Kentucky’s Unconstitutional Alcohol Shipping Law Debuts

Posted by Tom Wark on Dec 17, 2020

If there is a community of people who desperately need access to wine, beer and spirit shipments from out-of-state it’s the poor, deprived residents of the state of Kentucky. Consider this, in the past 36 months, the state of Kentucky has approved 45,877 wine, beer and spirit products for sale in the state. Meanwhile, in that same period, the Federal Government has approved over HALF A MILLION products for sale in the U.S. Yes, that’s less than 9% of the alcohol products available to Kentuckians. 

This pitiful access to products in the state is the primary reason why Kentuckians have good reason to celebrate the beginning of alcohol shipments into the state this week in the wake of HB 415 having passed earlier this year that allowed shipments from out-of-state producers.

But wait, here’s more.

Consider this, while Kentuckians kneel at the alter of the crappy selection of alcohol products sold by the state’s wholesalers and while they start to look to the promise of shipments from out-of-state wineries, distillers and brewers, they still will lack access to more than half of those 500,000 products approved by the Feds over the past three years. This is due to the fact that Kentucky bars shipment of alcohol by out-of-state retailers and it is this group and only this group that sell imported wine.

Under Kentucky’s new direct shipping law only domestic producers may obtain a permit to ship into the state. Retailers may not. So, if that Kentucky imbiber happens to covet anything but the most common imported beer, wines and spirits, they are simply out of luck. The wholesalers in the state don’t distribute anything but the most common imported products, leaving undistributed well more than 200K imported products that could be obtained by Kentuckians if only out-of-state retailers could, along with out-of-state producers, ship into the state.

Kentucky Representative Adam Koenig, the sponsor of HB 415 that legalized direct shipment, described the new law this way:

“This is bigger than Kentucky. We are now a national model for how to expand opportunities.”

I’m not sure I’d go as far as to say “national model”. I’m not so sure I’d go as far as to say “consumer-friendly”. However, I do think it’s fair to say that the new Kentucky law is discriminatory (allowing in-state retailers to ship but not out-of-state retailers), protectionist (protecting in-state retailers and wholesalers from competition) and unconstitutional.

As it turns out, Kentucky is currently being sued in the United States District Court for the Western District of Kentucky-Louisville Division) due to the disparate way it treats in-state and out-of-state retailers. That suit has been briefed and has for six months now been awaiting a decision on the state’s motion to dismiss.

The HB 415 was originally introduced in Kentucky, it included provisions allowing residents of the Commonwealth to purchase and have products shipped to them from out-of-state retailers. This commonsense and obvious provision was included because the bill sponsor, Representative Koenig realized that after the 2019 Tennessee Wine v Thomas Supreme Court decision the state could not pass discriminatory laws that let in-state but not out-of-state retailers ship to Kentuckians. It was at the assistance of  Kentucky retailers and wholesalers that this provision was ultimately removed.

So, to put it bluntly, Kentucky is about the farthest thing from Representative Koenig’s suggestion that it is a “national model for how to expand opportunities.” In fact, Kentucky’s current alcohol shipping law makes the Commonwealth a fairly run-of-the-mill model for protectionism and anti-free trade ideology.