Wine Business Monthly Quotes Todd Friedman on Liquor License Residency Requirements Case Now Before U.S. Supreme Court

Corporate attorney and co-chair of Stoel Rives’ Agribusiness, Food, Beverage and Timber Industry Group Todd Friedman was quoted in Wine Business Monthly in an article titled “Should Granholm Extend to Retailers?” [PDF], published April 2019. The article discusses possible outcomes of a case argued recently before the U.S. Supreme Court over whether the state of Tennessee’s requirements that applicants for a retail liquor license must have resided within Tennessee for a minimum specified period violate the Dormant Commerce Clause of the U.S. Constitution, which prohibits state legislation that discriminates against interstate commerce.

In 2016 the owners of a nationwide chain of liquor stores applied for a liquor license to operate stores in Knoxville and Memphis, but the Tennessee Wine and Spirits Retailers Association threatened to sue to enforce the requirement that an applicant must have been a state resident for two years to be eligible for such a license. (The state also imposes a 10-year residency requirement to renew a license.) The U.S. Court of Appeals for the Sixth District ruled that the residency requirements were unconstitutional, citing Granholm v. Heald, a Supreme Court ruling that similar laws applying to out-of-state wineries are unconstitutional.

Friedman expects that the Supreme Court will strike down the residency requirement for renewals and possibly the one for new licenses, though he believes the ruling will be a narrow one, and will not reach the constitutionality of requirements that a retailer be located in-state to ship to customers within the state. “I think the most likely outcome is that the court says the [Tennessee] law and other similar, thinly veiled discriminatory laws against non-residents violate the Commerce Clause, perhaps without providing a test of what is and what isn’t discriminatory,” he said. “I doubt that any ruling will reach the physical presence requirements as that does not appear to be necessary to decide this case.”