544 U.S. 460 (2005)
In 2002 and 2003, residents of Michigan and New York joined with small out-of-state wineries to file separate federal lawsuits against state officials responsible for enforcing alcoholic beverage control laws.1
The Michigan plaintiffs included Domaine Alfred, a California winery that produces 3,000 cases annually, and Michigan consumers seeking direct purchases from out-of-state producers.2 The New York plaintiffs included Juanita Swedenburg of Virginia's Swedenburg Estate Vineyard, David Lucas of California's Lucas Winery, and three New York customers who had visited the wineries.3
Michigan and New York both require most wine to move through a three-tier system of licensed producers, wholesalers, and retailers.4 Michigan grants its approximately 40 in-state wineries wine-maker licenses costing $25 that allow direct shipment to consumers, while out-of-state wineries may obtain only a $300 outside-seller license permitting sales solely to in-state wholesalers.5 New York allows wineries using exclusively New York grapes to obtain direct-shipment licenses, but requires out-of-state wineries to establish a branch factory, office, or storeroom inside the state before they may ship directly to consumers.6
The Michigan district court upheld that state's scheme on cross-motions for summary judgment.7 The New York district court struck down the direct-shipment restrictions.8 The Sixth Circuit reversed the Michigan judgment in Heald v. Engler, 342 F.3d 517 (2003).9 The Second Circuit reversed the New York judgment in 358 F.3d 223 (2004).10 The Supreme Court consolidated the cases, granted certiorari on December 7, 2004, and heard argument on the regulatory schemes.11
Direct wine shipments grew from 1994 to 1999, reaching $500 million per year or three percent of all wine sales.12 The number of small wineries nationwide exceeded 3,000, more than triple the total from thirty years earlier, while the number of licensed wholesalers fell from 1,600 in 1984 to 600 in 2002.13 Domaine Alfred could not economically secure a Michigan wholesaler, and Swedenburg and Lucas were unable to fill orders from New York customers under the existing restrictions.14
Whether a State's regulatory scheme that permits in-state wineries directly to ship alcohol to consumers, but restricts the ability of out-of-state wineries to do so, violates the dormant Commerce Clause in light of § 2 of the Twenty-first Amendment?15
Yes. The Michigan and New York laws discriminate against interstate commerce by granting in-state wineries preferential direct-shipment rights.18
Michigan's scheme favors its in-state wineries by providing them with low-cost direct-shipment licenses unavailable to out-of-state producers on equal terms.19 New York's scheme similarly favors local wineries by exempting them from the in-state presence requirement imposed on out-of-state wineries.20
These provisions grant in-state wineries a competitive advantage over out-of-state ones by allowing direct shipment only to the former.21
The Twenty-first Amendment does not authorize this discrimination.22
Its text and history show it was intended to restore to the states the powers they held under the Wilson and Webb-Kenyon Acts, which did not permit discrimination against out-of-state products.23
The states failed to show that nondiscriminatory alternatives could not achieve their goals of preventing underage drinking and collecting taxes.24
The state laws violate the dormant Commerce Clause and are not authorized by the Twenty-first Amendment.25
Related opinions on this issue
Joined by O'connor, J.
Justice Stevens dissented, arguing that the Twenty-first Amendment grants states virtually complete control over the transportation and importation of alcoholic beverages.26 The direct-shipment laws are valid exercises of that power.27 The Commerce Clause should not be used to strike down these laws when the Amendment specifically addresses alcohol regulation.28
The majority's approach undermines the balance struck by the Amendment and ignores the historical context of Prohibition's repeal.29 States have long used three-tier systems to promote temperance and orderly markets.30 These systems should be upheld.31
Joined by Rehnquist, C. J., And O’connor And Stevens, Jj.
Justice Thomas dissented, contending that the majority misinterprets both the Commerce Clause and the Twenty-first Amendment.32 The Amendment was intended to constitutionalize state regulation of alcohol, including the power to discriminate between in-state and out-of-state producers.33 Historical practice after ratification of the Amendment shows that states engaged in exactly the type of regulation at issue here.34
The Court's dormant Commerce Clause jurisprudence should not override the express grant of authority in the Twenty-first Amendment.35 The laws do not violate the Constitution.36