Southern Wine & Spirits' challenge of a residency requirement for Missouri wholesalers was dealt a blow Wednesday as the 8th U.S. Circuit Court of Appeals affirmed a lower court's ruling in the state's favor.
Miami-based Southern Wine & Spirits filed a lawsuit in 2011 challenging the constitutionality of the state's residency requirement after the Missouri Division of Alcohol and Tobacco Control denied its subsidiary's application for a wholesaler-solicitor license.
Southern Wine has operations in more than 30 states and incorporated a subsidiary to expand in Missouri.
Under Missouri's three-tier distribution system put in place after Prohibition, alcohol producers and suppliers must sell their products to wholesalers or distributors, who then sell the beverages to retailers. Under Missouri law, a wholesaler must be at least 60 percent owned by Missouri residents.
In its lawsuit, Southern Wine argued the state's residency law for wholesalers does not advance any legitimate state interest.
But the U.S. District Court for the Western District of Missouri disagreed and granted the state's motion for summary judgment last year.
Wednesday, the 8th Circuit Court of Appeals affirmed the lower court's ruling. "The legislature legitimately could believe that a wholesaler governed by Missouri residents is more apt to be socially responsible and to promote temperance, because the officers, directors and owners are residents of the community and this subject to negative externalities -- drunk driving, domestic abuse, underage drinking -- that liquor distribution may produce," the 8th Circuit's ruling stated.
Johnny Richardson, an attorney representing Southern Wine, declined to comment on the ruling or whether his client will appeal the decision to the Supreme Court.
"We are pleased that the court agreed with our position that Missouri has broad authority to regulate the liquor distribution system within its own borders, and that it can require wholesalers to be Missouri residents," a spokesperson for the Missouri Attorney General’s office wrote in an emailed statement.
St. Louis-based Major Brands, the state's largest liquor distributor, opposed Southern Wine's efforts to operate in Missouri. "This is a significant decision for the state of Missouri as well as the industry because it affirms the legitimacy of the state's right to regulate the sale and distribution of alcohol and the three-tier system under the 21st Amendment," said Major Brands' CEO Sue McCollum.