Protectionist Tennessee Law Struck Down by U.S. Supreme Court

Tennessee held on to its protectionist liquor store law as long as possible. Prior to a Supreme Court decision on June 25, 2019, state code required an applicant to reside in-state for essentially 12 years to qualify for a retail liquor license, a regulation that critics say was unconstitutional and engineered to suppress competition. The U.S. Supreme Court agreed; and the code section was struck down by a 7-2 vote. In a 57 page opinion, Justice Samuel Alito delivered the opinion of the court in Tennessee Wine and Spirits Retailers Association v. Russell, holding that the Tennessee residency duration requirement “violates the Commerce Clause of the U.S. Constitution and is not shielded by the 21st Amendment”. This affirmed an earlier decision made by the Court of Appeals for the Sixth Circuit which invalidated certain provisions of the residency requirement.

State lawmakers in Tennessee had reliable notice that a constitutional gremlin was hiding in the code section that protected in-state liquor retailers from new competition. On two occasions the Tennessee Attorney General (AG) opined that the residency duration was unconstitutional, one opinion in 2012, the second in 2014. Pursuant to those AG opinions, the Tennessee Alcoholic Beverage Commission (TABC) routinely granted licenses to applicants that did not meet the residency duration requirement. Then the Ketchum family moved to Memphis, Tennessee from Utah and applied for a retail liquor license, which the liquor retailer’s organization intended to stop.

Tennessee Wine and Spirits Retailers Association, the petitioner in a federal suit against the Executive Director of Tennessee Alcoholic Beverage Commission, intended to preserve the Tennessee code section that protected its membership from new competitors like Doug and Mary Ketchum. The Institute for Justice represented the Ketchums in the U.S. Supreme Court, arguing that Tennessee law deprived them of economic liberty by imposing an unreasonable waiting period for a liquor retail license. Tennessee elected not to argue on behalf of its own statute, relying on the Tennessee Wine and Spirits Retailers Association and their private attorneys to pursue the case.

Michael Bindas, a senior attorney with the Institute for Justice, said, “Today’s ruling makes plain that all Americans have a right to earn an honest living and that government cannot deny someone that right simply because of where they live or used to live. No state may discriminate against out-of-staters or newcomers to protect established, in-state interests from competition.”

Scott Bullock, President and General Counsel of The Institute for Justice commented “we hope to take this strong language that the court stated against economic protectionism and apply it to other cases and instances where government and private businesses are engaged in protectionism”.

It remains to be seen if Tennessee lawmakers will choose to examine other protectionist laws that favor special interests.

 

David Seal is a long time educator in Jefferson County, as well as a recognized artist and local businessman. He has also served Jefferson County as a County Commissioner and is a lobbyist for the people on issues such as eminent domain and broadband accessibility on the state level.

This article originally appeared in the Jefferson County Post.

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