In Arizona, Wine Sales Could Soon Be On The Horizon

Wine connoisseurs might be excited to know that the wine industry could be uncorked with a U.S. Supreme Court hearing.

The points of contention began with a Tennessee dispute, Tennessee Wine and Spirits Retailers Association v. Blair, regarding wine sales across state borders and the labyrinth of post-Prohibition laws limiting how alcohol-based beverages can be sold to consumers. 

The highest court in the nation will decide if a common state regulation, which requires retailers to prove in-state residency in order to obtain a liquor license, is in violation of the U.S. Constitution’s Commerce Clause.

If the residency rule is eliminated, wine retailers could establish operations in all states. This scenario is expected to open the spigots when it comes to offering more product to consumers. A ruling is expected by early summer. 

Currently, 40 states — including Arizona — prohibit out-of-state wine retailers from shipping directly to consumers. The case before the Supreme Court arose when Total Wine & More, a national alcohol retailer, sought to open a store in Nashville. Tennessee’s Alcoholic Beverage Commission recommended approval for a liquor license, but the Tennessee Wine and Spirits Retailers Association, an advocacy group representing the state’s liquor retailers, sued in 2016 to block the license.

The association cited Tennessee’s residency requirement, which bars corporations from obtaining a retail liquor license unless each director, officer and shareholder of the business has been a Tennessee resident for at least two years, among other requirements. Attorneys for Total Wine argued the Tennessee law was unconstitutional, while the association argued the 21st Amendment, which ended Prohibition in 1933, gave states wide latitude to regulate alcohol sales.

The U.S. Court of Appeals for the Sixth Circuit ultimately sided with Total Wine in February 2018. Total Wine has since opened a store in Knoxville.

Arizonans drink far more beer than wine — 1.14 gallons of per capita vs. 0.40 per capita in 2016 — but wine consumption has increased 25 percent since 1977 compared to a drop of 29 percent in beer.

No surprise, retail wine sales have nearly doubled over the past 15 years. Between 2002 and 2017, sales grew to $62.2 billion from around $33 billion, according to the Wine Institute, an industry advocacy group.