The Power of States to Regulate the Sale of Alcoholic Beverages (2024)

The 18th Amendment, ratified in 1919 and with an effective date of January 17, 1920, declared (with minor exceptions) the production, transport, and sale of alcohol to be illegal. Prohibition was a disaster, leading to more organized crime as well as poisoning from crudely distilled alcohol. By 1933, the "wets" secured ratification of the 21st Amendment, repealing the 18th Amendment, but also establishing the power of states to regulate the importation and possession of intoxicating liquors within their own borders. It is the meaning of Section 2, recognizing state authority to regulate alcohol that has been the subject of a series of rather inconsistent Supreme Court decisions. Under a maximalist theory of Section 2, states have complete authority to regulate alcohol in their own borders, even in ways that would otherwise be inconsistent with other provisions of the Constitution (including the Commerce Claue, the Equal Protection Clause, and the First Amendment). Under the minimalist theory, however, the 21st Amendment gives the states to regulate the importation of alcohol but not in ways the violate other previously enforceable provisions of the Constitution.

The Courts first look at the 21st Amendment, in State Board of Equalization v Youn (1936), resulted in a fairly maximalist interpretation of state powers. The Court upheld a California law imposing a $500 fee to import beer into the state that had been challenged by breweries in Wisconsin and Missouri as a violation of the dormant Commerce Clause because it discriminated against of state commerce. The Court recognized that in the absence of the 21st Amendment, the law would have been a clear violation of the Commerce Clause.

In LaRue v California (1972), the Court considered another California law, this one that denied liquor licenses to establishments in which persons performed acts "simulating sexual intercourse, masturbation, beasti*al*ty, oral copulation,...or touching, caressing, or fondling on the breast, buttucks, anus or genitals." The state law was a response to the opening of "bottomless" dancing clubs associated with some of the listed activities. Because nude dancing is not "obscene" under Supreme Court decisions, and in fact was suggested to have a degree of First Amendment protection, the state relied on its 21st Amendment power to regulate alcohol sales, assuming that the lewd activities in question might not be otherwise within its power to prohibit. The Supreme Court concluded that the Twenty-First Amendment qualifies the First Amendment, thus allowing states to regulate expression in establishments that serve alcohol, even when such restrictions might violate the First Amendment if applied elsewhere. Ten years later in N. Y. State Liquor Authority v Bellanca, the Court extended reasoning to topless dancing. The Court declared, "Whatever artistic or communicative value may attach to topless dancing in overcome by the state's exercise of its broad powers arising under the Twenty-first Amendment."

In 1996, however, in the 44 Liquormart, Inc. v Rhode Island, the Court disavowed its earlier conclusion and made clear that the Twenty-First Amendment, while it may allow restrictions on alcohol that would otherwise violate the Commerce Clause, in no way qualifies the reach of the First Amendment. The Court therefore concluded that Rhode Island's restrictions on advertising the price of alcohol violate the First Amendment. (Similarly, in striking down an Oklahoma law that allowed 18 to 20 year-old females, but not males, to buy beer, the Court said that the 21st Amendment gave states no power to enact laws that would otherwise violate the Equal Protection Clause.)

In 2005, in the consolidated cases of Granholm v Heald and Swedenburg v Kelly, involving challenges to Michigan and New York laws respectively, the Court held that Section 2 of the 21st Amendment did not give states the power to discriminate against out-of-state wine sellers in ways that would otherwise violate the Commerce Clause. Ruling 5 to 4 in Granholm, the Court struck down a Michigan law banning out-of-state wineries from selling wine to Michigan residents over the Internet. Michigan allowed Michigan wineries to directly ship to consumers, but prohibited non-Michigan wineries from doing the same. The Court noted, however, that the 21st Amendment clearly gave the state the power to ban ALL direct shipments of wine (or other alcoholic beverages) to consumers if it chose to do so. Four dissenters argued that the history of the 21st Amendment proved that it was meant to exclude regulation of alcoholic beverages from the normal prohibitions on state discrimination under the Commerce Clause--however misguided that policy might seem today.