Supreme Court Poised To Reinforce That State Alcohol Rules Must Obey The Constitution

For the second time in about two decades, the U.S. Supreme Court may again clarify how far state alcohol regulations can go before they run afoul of the Constitution. Lower courts have at times narrowed the high court's precedents on protectionist alcohol laws, and the Arizona challenge now gives the Supreme Court another chance to reaffirm that states may not discriminate against out-of-state businesses without a legitimate, nonprotectionist justification.

What’s At Issue

The dispute centers on an Arizona rule that requires any wine retailer that ships to Arizona consumers to maintain a physical storefront in the state. Challengers — a mix of wine consumers and out-of-state retailers — argue this physical‑presence mandate violates the Dormant Commerce Clause, which bars states from enacting laws that unduly discriminate against interstate commerce.

Why Critics Say The Rule Is Protectionist

Because it is economically unrealistic for many small or specialty wine shops to open brick-and-mortar locations in Arizona, the storefront requirement effectively shuts those out-of-state retailers out of the Arizona market. Critics call the rule protectionist: it protects in-state businesses by raising the cost of market entry for out-of-state competitors, rather than addressing a genuine public-safety problem.

Legal Background

The Supreme Court has confronted similar issues before. In Granholm v. Heald (2005), the Court struck down state rules that required an in-state physical presence for wineries, allowing out-of-state wineries to ship directly to consumers; that decision did not extend the same holding expressly to independent wine retailers. More recently, in 2019 the Court struck down a Tennessee durational-residency requirement for liquor-store licenses as inconsistent with the Commerce Clause.

The Ninth Circuit’s 'Essential Feature' Test

Some lower courts have resisted applying these precedents broadly. The U.S. Court of Appeals for the Ninth Circuit adopted an "essential feature" test, concluding that Arizona's storefront mandate is an "essential feature" of the state's three-tier alcohol system (producers, wholesalers, retailers) and therefore immune from Dormant Commerce Clause attack. Critics say this approach lets states label many rules "essential" and thereby sidestep constitutional review.

Practical Regulatory Alternatives

Direct‑to‑consumer alcohol sales surged during and after the COVID‑19 pandemic, and most states have managed that growth through licensing, permitting, recordkeeping, and enforcement — not by imposing physical‑presence mandates. Delivery and shipping can be regulated through licensing requirements and revocations for violations (for example, shipping to minors), much like on‑premises licenses can be suspended after an enforcement sting.

Requiring an in‑state storefront is an unusually blunt tool. Thirteen states plus Washington, D.C., allow out‑of‑state wine retailers to ship directly while preserving three‑tier systems — undermining the claim that storefronts are indispensable.

Why This Case Matters

If the Supreme Court takes the case and reaffirms its prior precedent, it could close the loopholes lower courts have opened and make clear that states must justify discriminatory alcohol rules on real public‑safety grounds, not protectionist aims. The Manhattan Institute and the Reason Foundation have filed an amicus brief supporting the challengers, underscoring the case’s national policy stakes.

Bottom line: The Arizona litigation is more than a dispute about wine shipping; it’s a test of whether states can insulate parts of their alcohol codes from constitutional scrutiny simply by labeling them ‘‘essential’’ to a regulatory framework.