FINE(ING) WINE: CHALLENGING DIRECT-SHIPMENT LICENSING FEES ON DORMANT COMMERCE CLAUSE GROUNDS.

Citation metadata

Date: May 2021
From: William and Mary Law Review(Vol. 62, Issue 6)
Publisher: College of William and Mary, Marshall Wythe School of Law
Document Type: Article
Length: 11,150 words
Lexile Measure: 2340L

Document controls

Main content

Article Preview :
INTRODUCTION 2108 I. LICENSING TO CHILL: THE CHILLING EFFECT OF STATE DIRECT-SHIPMENT LICENSING FEES ON DTC COMMERCE 2111 A. State Direct-Shipment Licensing Frameworks 2111 B. DtC Licensing Fees Are Prohibitively Expensive for Wine Producers 2113 II. LEGAL VINTAGES: CONSTITUTIONAL FRAMEWORKS GOVERNING DTC LICENSING 2115 A. The Twenty-First Amendment 2116 B. The Dormant Commerce Clause 2119 III. RED, RED FINE: DTC LICENSING FEES VIOLATE THE DORMANT COMMERCE CLAUSE 2125 A. Wine DtC Licensing Requires a "Heightened" Balancing Test 2126 B. Weighing State Interests 2129 IV. SOUR GRAPES: ADDRESSING COUNTERARGUMENTS 2132 A. Rationality Review 2132 B. DtC Licensing Fees as a Matter of State Policy 2134 CONCLUSION 2135

INTRODUCTION

"[W]ine," Thomas Jefferson once remarked, "[is] a necessary of life with me." (1) An avid wine consumer, Jefferson notoriously spent over $16,500 on imported wines during his presidency alone. (2) But imagine if, much to Jefferson's chagrin, he could not have had his favorite wines shipped directly to Monacello because the producer had not paid the Commonwealth of Virginia for a direct-to-consumer shipping license. (3) Jefferson's worst nightmare is a reality for Americans in most states today, where costly licensing fees hinder direct-to-consumer (DtC) shipping from out-of-state wine producers. (4)

Following the repeal of Prohibition in 1933, states were given broad discretion to control the production, distribution, and sale of alcoholic beverages. (5) Contemporary regulations vary greatly state-by-state, but many states have adopted frameworks encouraging domestic wine production by allowing wine producers to sell directly to consumers. (6) At the core of DtC regulations is the requirement that producers obtain a direct-shipment license. (7)

Since the Supreme Court's landmark ruling in Granholm v. Heald, which invalidated laws in New York and Michigan that permitted in-state wineries to ship wine directly to consumers but otherwise prohibited out-of-state wineries from doing the same, (8) most states have extended direct shipment benefits to both in-state and out-of-state wineries. (9) While the Granholm Court implied that states could police direct-shipment through "an evenhanded licensing requirement," (10) the reality is that producers are required to pay exorbitant licensing fees on a state-by-state basis if they wish to ship directly to consumers across the country. DtC licensing fees, "while in [the] aggregate are reasonable expenses for in-state wineries with significant volumes of direct sales, [are] prohibitively expensive" for out-of-state wineries. (11) Because DtC wine shipments have become an increasingly important part of the wine industry, (12) there are emerging concerns that state scrutiny of DtC wine shipping will be intensified. (13)

This Note advocates for a constitutional challenge to state DtC licensing fees, arguing that the licensing fees impose an undue burden on interstate commerce. To this end, this Note will apply the Supreme Court's dormant Commerce Clause jurisprudence to state DtC wine licensing fees. Under this framework, the Court has almost always invalidated state laws that discriminate against out-of-state interests absent a showing that the law is necessary to achieve a legitimate purpose other than economic protectionism. (14) If the state law is not found to discriminate against...

Source Citation

Source Citation   

Gale Document Number: GALE|A666682279