By: Daniel J. Croxall*
Abstract
The United States has a strange relationship with alcohol. Alcohol is the only specific subject that can claim two constitutional amendments (the Eighteenth Amendment and the Twenty-first Amendment), and alcohol is one of the most heavily regulated industries in the country. The COVID-19 pandemic has wreaked havoc on alcoholic beverage laws and regulations, but it has specifically harmed the independent craft brewing industry. More specifically, the pandemic closed two of the three main revenue sources for craft breweries: taproom sales and sales to bars and restaurants. This left DtC sales as the only revenue source for many small and independent breweries. That is, craft breweries had to find ways to get their products into the hands of consumers directly, in a legal way, to survive. This is where DtC shipping comes in.
DtC shipping is legal in some states, partially legal in some, and prohibited in others. This is so because tension between the Twenty-first Amendment and the dormant Commerce Clause has led to a federal circuit split and inconsistent interpretations and analyses regarding whether states can discriminate against out-of-state breweries by prohibiting shipping into the state while allowing in-state breweries to do so. Despite the Supreme Court seemingly reconciling this issue in 2005 in Granholm v. Heald, the states have been anything but consistent in legislating this issue. Once thing is clear: the marketplace for DtC shipping could be incredibly beneficial to independent craft breweries. This Article examines the history of DtC shipping prohibitions, a circuit split regarding the application of Supreme Court precedent directly on point, and a proposed solution for states to ensure their laws and regulations are consistent with the Twenty-first Amendment, the dormant Commerce Clause. Further, this Article argues that independent craft breweries should be able to ship directly to customers to open new markets, to survive the pandemic that has rocked the market, and as a matter of constitutional law.
*Professor Dan Croxall created and teaches the world’s first craft beer law class at a law school at the University of the Pacific, McGeorge School of Law. He writes extensively on alcoholic beverage law with a particular focus on the craft beer industry. Professor Croxall would like to thank Quentin Barbosa and Savanna Corr for their research assistance.