Retail Display Network, which installed and operated seven-foot digital screen displays in 100 Southern California wine and spirits retailers, lost its challenge to California’s tied-house law that bans alcohol suppliers and wholesalers from providing retailers direct or indirect funding for advertising.
On its screens, RDN ran ads on a two-minute loop consisting of 15-second ads. It agreed to share part of its revenue with the off-premise retailers. Among the advertisers were St-Germain and Moet Hennessy. The bev/al suppliers cancelled the contracts, saying they feared the California ABC would enforce the tied house statute against them.
Other suppliers – including Anheuser-Busch, Beam Global, Diageo, Jack Daniel’s Tennessee Whiskey, MillerCoors and Skyy – refused to contract with RDN because of the same concern, leading to the lawsuit seeking a declaration the statute violates the First Amendment because it impermissibly restricts commercial speech.
The U.S. 9th Circuit Court of Appeals rejected RDN’s argument, saying the statute in question” directly and materially advances the State’s interest in maintaining a triple-tiered market system.”
National Beer Wholesalers Association (NBWA), along with the Wine and Spirits Wholesalers of America, filed an amicus brief in support of the State of California in this case. California Beer & Beverage Distributors and the Wine & Spirits Wholesalers of California, Inc., Public Citizen, California Craft Brewers Association and Brewers Association also filed amicus briefs in the case.
NBWA President & CEO Craig Purser called the 9th Circuit ruling “a significant win for state-based alcohol regulation and statutes designed to prevent vertical integration and preserve the independence of each tier in the alcohol industry. This is an important decision for responsible alcohol regulation and avoids a dangerous precedent that would have undermined states’ primary authority to regulate alcohol.”