The policy question is clear: state laws that ban out-of-state direct shipping of wine but permit in-state wineries to ship directly hurt consumers and provide little to no off-setting public benefits, such as promoting temperance. (1) The legal question, however, is more opaque. For any other product, such discriminatory laws would be forbidden by the dormant commerce clause, but the issue of whether a state can discriminate in favor of in-state liquor sellers remains unsettled because, as Judge Easterbrook has noted, a state can "control alcohol in ways that it cannot control cheese." (2) The reason for this difference--and hence legal uncertainty--is the confusingly written and frequently misunderstood [section] 2 of the 21st Amendment. (3) As the Supreme Court again will be faced with interpreting [section] 2, an analysis of the clause's original meaning is timely. (4)
This note will argue that, as originally intended, [section] 2 did not permit discrimination. An examination of the legal and legislative landscape that existed behind the ratification of the 21st Amendment demonstrates that while [section] 2 carved out for the States an expanded "police power zone," (5) it did not repeal the anti-discrimination principle. This is true despite the proposed deletion of [section] 3. In fact, the removal of [section] 3 reinforces this view.
A plain text reading of [section] 2 leaves much to be desired, as the Supreme Court has repeatedly recognized. (6) As a result, the Court has often tried to reconcile [section] 2 with the rest of the Constitution. (7) This has been relatively straightforward in matters relating to equal protection and the First Amendment, but controversy has surrounded the relationship of [section] 2 to the Commerce Clause--and therefore the dormant commerce clause--to the extent that some present members of the Court appear to favor the notion that [section] 2 de facto repealed the Commerce Clause as it relates to alcohol. (8) To support this view, Justice O'Connor in particular has extensively (and incorrectly) cited [section] 2's history. (9) It is time to set the historical record straight.
II. LEGAL CONTEXT
To understand [section] 2, one needs to understand the legal and political environment surrounding prohibition. Most importantly, one needs to consider the Court's early views on the states' police power. The desire for prohibition began long before the 18th Amendment was ratified in 1919. In the License Cases of 1847, the Supreme Court upheld a state's right to regulate alcohol as being within that state's police power. (10) However, in 1888 the Court held in Bowman v. Chicago & Northwestern Railway Co. that because of the dormant commerce clause, and despite the police power, "a state could not regulate liquor, even as part of a general prohibition, until after importation, when the liquor has been 'mingled with and become a part of the general property of the State.'" (11) This seriously undermined liquor regulation (as out-of-state sellers could disregard local laws) and led to the passage of two congressional acts.
The first was the Wilson Act of 1890; under the Commerce Clause, Congress mandated that state laws should apply to liquor, in its original package, imported from other states "to the same extent as though such ... liquors had been produced in such state." (12) However, in 1898 the Court restricted the scope of the Wilson Act in Rhodes v. Iowa, wherein it held, based on the act's language, that "state control commenced only after the liquor reached the consignee in the state, and not at the state line. This narrow construction undermined the Wilson Act so as to permit mail-order commerce in liquor which could circumvent the laws of dry states." (13) Congress then passed the Webb-Kenyon Act of 1913. (14) "This act forbade the transportation of intoxicants into any state where its receipt, possession, sale, or use was prohibited. …