granholm v. Heald, decided by the U.S. Supreme Court a dozen years ago, a case about a Michigan law that barred out-of-state wineries from shipping wine into the state? And didn’t the Supreme Court rule that Michigan’s law was unconstitutional?
Yes and yes. And yet here we are.
Indeed, the new Michigan law and lawsuit raise startlingly similar dormant Commerce Clause and Twenty-First Amendment questions that many assume were settled by the U.S. Supreme Court in Granholm. Three years after Granholm, a federal court ruled against Michigan in another wine-shipment case that was even more on-point.
Just what the hell is Michigan doing?
The Michigan law at issue in Granholm permitted Michigan wineries to ship their products directly to consumers in the state but prohibited out-of-state wineries from doing the exact same thing. The Court held in that case that the Michigan law “discriminate[s] against interstate commerce in violation of the Commerce Clause [and] is neither authorized nor permitted by the Twenty-first Amendment.”
One key question that arose in the wake of Granholm was whether “states will remove the discriminatory legal impediments to interstate wine shipping.” Most states have, according to the National Law Review, which notes that “nearly every state now allows wineries to ship wine directly to in-state consumers.”
Retailers—wine superstores and others—are now bumping up against the Michigan law.
Notably, Granholm pitted what I think is the Constitution’s most overrated amendment—the Twenty-First—against perhaps its most important unwritten rule, the so-called dormant Commerce Clause. Thankfully for wineries and consumers, the latter won.
But what’s so lousy about the Twenty-First Amendment? After all, didn’t it end Prohibition? Hardly. Instead, it simply shifted much of the power to prohibit and incessantly regulate alcohol from the federal government to the states. The Twenty-First Amendment—particularly the language in its second section, and the way lawmakers and courts have interpreted that language—is why we have things like dry counties, happy hour bans, and a mandatory three-tier system in forty-nine of fifty states.
While in one sense Granholm reined in state power under the Twenty-First Amendment, in another it also demonstrated the awesomeness of that power. In its ruling in the case, the Supreme Court made clear that states could still use their breathtaking powers to regulate alcohol under the Twenty-First Amendment to ban all shipments of wine. Period. The Court simply held they couldn’t favor in-state producers over out-of-state producers if they did so.
The Twenty-First Amendment sucks.
Michigan is hardly alone in having crappy Twenty-First Amendment inspired alcohol-distribution laws in place. Pennsylvania law forces anyone driving through the state with so much as a can of beer in their car and who might want to stop off in the state for a spell to, say, learn more about “Indepedence” or the “Consitution,” to buy a distributor’s license from the state.
I have no idea what might become of the current Michigan law if this case were to make it to the Supreme Court. Only four Justices who ruled in the 2005 case remain on the bench: Justices Kennedy, Thomas, Ginsburg, and Breyer. Of those four, three (Justices Kennedy, Ginsburg, and Breyer) voted with the majority in the 5-4 decision overturning the Michigan law. Throw in the current eight-member makeup of the court, the likelihood the Court may soon boast a new member, and the dedication of many on the bench to upholding precedent, and I suspect the Court would again rule against Michigan. As it should.