Opinion ID: 1254905
Heading Depth: 3
Heading Rank: 3

Heading: Strict Scrutiny Analysis

Text: Our conclusion that the challenged statutes are discriminatory does not end the inquiry. This Court must also consider whether Kentucky's statutory regime advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory means. See Granholm, 544 U.S. at 489, 125 S.Ct. 1885 (quoting New Energy Co. of Ind. v. Limbach, 486 U.S. 269, 278, 108 S.Ct. 1803, 100 L.Ed.2d 302 (1988)). The Wholesalers argue that the in-person requirement was motivated by Kentucky's extensive problems with underage drinking. They provide and reference a number of reports that discuss the problem of underage drinking and argue that the elimination of the in-person requirement would create negative effects on alcohol enforcement. This argument is almost identical to an argument that was presented and rejected in Granholm. Based in part upon a report from the Federal Trade Commission, the Granholm Court found little evidence that the purchase of wine over the Internet by minors is a problem, and noted that wine is not the alcoholic beverage of choice among youth. 544 U.S. at 490, 125 S.Ct. 1885. The Granholm Court also remarked that even if there was a risk of minors receiving direct shipments of wine, this risk is not addressed solely by prohibiting shipment from wineries. As a less restrictive step to address this risk, the Court pointed to the Model Direct Shipping Bill which would require age-verification upon delivery of wine. Id. at 491, 125 S.Ct. 1885. We agree with the reasoning of the Granholm Court, and note that the Wholesalers have not presented evidence about underage drinking that is unique to Kentucky and would warrant a different result. Also, as the district court noted, Defendants and the Wholesalers presented no evidence that small farm wineries and their shippers cannot or will not comply with existing or future shipping laws governing deliveries of alcoholic beverages to Kentucky customers. Therefore, consistent with the Granholm Court's finding, we conclude that age verification upon delivery of wine is a reasonable nondiscriminatory means to address the proferred state interest. The Wholesalers also reference Defendants' arguments in the district court, which include an argument that the in-person sales requirement is motivated by concerns for tax revenue. Defendants predicted a heavy loss in sales and use tax if internet wine sales were permitted. However, as the district court noted in its opinion, this argument appears to assume that internet sales would be permitted without restrictions. Cherry Hill Vineyards, 488 F.Supp.2d at 620. Again, the Granholm Court addressed and rejected a similar argument, and found that states can adequately collect tax revenue through requiring a permit as a condition of direct shipping, relying upon self-reporting, and utilizing federal remedies. This reasoning is directly applicable because, like the defendants in Granholm, the Wholesalers have not shown that tax evasion from out-of-state wineries poses such a unique threat that it justifies discriminatory regimes. 544 U.S. at 491-92, 125 S.Ct. 1885. Ultimately, the Wholesalers fail to establish that the state regime advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory means. Consequently, we conclude that Kentucky's in-person purchase requirement, which is discriminatory in practical effect, violates the dormant Commerce Clause.