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News Alert: Supreme Court Strikes Down Tennessee Residency Requirement

June 26, 2019

In a 7-2 decision, the U.S. Supreme Court has struck down Tennessee’s residency requirement for beverage alcohol licensing. The case had been highly anticipated for months.

The ruling represents a major victory for Total Wine & More, which has sought to expand in Tennessee, but had been thwarted by the state’s residency requirement law. Total Wine challenged the law successfully on Commerce Clause grounds in both federal district and appeals courts, and noted in its brief to the Supreme Court that Tennessee’s own attorney general “twice opined that this residency statute violated the Dormant Commerce Clause and could not be enforced.” In the meantime, Total Wine was granted a license by the Tennessee Alcoholic Beverage Commission and opened its first store in Knoxville last summer.

In its decision, the court affirmed the previous Sixth Circuit ruling against the two- and ten-year residency requirements for beverage alcohol retailers in Tennessee. The ruling was tailored to the issue of the two-year residency requirement, as it opined that the restriction “violates the Commerce Clause and is not shielded by section 2 of the Twenty-first Amendment.” The ruling also said that while Section 2 gives states the ability to regulate the sale of alcohol, it “is not a license to impose all manner of protectionist restrictions on commerce in alcoholic beverages.”

The court described the Tennessee law as “onerous durational-residency requirements” which essentially bar any “corporation whose stock is publicly traded” from operating in the state. Based on arguments and evidence put forth by the Tennessee Wine and Spirits Retailers Association, the court concluded that the two-year residency requirement is favoritism for state residents and does not meaningfully relate to promoting public heath and protecting public safety.—Shane English

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