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Thursday, May 19, 2005

Granholm v Heald

--posted by Tony Garcia on 5/19/2005

Granholm v Heald
5-4 decision. Kennedy delivered the opinion of the Court, in which Scalia, Souter, Ginsburg, and Breyer joined. Stevens filed a dissenting opinion, in which O’Connor joined. Thomas filed a dissenting opinion, in which Rehnquist, Stevens and O’Connor.

This is the wine sales case that was decided on May 16, 2005. Classic states rights issue pitted against free market issues. (Too bad Marty & I are not back on the air yet...this would be a perfect Race to the Right issue.)

As I read the opinion I think I am in agreement in part and in disagreement in part.

The basic background is that there are small private wineries. In New York and Michigan the states have created laws that in essence (a) ban direct sales between winery and customer (Michigan had an outright ban) and (b) create onerous licensing requirements that essentially make it unfeasible for smaller wineries to sell any product in those states.

Without reading the decision I knew that the decision was based on the often misused Commerce Clause of the Constitution.

Kennedy says basically "state laws violate the Commerce Clause if they mandate "differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter".

Being a federalist first I think that any licensing structure made by the states deals with in state commerce. This is in the same manner that there are different levels of licensing for drivers based on state residency/citizenship.

If New York wants to tax the Holy Hell out of out-state products to the point that out-state products cannot be sold there then let them. Wine collectors can go to New Jersey or California to get their wine. Tsk, tsk, that will be lost revenue for New York. That is where the free market will be allowed to take over.

As for the direct sales ban I think that a state has the right to ban ALL direct sales of a product. But to ban direct sales strictly on out-of-state sales does fall under the Commerce Clause and warrants Equal Protection.

In essence, Michigan was out of line when they banned only out-of-state direct sales (winery to customer). The way I see it Michigan can ban all direct sales, both intra-state and inter-state, or allow them all direct sales.

So, I concur in part and dissent in part with the Court.


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