fbpx

Lawsuit Challenging Minnesota’s Protectionist Ban on Using Out-of-State Grapes to Make Wine Scores Major Win

Eighth Circuit allows constitutional claims to be tested

Minneapolis—Minnesotans became one step closer to having more wine options today when the 8th U.S. Circuit Court of Appeals ruled that two Minnesota wineries can move forward with their challenge to a little-known but onerous state law that severely restricts the kinds of grapes they can use to make wine. Under the law, a winery in Minnesota cannot legally make wine unless a majority of the winery’s grapes are grown in Minnesota. This out-of-state grape cap makes it more expensive for consumers to buy their favorite wines in Minnesota, and reduces their choices, in order to protect the state’s grape industry from healthy economic competition.

The 8th Circuit sent the case back down to the federal trial court to rule on whether the law violates the Constitution’s Interstate Commerce Clause. In 2017, Alexis Bailly Vineyard and Next Chapter Winery teamed up with the Institute for Justice (IJ) to challenge this barrier to free trade. The trial court had thrown the case out, however, because it ruled the wineries did not have “standing” to challenge the law. The 8th Circuit disagreed, stating that “Minnesota is free to offer or not offer the farm winery license or to establish other license options for the production and sale of alcohol. What it cannot do—and what the Farm Wineries allege it has done—is condition a license on compliance with unconstitutional discrimination against out-of-state grape growers.” The court further said the wineries could challenge that discrimination.  

Under the Commerce Clause, open discrimination against out-of-state commerce is unconstitutional unless the state can prove that the out-of-state commerce at issue is more dangerous than the in-state commerce, a burden the state cannot satisfy in this case, as the wineries will demonstrate when the case goes back to the trial court.

Nan Bailly, the owner of Alexis Bailly Vineyard, was overjoyed by the opinion, stating “the court recognizes the real burden this law places on us and recognizes the hard work we do at our vineyards.” She added, “We don’t need Minnesota to get in our way, we need it to help allow us to make our wine as we and our customers see best.”

Anthony Sanders, a senior attorney in IJ’s Minnesota office, stated, “The U.S. Constitution was crafted to guarantee free trade among the states. Minnesota is violating this founding ideal by restricting the grapes that wineries can purchase from other states. We look forward to vindicating the constitutional rights of Minnesota’s wine community in the trial court.” Jaimie Cavanaugh, another attorney in IJ’s Minnesota office added, “We are very pleased that the court of appeals saw what is going on in this case: Our clients cannot get a license if they trade more with Wisconsin instead of within Minnesota. But our Constitution says that we are one nation. Fighting for that principle in Minnesota just got a lot easier.”  

Most wines Americans are accustomed to drinking are made with grapes that struggle in Minnesota’s cold climate. Northern grape varieties, which can grow with some difficulty in Minnesota, often produce wine too acidic for most consumers. To make a Minnesota wine palatable, most wineries blend Minnesota grapes with grapes grown elsewhere to create a wine that is essentially Minnesotan but more appealing to a traditional palate. The state’s law mandating Minnesota grapes constitute the majority of a farm winery’s wine therefore handicaps vintners. As a result, the government’s in-state grape requirement restricts farm wineries from producing the broad variety of wines that consumers want—even though these wines would be legal to sell at a wine or liquor store if made out of state.

By contrast, Minnesota’s biggest craft breweries, like Summit and Surly Brewing, are among the most successful in the country, thanks in part to a variety of hops grown in the Pacific Northwest that flavor their signature beers. If Minnesota breweries were instead forced to use mostly hops grown in Minnesota, many of their popular products would become difficult, if not impossible, to offer. This is the separate and unequal problem facing Minnesota’s farm wineries.

The 8th Circuit relied upon a recent Supreme Court ruling, Tennessee Wine and Spirits Retailers Association v. Tennessee, which struck down a limit on new residents getting liquor store licenses in Tennessee. That was also a case litigated by IJ, which represented a small liquor store owned by Doug and Mary Ketchum. These cases were not the first time IJ fought illegal liquor regulations in court. IJ argued a 2005 case, Granholm v. Heald, that saw the U.S. Supreme Court rule it unconstitutional for states to discriminate against out-of-state wineries in the business of selling wine directly by mail to consumers. An IJ victory in this Minnesota lawsuit could similarly roll back harmful regulations on wineries across the United States.

JOIN THE FIGHT!   Sign up for newsletters:

JOIN THE FIGHT!