Court Strikes State Residency Requirement for Liquor Store Licenses

Steven D. Schwinn, John Marshall Law School

The Supreme Court ruled today in Tennessee Wine and Spirits Retailers Ass'n v. Thomas that Tennessee's 2-year durational-residency requirement for retail liquor store license applicants violates the dormant Commerce Clause and is not saved by the Twenty-first Amendment.

The 7-2 ruling, authored by Justice Alito, is a strong endorsement of the Court's dormant Commerce Clause jurisprudence, which sets limits on states' economic protectionism and discrimination against interstate commerce.

Justice Alito, joined by Chief Justice Roberts and Justices Ginsburg, Breyer, Sotomayor, Kagan, and Kavanaugh, wrote first that the residency requirement violated the dormant Commerce Clause. The Court said that while "[i]n recent years, some Members of the Court have authored vigorous and thoughtful critiques of" the dormant Commerce Clause,

the proposition that the Commerce Clause by its own force restricts state protectionism is deeply rooted in our case law. And without the dormant Commerce Clause, we would be left with a constitutional scheme that those who framed and ratified the Constitution would surely find surprising.

The Court went on to say that Tennessee's 2-year durational-residency requirement "plainly favors Tennesseans over nonresidents" in violation of the doctrine.

As to the Twenty-first Amendment, the Court said that despite "the ostensibly broad text of Section 2 . . . we have looked to history for guidance, and history has taught us that the thrust of Section 2 is to 'constitutionaliz[e]' the basic structure of federal-state alcohol regulatory authority that prevailed prior to the adoption of the Eighteenth Amendment." Under that reading, the Court said that "as recognized during that period, the Commerce Clause did not permit the States to impose protectionist measures clothed as police-power regulations."

In short, "Section 2 cannot be given an interpretation that overrides all previously adopted constitutional provisions," including the dormant Commerce Clause, and therefore Tennessee's residency requirement isn't saved by the Twenty-first Amendment.

Justice Gorsuch, joined by Justice Thomas, dissented. Justice Gorsuch argued that the plain text of the Twenty-first Amendment, the history, and early Court interpretations all point toward permitting state residency requirements:

But through it all, one thing has always held true: States may impose residency requirements on those who seek to sell alcohol within their borders to ensure that retailers comply with local laws and norms. In fact, States have enacted residency requirements for at least 150 years, and the Tennessee law at issue before us has stood since 1939. Today and for the first time, the Court claims to have discovered a duty and power to strike down laws like these as unconstitutional.