Local bev/al retailers lost big this morning, when the U.S. Supreme Court ruled Tennessee’s two-year residency requirement was unconstitutional. While it’s likely that the court might accept a shorter residency requirement (1 month? 6 months? 1 year?) there is virtually nothing left to prevent large retailers from moving into every state.
To be sure, the court did say states could limit the number of stores a person could own. But whether it is one store or 10 or 500 is almost irrelevant. You can expect some out-of-state retailers to be attempting to ship into every state as early as this weekend.
Michelle Korsko, President/CEO, Wine & Spirits Retailers of America, said the decision “erodes the Twenty-First Amendment and primary state authority. Still, she said, “the vast majority of state laws aren’t affected by this ruling.”
Tom Wark, who runs the National Association of Beverage Retailers, made it clear retailers will seek to ship into any state they choose. He called the Supreme Court’s decision an “historic win for both free trade and wine consumers across the country.
“Most important, Wark said, “is the Court’s decision that the non-discrimination principles laid out in the Supreme Court’s 2005 Granholm v. Heald decision overturning bans on winery shipping also apply to retailers. This determination by the Court is in direct contradiction to claims by alcohol wholesalers and retailers, courts and other commentators that states may discriminate against out-of-state retailers. Today the Court said they may not.“
Just in case that isn’t clear enough, Wark drove home the message: “With this decision, the effort to modernize and bring fairness to the distribution and wine shipping laws of the states begins in earnest. While we expect the opponents of free trade and supporters of protectionism to fight this evolution in the American marketplace, we are equally confident that this Supreme Court decision will lead to greater access to the hundreds of thousands of wines many consumers do not currently have access to due to protectionist wine shipping laws.”
How this decision will affect wholesalers remains to be seen. We think one result may be that a retailer, such as one with a store (or stores) in the Chicago are might simply ship from his store into any state from which he can get an order.
But it’s equally possible that wholesalers might reconfigure their operations to serve as the warehouse for retailers, so that if you order a bottle of, say, Jack Daniel’s from a Chicago retailer to be delivered to your home in Maryland, the order will be sent by the Chicago retailer to the Maryland wholesaler who will dispatch it to you via Drizly or a similar service.
Ultimately, we think, the winner in this case won’t be Total Wine or Binny’s or any local wholesaler. The winner will be Amazon, which will simply apply for a retail license in every state.