Twenty-First Amendment, Section 2:

The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

The Supreme Court’s jurisprudence on the relationship between the Commerce Clause and the Twenty-First Amendment evolved gradually in the decades after the Amendment’s 1933 ratification. By the 1960s, the Supreme Court had abandoned the notion that the Twenty-First Amendment entirely “repealed” Congress’s power over interstate commerce in alcoholic beverages.1 During the 1980s, the Court more clearly rejected the view that the Twenty-First Amendment allowed the states to discriminate against such commerce without a legitimate justification.2 For example, in the 1984 case Bacchus Imports, Ltd. v. Dias, the Supreme Court held that the Twenty-First Amendment could not shield a state tax that discriminated against liquor imports from Dormant Commerce Clause scrutiny.3 The Court struck down a twenty percent Hawaii excise tax on wholesale liquor transactions, including all imports, that exempted two domestically produced alcoholic beverages, okolehao and fruit wine.4 According to a majority of the Justices, the tax could not be maintained under the Twenty-First Amendment because it aimed to protect local industry rather than “combat the perceived evils of an unrestricted traffic in liquor.” 5 The Court wrote, “It is by now clear that the [Twenty-First] Amendment did not entirely remove state regulation of alcoholic beverages from the ambit of the Commerce Clause.” 6

The Supreme Court continued to subject the states’ regulation of alcoholic beverages to Dormant Commerce Clause restrictions in the 1980s, striking down state price affirmation statutes that discriminated against out-of-state economic interests.7 For instance, in a 1986 case, the Court invalidated a New York law that conditioned a New York-licensed liquor producer’s ability to sell alcoholic beverages to wholesalers in New York on the producer’s affirmation that it would charge wholesalers located elsewhere in the United States an amount no less than its scheduled prices during the remainder of the month.8 In 1989, the Court struck down a Connecticut price affirmation statute that required out-of-state shippers of beer to affirm that the prices they charged Connecticut wholesalers during a particular month were “as of the moment of posting, no higher than the prices at which those products” were sold in bordering states.9

In both cases, the Supreme Court held that the statutes violated the Dormant Commerce Clause doctrine because they discriminated against out-of-state commerce and directly regulated out-of-state commercial transactions.10 According to the Court, the state laws thus disrupted the “maintenance of a national economic union” without adequate justification.11 The Court determined that the states could not rely upon their Twenty-First Amendment powers to maintain these price affirmation requirements because such authority did not extend to the regulation of out-of-state commerce in alcoholic beverages.12

Footnotes

1

E.g., Hostetter, 377 U.S. at 331–32. Even before the 1960s, the Supreme Court had suggested some limits to the states’ Section 2 powers. See, e.g., Nippert v. City of Richmond, 327 U.S. 416, 425 n.15 (1946) (stating, in dicta, that “even the commerce in intoxicating liquors, over which the Twenty-First Amendment gives the States the highest degree of control, is not altogether beyond the reach of the federal commerce power, at any rate when the State’s regulation squarely conflicts with regulation imposed by Congress governing interstate trade or traffic . . .” ) (citing United States v. Frankfort Distilleries, Inc., 324 U.S. 293, 295, 299 (1945) (upholding the federal government’s prosecution of alcoholic beverage producers, wholesalers, and retailers for violating the Sherman Antitrust Act by conspiring to fix and maintain retail prices of alcoholic beverages imported into Colorado and opining that the Twenty-First Amendment did not grant the states “plenary and exclusive power to regulate the conduct of persons doing an interstate liquor business outside their boundaries.” )); see also .

2

This shift in the Court’s jurisprudence accompanied a series of decisions in which the Court determined that the Twenty-First Amendment did not authorize the states to disregard their obligations under various other provisions of the Constitution when regulating alcoholic beverages. E.g., Capital Cities Cable v. Crisp, 467 U.S. 691, 712 (1984) ( “[O]ur prior cases have made clear that the [Twenty-First] Amendment does not license the States to ignore their obligations under other provisions of the Constitution.” ); see also .

3

468 U.S. 263, 268–76 (1984).

4

Id. at 265, 276 “Okolehao is a brandy distilled from the root of the ti plant, an indigenous shrub of Hawaii.” Id. at 265.

5

Id. at 268–76.

6

Id. at 275.

7

Healy v. Beer Inst., 491 U.S. 324, 335–43 (1989); Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 578–85 (1986).

8

Brown-Forman Distillers Corp., 476 U.S. at 575–76, 585.

9

Healy, 491 U.S. at 326, 335–43. In contrast to Brown-Forman, the out-of-state beer shippers in Healy could alter the prices they charged to any wholesaler after posting them. Id. at 330.

10

Brown-Forman Distillers Corp., 476 U.S. at 579–84; Healy, 491 U.S. at 335–43 (determining that retrospective price affirmation statutes also violated the Commerce Clause because they necessarily regulate out-of-state prices for alcoholic beverages), overruling Joseph E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35 (1966). In a 2023 case, the Supreme Court emphasized that the price affirmation statutes at issue in Brown-Forman and Healy had a discriminatory impact on out-of-state businesses and consumers, clarifying that the Dormant Commerce Clause doctrine’s rule against state laws with extraterritorial effects is limited to cases addressing “price control or price affirmation statutes that tie[] the price of. . .in-state products to out-of-state prices.” Nat’l Pork Producers Council v. Ross, No. 21-468, slip op. at 9–13 (U.S. May 11, 2023) (citations and internal quotation marks omitted).

11

Brown-Forman Distillers Corp., 476 U.S. at 579–84.

12

Id. at 584–85; Healy, 491 U.S. at 341–43. The Court in Brown-Forman also noted that the New York law might interfere with other states’ Twenty-First Amendment powers because a distiller that had scheduled prices in New York could not immediately lower them to fulfill its regulatory obligations in another state without potentially losing its New York license. Brown-Forman Distillers Corp., 476 U.S. at 585.