Retailer DTC Shipping Gets a Boost in Connecticut, and by the US Supreme Court

As widely reported, on June 26 the U.S. Supreme Court ruled unconstitutional a Tennessee law requiring two years of residency in the state before obtaining a state-issued alcohol retailer license. The 7-2 ruling upheld a lower court decision in Tennessee Wine and Spirits Retailers Association vs. Russell F. Thomas.

Does the ruling mean that the 35 states currently banning interstate retailer direct-to-consumer (DTC) shipping will immediately take up the issue in state legislatures? That is very unlikely. After the 2005 USSC ruling in Granholm v. Heald – which was quite definitive in its rebuke of state-based discrimination against wineries—it took years for some state legislatures to consider and pass enabling legislation for winery DTC. Five states continue an outright ban on winery DTC.  Many pundits have argued that the Tennessee ruling’s focus on residency requirements is not as sweeping or definitive as was Granholm for winery DTC shipping.

Will this week’s ruling be used in other retailer DTC litigation cases? –probably.

Coincidentally, the ruling arrived the same month that Connecticut passed a favorable retailer DTC bill, which was signed by the Governor June 5 and went into effect today, July 1.  Senate Bill 647, an omnibus liquor bill, included a provision allowing in-state and out-of-state retailers to purchase a DTC license for shipping directly to CT adult consumers. For that, we toast the Connecticut legislators!

Taken together, the new Connecticut law and the USSC ruling suggests to us that the future holds promise for expanding consumer choice in wine. Winery associations have successfully fought for, and secured, DTC shipping provisions for both wine producers and retailers, finding a solution that satisfies both a dynamic consumer marketplace and the requirements of state regulators and tax collection agencies. The groundwork has been laid.

We are not attorneys but are optimistic that the ruling, as well as the good news from Connecticut, will further encourage state legislators to see the wisdom of expanding retailer DTC shipping. After all, retailers provide access to not just US but imported wines, opening a window of discovery for curious wine consumers.