Michigan can prevent out-of-state alcohol retailers from offering at home deliveries to Michigan consumers while denying the same option to an Indiana retailer who doesn’t have a Michigan retail license.
In deciding the case, the U.S. 6th Circuit Court of Appeals ruled the 21st Amendment permits Michigan to treat in-state retailers who operate within the three-tier system differently from out of state retailers.
The case involved an Indiana retailer who claimed the Michigan law violated the dormant Commerce Clause because it treats Indiana retailers differently than Michigan retailers. But the court noted that several other cases in other jurisdictions upheld restrictions on out-of-state retailers.
The decision noted the critical role played by wholesalers in the three-tier system. “Banning direct deliveries from out-of-state,” the 2nd Circuit reasoned, was necessary to ensure “all liquor sold within” the state passed through in-state wholesalers. state control of the wholesalers, it added, promoted “core” Twenty-first Amendment interests by “promoting temperance [and] ensuring orderly market conditions.”
“Opening up the State to direct deliveries from out-of-state retailers necessarily means opening it up to alcohol that passes through out-of-state wholesalers or for that matter no wholesaler at all,” the decision says.
The decision was praised by Craig Purser, president, National Beer Wholesalers Association, who said:
“Permitting Indiana retailers to sell to Michigan consumers would allow those retailers to evade Michigan state law. This decision is a clear victory for physical presence requirements and a strong endorsement of the control state model. The opinion rightly recognizes the essential role played by the three-tier system and the important role of a state’s distributors in promoting a fair alcohol marketplace.”