A federal appeals court has ruled Ohio’s laws effectively banning wine sales by out-of-state retailers unconstitutional. The decision didn’t just give retailers their first major victory over wholesalers and state officials. It also increased the odds that the U.S. Supreme Court will try to resolve the conflicting legal interpretations of federal law and Court precedent that have produced varied legal standards for out-of-state alcohol sales across the country.
Ohio is one of 38 states with some kind of ban on out-of-state sales by alcohol retailers. Kenneth Miller, an Ohio consumer, and Derek Block, owner of an Illinois wine retailer, sued state officials in Block v. Canepa, alleging that Ohio’s ban was unconstitutional. A federal district judge issued a summary judgment in favor of the state.
The decision by the three-judge panel in the Sixth Circuit Court of Appeals is the second occasion in which the judges reversed the lower court on this case. This time, they ordered the district court to reverse its summary judgment, now in favor of the plaintiffs, and to determine the appropriate constitutional remedies.
It’s the first time an appeals court has so plainly sided with plaintiffs on this matter. And with the Supreme Court currently considering whether to hear a similar case from Arizona, it could accelerate the highest court’s involvement. The judges did not touch on the legality of the three-tier system of producers, wholesalers and retailers states use to regulate the flow of alcohol sales, however.
Discrimination or Protection?
At issue in this and similar cases in other federal circuits is the tug of war between the 21st Amendment, which gives states the power to regulate alcohol, and the Commerce Clause, which precludes those same states from interfering with interstate commerce. Two previous Supreme Court decisions have tried to chip away at the confusion. In 2005’s Granholm v. Heald, the justices ruled that states allowing direct sales by in-state wineries could not ban sales by out-of-state wineries.
In 2019’s Tennessee Wine & Spirits Retailers Association v. Thomas, Justice Samuel Alito wrote in his majority opinion that any law regulating alcohol sales cannot be discriminatory against interstate commerce unless it advances the state’s obligation to maintain public health and safety.
In Block, the Sixth Circuit’s majority opinion said definitively that the regulations that comprised Ohio’s Direct Ship and Transportation Restrictions did not meet that burden—an opinion, they wrote, that they reached with “little difficulty." In fact, they called the overall evidence offered by state officials and wholesalers “speculative."
In particular, they called officials’ evidence justifying requirements for retailers to maintain physical locations in Ohio “weak”: “Defendants are unable to point to a single piece of concrete evidence demonstrating tangible risks stemming from the interstate shipping of wine from professional, licensed retailers.”
They were equally unimpressed with officials’ evidence that the laws are needed to curb underage drinking, calling it “the least convincing of all of Defendants’ health and safety objectives.” The reason is that Ohio already allows direct shipping by out-of-state wineries. The judges also noted in their decision a select carveout in the law for some out-of-state retailers who held permits dating to before laws were changed in 2021.
The judges were particularly scathing when it came to laws regulating the transport of liquor across state lines by consumers.
“If there is some public safety rationale indicating why it is safe to allow individuals to bring only six bottles of wine into the state every 30 days—but not seven, or eight, or nine, or more—the State has not shown what that is,” the judges wrote. They later added, “The effect of these statutes is that Ohioans can legally order 288 bottles of wine from a California winery but cannot personally bring home seven bottles from the same winery after road-tripping out west.”
Not Over Yet
In a statement to Wine Spectator, the Wholesale Beer and Wine Association of Ohio (WBWAO) said they were “disappointed” in the decision and that, “The record demonstrates that the challenged statutes promote public health and safety by curbing underage drinking, promoting temperance, and ensuring that alcohol that enters Ohio is subject to proper regulatory restrictions.”
The WBWAO also stated it disagreed with the Sixth Circuit judges’ interpretation of a previous decision in a similar case. “We are therefore considering our options for further review of this case,” they said.
Bob Epstein, a founding partner at Epstein, Seif, Porter and Beutel and one of the litigators representing the plaintiffs, believes this won’t be the last time this court hears the case. "We're very pleased with the decision, but we're holding our breath,” Epstein said. “It is very likely they could apply for a hearing en banc. So it ain't over till it's over." An en banc hearing would have all the judges of the Sixth Circuit rehear the case.
This decision comes months after a majority of judges in a separate federal jurisdiction reached the opposite conclusion. They ruled in favor of Arizona state officials and wholesalers that the requirement for retailers to maintain a physical location was an essential feature of that state’s three-tier system. Plaintiffs in that case have petitioned the Supreme Court for review.
John Flowers is a Connecticut-based journalist who has written for CNN and the Wall Street Journal.
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