VIRGINIA COURT UPHOLDS THE THREE-TIER

Yesterday was a cause for celebration for advocates of the three-tier system, and a mixed bag for small wineries. A judge in the Fourth Circuit Court of Appeals used language in Granholm to sustain the three-tier system as opposed to dismantling it. The judge reversed a decision by a lower court which declared that parts of Virginia’s alcohol code were unconstitutional under the Commerce Clause because in-state entities were treated differently from out-of-state entities.

The court sustained the constitutionality of the Virginia law that restricts consumers from bringing more than one gallon of alcoholic beverage into the state for personal consumption, and also authorized state-run ABC wineries to sell only Virginia wine. Both had previously been deemed unconstitutional by a lower court.

This is a victory both for three-tier advocates and control state advocates, as Virginia is a control state, and the appeals court upheld the state’s right to control alcohol imports by consumers. It is also a victory for small wineries.

Furthermore, the judge used Granholm to justify its decision, which may have implications for the retail direct shipping cases pending in Texas and Michigan:

“An argument that compares the status of an in-state retailer with an out-of-state retailer — or that compares the status of any other in-state entity under the three-tier system with its out-of-state counterpart — is nothing different than an argument challenging the three-tier system itself. As already noted, this argument is foreclosed by the Twenty-first Amendment and the Supreme Court’s decision in Granholm, which upheld the three-tier system as ‘unquestionably legitimate.’”