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Michigan Law Prohibiting Out of State Retail Wine Shipments Ruled Unconstitutional

On September 28, 2018, a federal court in Michigan held unconstitutional a state law prohibit out-of-state wine retailers from shipping wine to Michigan residents on the one hand, and permit in-state retailers to ship to Michigan residents on the other.  In Lebamoff Enterprises v. Snyder, Case No. 17-10191, (E.D. Mich. Sept. 28, 2018), The United States District Court for the Eastern Division of Michigan held that the law, which precludes out-of-state sellers from shipping wine to Michigan residents, to be unconstitutional:

“Michigan is … operating an unjustifiable protectionist regime in its consumer wine market, a privilege unsanctioned by the Twenty-first Amendment and forbidden by the dormant Commerce Clause.”

Michigan is in the Sixth Circuit, and the Lebamoff decision is in accord with Byrd v. Tennessee Wine & Spirits Retailers Ass’n, 883 F.3d 608 (6th Cir. 2018), cert. granted, No. 18-96, 2018 WL 3496882 (U.S. Sept. 27, 2018) – a case involving similar issues that is now on its way to the United States Supreme Court.  The Lebamoff court relied on and discussed the United States Supreme Court’s 2005 decision in Granholm v. Heald, which involved the direct shipment of wine from out of state wineries to consumers in Michigan and New York.  In Granholm, the court held that it was unconstitutional to discriminate against out of state wine producers.  We’ll now need to wait and see if Granholm, will be extended to protect out-of-state retailers.

I would expect the Lebamoff case to be appealed to the Sixth Circuit Court of Appeals and perhaps make some effort to join in the Supreme Court case.

I also expect to see more lawsuits challenging protectionist states’ wine retail laws.  Also, with the overwhelming trend of liquor delivery services like Drizly and Amazon, expect to see beer and spirits added to the mix.

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