AG: State’s liquor residency requirement unconstitutional

Outgoing Attorney General Robert Cooper has opined that a two-year Tennessee residency requirement for getting a liquor license is unconstitutional despite a provision included in the wine-in-grocery-stores bill that attempted to justify it.

In a 2012 opinion, Cooper had declared the liquor license residency requirement violated the U.S. Constitution’s “commerce clause,” citing a 2008 6th U.S. Circuit Court of Appeals ruling that struck down a similar requirement for licensing of wineries in Tennessee.

In section 27 of the complex, 34-section wine-in-grocery-stores bill, enacted into law as Public Chapter 554 and encompassing many revisions to the state’s alcoholic beverage statutes, legislators made an effort to get around the opinion. It didn’t work, Cooper wrote in responding to a question posed by Sen. Ken Yager, R-Harriman.

Courts have held that residency requirements can be valid “if they serve a legitimate local purpose that cannot be achieved by less discriminatory means.” Section 27 declared that “it is in the best interest of the health, safety and welfare of the state of Tennessee to require all licensees to be residents of the state” because liquor retailers sell products with higher alcohol content than those selling just wine or beer.

The provision further instructs the Alcoholic Beverage Commission to “prescribe such inspection, reporting and educational programs as it shall deem necessary or appropriate” to make sure liquor license holders are following all rules.

“But this stated purpose is not enough to save the residency requirements … from violating the Commerce Clause,” says the opinion. “Notwithstanding the statement … the statute’s distinction between residents and nonresidents appears unnecessary to achieve a ‘higher degree of oversight, control and accountability’ of retail liquor sales.”

Background checks, financial records and other data is readily available for out-of-state residents just as for Tennesseans, the opinion notes, and out-of-state people would be just as much subject to the ABC’s educational and inspection efforts as in-state people — if they could get a license that is denied by the residency requirement.

“The residency requirements facially discriminate against nonresidents and the intent expressed in (the 2014 provision) does not establish a local purpose sufficient to justify the discriminatory licensing provisions,” the opinion says.

Note: Full opinion HERE.