AG Says State Liquor Licensing Laws Unconstitutional

Attorney General Bob Cooper says a state law that requires liquor store owners to be Tennessee residents – enacted by state legislators who said they wanted to block “interstate whiskey” – violates the commerce clause of the U.S. Constitution.
State Rep. Jon Lundberg, R-Bristol, who requested the Cooper opinion released Tuesday, says he will next year sponsor legislation to repeal the requirement and hopes it will be a first step toward a comprehensive rewrite of state liquor laws that currently “are not business-friendly and not citizen-friendly.”
The Cooper opinion (full text HERE) deals with statutes applying to both wholesale and retail liquor licenses.
To get a wholesaler license, a corporation’s officers and stockholders must be Tennessee residents for five years and “a majority of its assets” must be located in Tennessee. For a retail package store license, a company must have “all of its capitol stock” owned by persons who have resided in Tennessee for at least two years.
“These residency and corporate asset location requirements for applicants seeking a license as an alcoholic beverage wholesaler or package retailer violate the Commerce Clause of the United States Constitution,” says the opinion.

The opinion says that, under court rulings, a state must have clear and valid reasons for discriminating against people in other states. The opinion quotes from legislative debate on a 1984 amendment to the Tennessee residency requirements law.
“I think all this does is kill interstate whiskey,” the late Rep. John Bragg, D-Murfreesboro, is quoted as telling colleagues in urging support for the legislation. Other similar comments are also quoted.
“In short, the aforementioned legislative history reveals no legitimate public policy to support these residency requirements and indeed provides some evidence that the legislative intent for the residency requirement for retailers was to deter the sale of alcoholic beverages from outside Tennessee, which intent would violate the federal Commerce Clause,” the opinion says.
“These requirements constitute trade restraints and barriers that impermissibly discriminate against interstate commerce and cannot be sustained unless they advance ‘a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives,” the opinion says.
Lundberg has sponsored legislation to allow the sale of wine in grocery stores, which has failed repeatedly in recent years.
“We need to take a comprehensive look at some of our laws when it comes to alcohol,” he said. “I realize common sense and politics don’t go together, but this is really incomprehensible.”
The latter Lundberg remark referred to state law that “says you can buy wine in a liquor store but you can’t buy a corkscrew.”
He also criticized a state law that gives liquor wholesalers what amounts to a geographic monopoly.
“In Bristol, a restaurant, or bars if you will, has to buy from someone in Knoxville. That’s the closest wholesaler… and the wholesalers are all in the five largest cities.”
“I’m a free market person and I don’t see why that makes any sense,” he said.

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