Justice Brandeis, writing for the Supreme Court in State Board of Equalization v. Young’s Market Co. (1936), offered a (then) foundational interpretation of the Twenty-first Amendment, asserting a remarkably broad scope of state authority over alcohol. The case involved plaintiffs who argued that California’s $500 licensing fee for importing beer was unconstitutional unless it could be justified on traditional public health, safety, or moral grounds. In other words, they contended that the Twenty-first Amendment only empowered the state to regulate alcohol if the regulation served those classic police power purposes. But Brandeis and the Court flatly rejected that framing. He wrote that to read such a limitation into the Twenty-first Amendment would not be to interpret it, but to rewrite it. The Court held that the Amendment abrogated the dormant Commerce Clause’s free importation right for intoxicating liquors, allowing states to prohibit or regulate importation on any terms they chose, regardless of whether those terms were grounded in health or safety rationales and would even allow a state the right to create a monopoly. (ASIDE: Don’t worry Brandeis fans, this is no aberration in his jurisprudence and life’s legal work, he utilized the observance about the grant of the monopoly in true Brandeis fashion to argue that the state had the power to regulate in lesser part without forming the monopoly – asserting in true Brandeis fashion that the less drastic regulation would be preferable to the monopoly.)
This doctrine has now completely flipped. Fast forward nearly ninety years and we find the Tennessee Wine & Spirits Retailers Ass’n v. Thomas decision beginning to chart a very different constitutional course—one in which the Supreme Court reads the dormant Commerce Clause and the Twenty-first Amendment not as granting states a free pass and the right to establish monopolistic protectionist measures, but as requiring a more searching inquiry into whether a state’s alcohol laws truly serve non-protectionist purposes and restricting their rights to the very limitations Brandeis rejected nearly 90 years ago: public health, safety (and my personal favorite given the antitrust functions of the three-tiered system and attendant trade protections – “other legitimate interests”).
The recently decided Third Circuit case, Jean-Paul Wegg LLC v. Director of the New Jersey Division of Alcoholic Beverage Control (link to opinion), puts this doctrinal evolution front and center. In Wegg, the Third Circuit confronted a challenge to New Jersey’s physical presence and in-state wholesaler purchase requirements for wine retailers wishing to ship directly to consumers in the Garden State. These requirements effectively exclude out-of-state retailers from the New Jersey market unless they establish brick-and-mortar locations and purchase inventory through New Jersey’s licensed wholesalers.
Notably, the Third Circuit did find that these requirements were discriminatory—a holding that should catch the attention of anyone still treating Tennessee Wine as an outlier or easily cabined precedent. Even more significantly, the court declined to apply the second prong of the traditional dormant Commerce Clause test—that is, the “no reasonable nondiscriminatory alternatives” inquiry. Instead, the panel adhered to Tennessee Wine’s framework, asking whether New Jersey’s discriminatory measures could be justified on the basis of public health and safety or some other legitimate non-protectionist rationale.
In a detailed analysis (Parts B(a) & B(b), pp. 16–22 of the opinion), the court upheld the challenged laws. It pointed to record evidence—declarations from regulatory and industry officials—documenting how the physical presence requirement allows for random inspections and the detection of fraudulent or unsafe practices, and how the in-state wholesaler requirement ensures the traceability and safety of the alcohol supply chain. While plaintiffs argued that other states allow out-of-state shipping without issue, the court emphasized that New Jersey need not adopt the regulatory judgments of its peers so long as its own are backed by concrete evidence.
The court also reaffirmed that these measures were not merely incidental features, but essential components of New Jersey’s constitutionally legitimate three-tier system. In doing so, it placed its reasoning in line with other circuits (like the Fourth in B-21 Wines) that have applied Tennessee Wine to uphold local three-tier structures while acknowledging the impermissibility of naked protectionism.
This stands in stark contrast to the Ninth Circuit’s recent puzzling conclusion—covered previously—that in-state retail shipping while prohibiting out-of-state retail shipping was not discriminatory at all. That interpretation is likely to be an aberration, and perhaps ripe for en banc correction, at least as to the discrimination finding. But even that case will ultimately survive Tennessee Wine review if a state can amass sufficient evidence that its regime advances concrete health and safety interests (or if someone would please start developing the “other legitimate interests” prong).
As we have said before in these posts, we are watching the development of an emerging consensus: Tennessee Wine is the new standard, and its “different inquiry” into discrimination and justification is quietly entrenching itself in federal appellate jurisprudence. What began as a departure from Brandeis’s robust conception of state control is now becoming a new normal in alcohol law. The future of the 21st Amendment’s interplay with the dormant commerce clause is not the unchecked domain Brandeis once described— it is a future that may not require the proof that reasonable less-restrictive alternatives are available if proof that public health or safety (or that other thing) are advanced by the challenged laws.
The post The Echo of Brandeis in the Age of Tennessee Wine: Jean-Paul Wegg and the Limits of State Power under the 21st Amendment appeared first on Libation Law Blog.