Lebamoff Enterprises, Inc., v. Whitmer, No. 18-2199 (6th Cir. 2020)Annotate this Case
The Twenty-first Amendment permits the states to regulate the sales of alcohol within their borders. Michigan is among several states with a three-tier system that forbids alcohol producers (first tier) to sell directly to retailers or consumers. Producers must sell to wholesalers within the state (second tier); those wholesalers sell exclusively to in-state retailers, who sell to consumers. Businesses at each tier must be independently owned; no one may operate more than one tier, Michigan imposes minimum prices and prohibits wholesalers from offering volume discounts or selling on credit. For liquor (not wine and beer), the state is the wholesaler in Michigan.
In 2016, Michigan amended its law to allow in-state retailers to deliver directly to consumers using state-licensed “third party facilitators” or common carriers like FedEx or UPS. A wine retailer based in Fort Wayne, Indiana and Michigan wine consumers alleged that the new law violated the Commerce Clause and the Privileges and Immunities Clause. The district court extended delivery rights to out-of-state retailers. Michigan obtained a stay.
The Sixth Circuit reversed. The Twenty-first Amendment permits Michigan to treat in-state retailers differently from out-of-state retailers. There is no inherent right to sell intoxicating liquors by retail. Some reduction in consumer choice is inevitable in a three-tier system, which is intended to make it harder to sell alcohol.