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Judge’s booze decision could loosen liquor laws

August 17, 2012 by Scott Bomboy


A federal judge's decision to overturn a Prohibition-era booze-ban law, citing the 14th Amendment, could have implications in other state liquor-law fights.

On August 14, U.S. District Judge John G. Heyburn II said Kentucky’s state law "violates the U.S. Constitution's Equal Protection Clause in that it prohibits certain grocery stores, gas stations and others ... from obtaining a license to sell package liquor and wine."

Kentucky is on a short list of states that prohibit beer or wine sales in grocery stores or at retailers.

The decision could lead to new discussions about tactics to get privatized wine and spirits into states like Pennsylvania, which represent huge untapped markets for wholesalers and liquor manufacturers.

The Equal Protection Clause is part of the 14th Amendment, and it is frequently cited in legal decisions involving voting rights and discrimination. According to Section 1 of the amendment, it is illegal for a state to “deny to any person within its jurisdiction the equal protection of the laws. “

In this case, Judge Heyburn said that state regulations that allow drug stores to sell wine and hard liquor, but not grocery stores, are unfair. (The ban will remain in place for a few more weeks until Heyburn resolves some other legal issues with the case.)

Kentucky’s law goes back to the Prohibition era, when consumers could use a prescription to buy alcohol at a pharmacy.

A plaintiff in the case, the Food with Wine Coalition, said Kentucky now joins a list of about 36 states that allow consumers to buy wine and liquor as they shop for food.

The ruling is part of a steady march away from a hangover from the 18th Amendment (which ushered in Prohibition) and the 21st Amendment (which ended it).

When the 21st Amendment repealed Prohibition in 1933, it also returned control of all liquor laws to the states, which in turn had the power to allow counties and towns to establish their own laws.

In 2012, there is considerable business pressure from wholesalers and retailers to standardize laws and markets for the sale of alcohol products. And the giant low-cost retailer Costco is now a heavy hitter in the booze business.

In neighboring Tennessee, the debate was on about the Kentucky decision, since another border state would now offer easier access to wine and distilled spirits.

Jarron Springer, president of the Tennessee Grocers & Convenience Store Association, told local newspapers the decision could hurt business in Tennessee.

“It would be the sixth state of the eight that border us that allow these types of sales. Tax dollars are going to leave our state from our northern border and go up there,” he said.

Booze flight issues are now at the forefront of the closely watched case of Washington state, which saw liquor sales fall in June after it privatized its state-run liquor-store system.

Washington added taxes to products to make up for a revenue short fall, which resulted in higher prices at the cash register. Costco, which is based in Washington state, spent a reported $22 million on lobbying efforts for privatization.

Neighboring Oregon and Idaho have seen big spikes in liquor sales, since Washington privatized sales.

Costco has denied interest in seeking bulk liquor sales in Pennsylvania, the one state that is the crown jewel of privatization efforts.

Pennsylvania’ liquor control system dates back to the end of Prohibition, when Governor Gifford Pinchot formed the state’s Liquor Control Board in 1933 with the stated goal to “discourage the purchase of alcoholic beverages by making it as inconvenient and expensive as possible."

Since then, Pennsylvania has become the biggest purchaser of wine and spirits in the U.S., with nearly $1.9 billion in sales, while greatly restricting where and how alcohol products can be bought.

It now allows some grocery stores to sell beer to be consumed on the premises or to be sold in small takeout quantities.

Annually, some Pennsylvania lawmakers push for privatization of wine and distilled spirits sales in the state (beer sales are already privatized but restricted). The efforts have been defeated in the state legislature and are opposed by unions,  MADD, and social conservatives.

Scott Bomboy is the editor-in-chief of the National Constitution Center.

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