The 21st Amendment Enforcement Act & Retail Sales in Interstate Commerce Published in Grapevine Magazine

Nov 6, 2023

By: Louis J. Terminello, Esq. and Brad Berkman, Esq.

Direct to consumer (“DTC”) sales of wine and other beverage alcohol from out-of-state shippers is presumably here to stay, at least from the perspective of retail shippers. The Granholm decisions, as most readers are familiar with, burst open the door to DTC sales by suppliers and in particular winemakers. Wineries, with and without distribution in the various states, took advantage of the new opportunity and began shipping direct to consumers outside the sacrosanct three-tier system. In addition to winemakers, other business types began to sell their beverage alcohol wares in interstate commerce, directly to consumers in states other than their home markets. Retailers, in particular, have grown substantial sales revenue streams from selling to consumers outside of their home markets via the internet. Of course, third-party e-commerce platforms have turned the three-tier system and interstate sales on its head through highly creative and not always beverage law-compliant sales strategies often at the disdain of state regulators. Recently, some states have turned to legislation passed in October of 2000 to bring enforcement actions against out-of-state entities that seemingly violate their laws on the importation and shipment of beverage alcohol across their borders. The purpose of this article is to introduce the reader to this twenty-three-year-old piece of legislation known as the 21st Amendment Enforcement Act, some of its key provisions and its recent use by certain states.

The Act-What is it?

The 21st Amendment Enforcement Act, (the “Act”), became law in 2000 and effectively amended the Webb Kenyon Act of 1913. The act allows for state’s attorneys general to bring civil actions in federal court against parties that import or transport beverage alcohol into a state in violation of the Act and the state’s laws. Certain provisions of the law are printed below that are worth looking at, however, it is not necessary to reprint the full Act to understand its effect and implications, In a nutshell, the Act permits a state’s attorney general, to move for an injunction against the offending party to force cessation of the activity complained of that is in violation of a state’s beverage law. It is worth noting that relief in federal court takes the form of injunctive relief. The Act, as drafted, does not allow for states to bring actions, or impose monetary fines for violations brought under it. Further, nothing in the Act prevents states from bringing actions in state courts for violations of its beverage laws.

Click here to read the rest of the article in published in Grapevine Magazine.

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