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.

Although the Twenty-First Amendment recognized the states’ authority to control the “importation” of alcoholic beverages,1 it did not displace other provisions of the Constitution that restrict the states’ power over international trade between the United States and foreign countries.2 One such provision, the Import-Export Clause, generally prohibits states from laying “imposts” or “duties” on imports or exports with foreign nations, absent congressional consent, except for purposes of covering charges associated with state inspection laws.3 In Department of Revenue v. James B. Beam Distilling Co., the Supreme Court held that the Twenty-First Amendment had not repealed the Import-Export Clause with respect to alcoholic beverages.4 Thus, the State of Kentucky lacked authority to levy an excise tax on imported Scotch whiskey while the liquor remained in an unbroken package in the original importer’s possession and had not been resold or used within the state.5

The Commerce Clause, which gives Congress the power to regulate interstate and foreign commerce, also limits the states’ regulatory authority over international trade in alcoholic beverages. The Supreme Court has held that the Commerce Clause “operates with full force whenever one State attempts to regulate the transportation and sale of alcoholic beverages destined for distribution and consumption in a foreign country or another State.” 6 The dormant aspects of Congress’s commerce power thus nullified New York’s attempt to prohibit the importation of out-of-state liquor for delivery to a retailer at John F. Kennedy Airport that sold the beverages duty-free to departing international airline passengers.7 In rejecting the state’s argument that the Twenty-First Amendment authorized prohibition as a means of preventing the diversion of liquor into the state’s local market, the Court noted that the transactions were supervised by federal customs authorities and destined for delivery to passengers upon their arrival in a foreign country.8

Footnotes

1

See Tenn. Wine and Spirits Retailers Ass’n. v. Thomas, No. 18-96, slip op. at 26 (U.S. June 26, 2019).

2

For information on the states’ powers to regulate interstate commerce in alcoholic beverages with other states, see and .

3

U.S. Const. art. I, § 10, cl. 2. For more information, see .

4

377 U.S. 341, 345–46 (1964). Although the Supreme Court has not overruled James B. Beam Distilling Co., it subsequently modified its approach to determining whether a state tax is an “impost” or “duty” under the Import-Export Clause, evaluating (1) whether it interferes with the Federal Government’s ability to speak with one voice in commercial relations with foreign governments; (2) whether it diverts import revenues from the federal to state government; and (3) whether it may jeopardize harmony between the states. For more on the Court’s modern approach to Import-Export Clause cases, see .

5

James B. Beam Distilling Co., 377 U.S. at 342–43. The Court distinguished two of its prior decisions upholding fees imposed on the possession or sale of liquor brought into the United States from a foreign country, Gordon v. Texas, 355 U.S. 369 (1958) and De Bary v. Louisiana, 227 U.S. 108 (1913), on the grounds that these cases did not involve taxes on imports.

6

Brown-Forman Distillers Corp. v. N.Y. State Liquor Auth., 476 U.S. 573, 585 (1986) (citation omitted).

7

Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324, 325–26, 329–34 (1964).

8

Id. at 329–34. For more on the Supreme Court’s Dormant Foreign Commerce Clause jurisprudence, see . Although the Supreme Court’s decision in Idlewild appears to rest on Dormant Foreign Commerce Clause principles, the case could also be characterized as a preemption decision. See Idlewild, 377 U.S. at 334 ( “[T]he State has sought totally to prevent transactions carried on under the aegis of [customs laws] passed by Congress in the exercise of its explicit power under the Constitution to regulate commerce with foreign nations. This, New York cannot constitutionally do.” ).