On February 21, 2018, the United States Court of Appeals for the Sixth Circuit issued an opinion affirming the judgement of the United States District Court for the Middle District of Tennessee that the durational residency requirements found in Tenn. Code Ann. §57-3-204(b)(2)(A), (3)(A)-(B) and (3)(D) are in violation of the Commerce Clause. This is the portion of Code which lays out the requirements for a retail package store license.
Residency issues have been a topic in the alcoholic beverage industry for years. It was first included in Tennessee Code Annotated statutes pertaining to wholesalers in 1947. It wasn’t added to the retail package store portion of the code until 1984, and amended in 1990 to include the ten (10) years consecutive portion meaning, you either had to be a resident or you had to have been a resident for ten (10) consecutive years at some point in your life. According to discussions on the House Floor in 1990, this was done so that someone could retire to another state, yet still maintain ownership of their liquor store in Tennessee.
In 2012 and in 2014, the Attorney General’s office opined that residency requirements for applicants seeking a retail package store license or a wholesaler’s license were in violation of the Commerce Clause. In response, the TABC began issuing licenses to out of state applicants. However, in 2014 with the passage of the bill for wine in grocery stores, residency requirements for retail package stores were written back into the law. The TABC, as well as industry attorneys were aware that this would lead to litigation at some point. That didn’t happen until 2016 when Total Wine & More, a large chain of liquor superstores based out of Maryland made application to the TABC for a store in Brentwood and a store in Knoxville. The Tennessee Wine and Retailers Association objected. In response, Clay Byrd, Executive Director of the TABC, filed for a declaratory judgement with the United States Middle District of Tennessee Nashville Division. The Middle District ruled that the residency requirement was a violation of the Commerce Clause, which the Tennessee Wine and Spirits Association appealed to the United States Court of Appeals for the Sixth Circuit. The Sixth Circuit affirmed that this was a violation of the Commerce Clause, so unless the Tennessee Wine and Spirits Retailers Association appeals to the Supreme Court, it looks like the residency requirement is settled for good.