Freeing the Booze: A recent court case could upend the alcohol industry

WASHINGTON (June 13, 2017) – A recent South Carolina Supreme Court decision could be a game-changer when it comes to ending oppressive and protectionist alcohol regulation regimes across the country, according to a new policy study from Jarrett Dieterle, R Street Institute fellow and editor of DrinksReform.org.

South Carolina’s high court recently struck down a state law that limited how many liquor retail outlets an individual or business can own within the Palmetto State. According to the court, the only justification for the law was economic protectionism, an improper basis for economic regulation.

“Rather than being a new phenomenon, the tradition of courts guarding against economic protectionism has deep historical roots,” according to Dieterle. “The South Carolina Supreme Court applied this form of economic liberty jurisprudence to the world of alcohol, which could have ramifications for the many protectionist alcohol laws that remain on the books today.”

As Dieterle notes, in many ways, state and local alcohol laws are ground zero for cronyist and rent-seeking legal regimes, which renders this area ripe for a more robust application of economic liberty-based constitutional litigation. However, whether more courts will adopt South Carolina’s approach and start rigorously scrutinizing booze laws is an open question, given the broad power states are recognized to possess over alcohol.

“After Prohibition, states were given broad powers to regulate alcohol, and they did not hesitate to use them. Whether more state courts adopt the South Carolina court’s reasoning will likely depend on how broadly these regulatory powers are defined,” Dieterle said.

If more courts begin to conclude that some ends—such as promoting economic protectionism—remain beyond state governments’ proper police powers, it could usher in an era of booze-related economic liberty litigation. One thing is for sure: there are no shortage of protectionist state booze laws that are ripe for review.

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