Vice Squad
Saturday, March 06, 2004
Other States Join Michigan Appeal On Interstate Alcohol Shipments

When the 21st Amendment ended US national alcohol prohibition in late 1933, it did not legalize alcohol. Rather, the Amendment authorized the individual states to regulate alcohol as they saw fit, and explicitly proclaimed that alcohol imports had to adhere to state laws. Many states remained dry for a long time -- Mississippi didn't allow spirits to be sold legally until the late 1960s. And of course, many US counties and cities remain dry even today.

The desire of wine enthusiasts to make out-of-state purchases over the Internet has refueled the debate as to the extent that states can regulate imports. Some state regulations that ban interstate direct wine shipments appear to be designed not to control alcohol distribution to minors, or to ensure alcohol tax collections, but rather, to protect the economic interests of some established in-state distributors and retailers -- at a cost to consumers. These regulations are now being challenged. The court tussles pit the 21st Amendment (giving states control over alcohol imports) with the interstate commerce clause of the Constitution, which preserves the regulation of interstate economic activity to the Federal government.

A federal court ruling in Michigan last year sided with the commerce clause, as Michigan's alcohol control regime forbids direct shipments only from out of state, not in-state, wineries. The state of Michigan has filed an appeal with the Supreme Court, and this past week, 36 other states joined with Michigan in asking the Supreme Court to overturn the earlier decision. Here is a press release from an interested party, the Wine and Spirits Wholesalers of America, Inc.

A Nobel Prize-winning economist, Berkeley Professor Daniel McFadden, has addressed this debate (3 page pdf here); he believes that some state laws (including, presumably, the overturned Michigan system) go too far in sacrificing consumer interests, and for what he believes is a minimal gain to the protected parties. McFadden owns a small winery, too.

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