GRANHOLM V. HEALD, 544 U.S. 460 (2005)
In Granholm v. Heald, 544 U.S. 460 (2005), the Supreme Court struck
down laws in Michigan and New York that barred out-of-state wineries from
selling directly to consumers. The majority opinion written by Justice Kennedy
viewed these laws as classic trade barriers that violated the Commerce Clause,
exceeded state power under the 21st Amendment, and were not necessary to
advance the states’ interests in preventing underage access and collecting
revenue.
In this case, the State of Michigan allowed in-state wine retailers to sell
wine directly to consumers and could ship the product to their homes. Only a
small percentage of the approximate 3,000 wineries in the country distribute
their wine nationally, so the other, smaller wineries depend on local business
or on shipping directly to the customer. Twenty four states do not allow
shipping wine at all. Wineries located outside of Michigan could only sell wine
through a complicated 3-tiered system and could not sell directly to
consumers.
New York has a slightly different system. But, in-state wine producers do
not have to go through the three-tiered system for selling in New York State.
The result in New York, as in Michigan means that local wineries have a huge
advantage by being able to sell directly and to ship directly to consumers.
The United States Supreme Court held that the state laws that created
an extra burden on the out-of-state sellers and created a scheme of preferential
treatment for the in-state sellers, and that these laws were in violation of the
Commerce Clause. The Court wrote that free trade was one of the foundations
of our government, which means that the states may not prohibit trade from
out-of-state merchants.
Next, the Court took up the 21st Amendment as it applied to this case. It
clearly concluded that this amendment was supposed to allow each state to
have its own system for the distribution of liquor. And, while it allowed each
state to require all sellers to go by the rules, it does not support any state
designing a preferential scheme favoring in-state producers.
This may seem to be a narrow ruling, only affecting a few merchants in a
few states. However, the opinion is so strong and clearly meant to broadly
warn that any state laws concerning wine that effectively prohibit interstate
commerce are unconstitutional.
My Thoughts:
Upon first reading this decision, my thought was that there are all types
of protection for merchants in order to help them advance their business and
not be unnecessarily disadvantaged. So, the Michigan and New York laws did
not seem to be out of line, or discriminatory. After all, the wineries that are in
another state, can market their wine locally. But the “big picture” is that if
each state passed laws prohibitive of interstate commerce just to “protect” a
local industry, the economy would grind to a halt. And the 21st Amendment
specifically speaks to the sale of alcohol. The Court made the right call here.