Judge Ebinger of the Central District in Iowa has ruled on summary judgement motions before her. In her decision, she ruled for an out of state winery’s dormant Commerce Clause challenge to one Iowa law (123.173(2)) that allows Iowa wineries to also be a wholesaler but the judge also ruled for the state against challenges to other provisions of the law (Iowa Code 123.3.(40) and 123.175 (2)(c)).
The Iowa wine law allows Iowa wineries to be both producer and wholesaler. The Iowa law that was stuck -123.173(s)- states, “All class ‘A’ premises shall be located within the state.”
The court conducted a review of recent Supreme Court cases and more recent circuit court hearing and ultimately concluded the state could not provide the requisite evidence to satisfy the disparate treatment of in and out of state producers. The Court noted, “While a State may subject alcohol entering into the State to certain regulations through its wholesaler and retailer tiers, it may not discriminate against the origin of that alcohol (i.e., the manufacturer).
The court noted that consistent with Supreme court approval, in state wholesaling is still important. “While a State may require all wholesalers to be in-state, it may not deviate from the basic structure of the three-tier system and discriminate against out-of-state manufacturers through that deviation.“
She also clarifies that , “An out-of-state holder of class “A” wine permit may not sell others’ wine directly to retailers. An out-of-state holder of a class “A” wine permit may only directly sell wine they have manufactured themselves. That is, the out-of-state holder of a class “A” wine permit may not use the permit to wholesale others’ wine or otherwise act as a wholesaler of wine.“
The opinion can be found here.
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