Illinois Court Scores One for Three-Tier System

Source: Wine & Spirits Daily

June 13th

Late last week a judge for the US District Court of Illinois sided with the state and its wholesalers in dismissing a case that challenged the state’s direct-to-consumer shipping laws.

Recall, Lebamoff Enterprises, a retailer in Indiana, filed suit against the state last year over the Illinois Liquor Control Act of ’34 (ILCA), which among other things, prevents out-of-state retailers from selling and shipping wine directly to Illinois residents. Lebamoff argued the law is in violation of the Commerce Clause, and the Privileges and Immunities Clause because in-state retailers are allowed to ship DTC.

According to the plaintiff, the case is based on the same principles as the Granholm case, which determined state direct-to-consumer wine shipping laws could not discriminate between in- and out-of-state producers.

In his dismissal of the case, the judge claims Lebamoff’s Commerce Clause argument “fails at the most basic starting point,” because they cannot show that the ILCA “provides for differential treatment of in-state and out-of-state economic interests.”

The judge explained that the difference between Granholm and this case, is that in the Granholm case, allowing in-state suppliers to ship directly to consumers, while denying out-of-state retailers the same privilege did constitute preferential treatment. But in this case, Illinois law requires “all alcohol sold in Illinois by retailers directly to Illinois consumers must pass through the three-tier system,” regardless of where the retailer is located, i.e., no discrimination.

“Unlike in-state retailers who have obtained alcohol under the three-tier regulation system, certain out-of-state retailers…have not proceeded through the regulatory system in place to protect the Illinois public from harm,” he continued.

Now we wait to see if there will be an appeal.