What could Tennessee Wine and Spirits Retailers Association v. Thomas mean to Pennsylvania?

I am not a lawyer, and some or all of my thoughts could be right or wrong, so maybe this post should be filed under wishful thinking, but...there seems to be a crack in the control wall. It's from the hammer blow struck by the Supreme Court's decision in Tennessee Wine and Spirits Retailers Association v. Thomas, handed down on June 26. Take a look with me and see what you think. 

The future of the PLCB?

The facts of the case:

To sell liquor in Tennessee, you need a license from the Tennessee Alcoholic Beverage Commission (TABC). That's pretty normal...in states where private liquor stores are allowed. But there was a catch in Tennessee. Under Tennessee Code, to get a license, you must have been a resident of the state for two years. There was a ten year residency required to renew a license, so don't plan on leaving. And yes, the same requirements were there for corporations.

The case stems from two license applications that did not meet the residency requirement. The TABC was planning to approve their applications anyway...until the Tennessee Wine and Spirits Retailers Association informed TABC that if they did, they planned to sue. (You know...to protect their competitive advantage.) The TABC preemptively went to court to determine the constitutionality of the requirement. The district court ruled that it violated the dormant Commerce Clause of the U.S. Constitution (Been saying that about the PLCB for years! -- Lew). The Sixth Circuit affirmed, and it was off to the Supremes, because the Association wasn't giving up on their anti-competitive lawsuit. 

Cracking the wall around the 21st Amendment

The Supremes Say: 

In a 7-2 decision (Justices Gorsuch and Thomas dissenting), the court found that: Under the dormant Commerce Clause, notwithstanding the Twenty-First Amendment, a state may not regulate liquor sales by granting licenses only to individuals or entities that have met state residency requirements.

The 21st Amendment has long been held to allow states free rein on writing laws controlling the sale of alcohol within their borders. Section 2 of the Twenty-First Amendment states: “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.”

But a number of Supreme Court decisions since the 1990s -- 44 Liquormart, Granholm, etc. -- have been chipping away at the absolute nature of such control. Tennessee Wine and Spirits takes that quite a step further. The Court’s Commerce Clause jurisprudence holds that “a state law that discriminates against out-of-state goods or nonresident economic actors can be sustained only on a showing that it is narrowly tailored to ‘advance a legitimate local purpose.’” Tennessee’s residency requirement clearly favors residents over nonresidents, hard to justify as a "legitimate local purpose" in the face of the Commerce Clause.

That's just what the Supreme Court found. The Court noted that at the time the Eighteenth Amendment (nationwide prohibition) was ratified, it had already been established that the Commerce Clause prevented states from discriminating against the citizens and products of other states. Against this backdrop, when the Twenty-First Amendment was ratified, “the Commerce Clause did not permit the States to impose protectionist measures clothed as police-power regulations.” Thus, while § 2 of the Amendment gives states latitude with respect to the regulation of alcohol, it does not allow them to violate the nondiscrimination principle.

(A discrimination, maybe, against every citizen and entity who would like to sell alcohol in competition with the state's police-enforced monopoly?)

The Court concluded that protectionism is not a legitimate local purpose and that the residency requirement “has at best a highly attenuated relationship to public health or safety.”

My Opinion
Our state law does discriminate against out-of-state citizens and out-of-state economic actors. It also imposes police powers to maintain and enforce protectionist measures. Read the beginning of the Liquor Code Section 104(a):"This act shall be deemed an exercise of the police power of the Commonwealth for the protection of the public welfare, health, peace and morals of the people of the Commonwealth and to prohibit forever the open saloon, and all of the provisions of this act shall be liberally construed for the accomplishment of this purpose."

In the above decision, the Supreme Court held that "Protectionism is not a legitimate local purpose" and stresses the REGULATORY authority, not monopoly authority of the state. But does that make Pennsylvania's Almighty Liquor Code invalid? That just might be the next question the Court will have to decide. How much does the 21st Amendment give the states the right to impose protectionist, monopoly, discriminatory measures, instead of regulation that allows the intent of the Commerce Clause? How much does it matter if the state allows private retailers or only state store sales?

As I said, I'm not a lawyer. But it does make me think of what might be coming down the road at some point. I think that Costco and Total Wine teaming up will have the resources to get it done and none too soon for me.

Privatize.

I guess I'm on the official Enemies list

Look who I found poking around one of my accounts.

Glad to know they care enough to send the top dog.

An update: 
Ms Diehl has figured out how to poke around anonymously and now that same "Who's viewed your profile" looks like this:

Wine Kiosks DEAD; Conti says, "It certainly wasn't a failure."

The wine kiosks are dead, they've been taken off life support. As I predicted, the PLCB has used their trumped-up charges against the kiosks' hapless creator, the so-called "Simple Brands," as an exit strategy. They are leaving this debacle bruised, battered, smoking, and humiliated, the kiosks -- their bright, innovative idea to give the consumer what they want (that their own people told them was "deficient") -- rejected by Wegmans and Walmart as well as the state's consumers...and what does Joe Da CEO have to say about the whole thing, this 15-month circus of embarrassing failure?

"It certainly wasn't a failure."

and

"I still think there is merit to the program."

and

"It didn't end up successful, but we learned a lot and we will end up better for it."

Can we run a drug screen on this man? Because he is not in touch with reality at all.

So where are we...the program was an abject failure (except at making the PLCB's top management look like the arrogant, clueless bureaucrats they are), the PLCB is going after "Simple Brands" for $1.2 million in charges (that the company's lawyer -- finally making comment -- called "malarkey," noting that the PLCB was overbilling for maintenance and hardware) through the Board of Claims (a system Conti admitted was glacially slow, noting that one case took 18 years to settle), and, oh yeah, "Simple Brands" is suing the PLCB for $81 million in damages.

And the PLCB (and AG Jack Wagner, and Senator Scarnati) want us to "take off the handcuffs" of the Liquor Code to let them realize their full potential as a government-owned-and-run monopoly business? Maybe we ought to get out some actual handcuffs.

Lawsuit looming over PLCB's monopoly extension at Garces Trading Co.

And it's about time.

Brownstoner, the Philly real estate blog, is reporting that the Washington Square West Civic Association, State Rep. Babette Josephs are joining with about a dozen Philly restaurants -- Le Bec Fin, Tria, Lolita, Fergie's, and Caribou Cafe among them -- in filing suit against the PLCB over the "wine boutique" they've placed in Garces Trading Company. It's not fair to work with one restaurant owner, they say.

The following quote pretty much summed it up for me, especially the first sentence:

"I have nothing but admiration for Jose Garces—this issue is not about him," Jon Myerow, the owner of Tria, said in a statement. "The issue is that of all restaurants being able to compete on a level playing field. In no other state has the alcohol governing body entered the restaurant industry to compete against the very businesses it regulates, all while partnering with hand-selected competitors. The incredible amount of choice we enjoy when dining out shows the free market at its best. If restaurants are forced to compete against the state, eventually there will be fewer restaurants."

Right. Remember Dominic Origlio's line from the PLCB hearings?  "I would be remiss without mentioning what I believe is the underlying cause of these regulatory and enforcement problems. Pennsylvania's beer industry is regulated by its competitor -- the Liquor Control Board, a state run corporation which sells wine and liquor."

Inherently unfair; now expressly unfair. Get Pennsylvania out of the retail booze business. Today.