As noted in Wine Wars, Part 1
there is no persuasive policy goal to justify discriminatory bans that permit direct shipment by in-state wineries but prohibit out-of-state wineries. New York, for instance, has 200 farm wineries shipping directly to consumers and has not proffered any evidence that consumers can only get drunk on California wines but not New York wines. Given the absence of any reasonable justification for these laws, the next question is whether the 21st Amendment nonetheless permits states to engage in this arbitrary discrimination, notwithstanding the dormant commerce clause.
An essential purpose of the Commerce Clause was to eliminate the protectionist barriers erected by the states under the Articles of Confederation. As Justice Johnson wrote in Gibbons, "If there was any one object riding over every other in the adoption of the constitution, it was to keep the commercial intercourse among the States free from all invidious and partial restraints." Gibbons v. Ogden, 22 U.S. 1 (1824) (Johnson, J., concurring). The 21st Amendment, as we will see, was intended to deal with the narrow but difficult problem of transitioning from the federal prohibition regime under the 18th Amendment to the post-Prohibition world after the 21st Amendment repealed prohibition. The 21st Amendment restored the constitutional balance that had been upset by the 18th Amendment, but was not intended to give the states power to engage in economic warfare against each others' products. Indeed, the reciprocal protectionist barriers and economic Balkanization that the states have erected in recent years is exactly the behavior that the Commerce Clause was intended to prevent. Hughes v. Oklahoma, 441 U.S. 322, 325 (1979).
But what of the 21st Amendment? Section 1 of the 21st Amendment repealed the 18th Amendment, therey ending Prohibition. Section 2 of the 21st Amendment provides, Section 2 of the 21st Amendment provides, "The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." It is argued that by its plain language this provision gives the states plenary power over interstate commerce in alcohol, to regulate "importation or transportation" in any way the state sees fit, including imposing discriminatory bans on importation. But this plain language interpretation is clearly wrong.
Section 2 by its own terms neither specifically mentions the Commerce Clause nor is it specifically limited only to the Commerce Clause. Thus, there is no distinguishing principle in the text of § 2 of the 21st Amendment that would justify its application to a partial repeal of the Commerce Clause with no modification of any other provision of the Constitution, such as the First Amendment, Equal Protection Clause, or Due Process Clause. Still less is there any reason to believe that it repeals only the dormant Commerce Clause, while leaving all other provisions of the Constitution intact.
Early interpretations of § 2 in fact did point to its plain language to interpret the 21st Amendment as a blanket exception to the Constitution. In upholding a state liquor regulation in State Bd. of Equalization of California v. Young's Mkt., the first Supreme Court case addressing § 2, the Court stated, "The claim that the statutory provisions and the regulations are void under the equal protection clause may be briefly disposed of. A classification recognized by the Twenty-First Amendment cannot be deemed forbidden by the Fourteenth." 299 U.S. 59, 64 (1936).
The rationale for limiting the text of § 2 is evident. Otherwise, a state could pass a law that prohibited the importation of kosher or sacramental wine. Or could permit the importation or transportation of alcohol to white people or to those who sign a pledge not to criticize the government. Indeed, if the expansive interpretation of the plain language is adopted, it seems that the state government could enslave members of the population and make them drive beer trucks. Given the absurd consequences that would flow from an expansive interpretation of the 21st Amendment, it is reasonable to assume that contrary to the interpretation imposed in Young's Mkt., the framers of the 21st Amendment did not intend to eliminate all constitutional limits on the states' regulatory authority. In other words, whereas the final clause of the provision refers to "in violation of the laws thereof," it clearly should be read as in violation of otherwise valid laws thereof. And, in fact, in a whole stream of subsequent cases, the Supreme Court has correctly held that the 21st Amendment does not nullify the application of the 1st Amendment Freedom of Speech, 1st Amendment Establishment Clause, Due Process Clause, or Equal Protection Clause. Clearly, therefore, state authority is not untrammeled under the 21st Amendment.
But perhaps the 21st Amendment repeals commercial provisions of the Constitution, and not individual liberties protections. Note first, however, that this distinction is not found anywhere in the text of § 2--so much for the unambiguous language of that provision. So that the distinction must be found in some extratextual source (which will be discussed in upcoming entries). But assuming somehow the phrase "importation or transportation" somehow magically gets converted into a selective repeal of only commercial clauses, does this authorizes states to engage in economic warfare against the products of other states with no justifiable basis?
Well, no. First, the Supreme Court has held that § 2 does not repeal the "Import-Export" Clause of the original Constitution. In Department of Revenue v. James B. Beam Distilling Co., 377 U.S. 341 (1964), the Court stated, "This Court has never so much as intimated that the Twenty-first Amendment has operated to permit what the Export-Import Clause precisely and explicitly forbids. . . . Nothing in the language of the Amendment nor it its history leads to such an extraordinary conclusion." Id. at 344-45. Then, in Hostetter v. Idlewild Bon Voyage Liquor Corp., 377 U.S. 324,331-32 (1964), the Court observed, "To [conclude] that the Twenty-first Amendment has somehow operated to `repeal' the Commerce Clause wherever regulation of intoxicating liquors is concerned would . . . be an absurd oversimplification. If the Commerce Clause had been pro tanto `repealed,' then congress would be left with no regulatory power over interstate or foreign commerce in intoxicating liquor. Such a conclusion would be patently bizarre and is demonstrably incorrect."
So the Court has held that notwithstanding the specific mention of "importation" in the 21st Amendment, it does not repeal the "Import-Export" Clause, and notwithstanding the mention of "transportation" it does not prohibit the transportation through New York for delivery to a duty-free shop at the airport (the facts of Hostetter). In short, notwithstanding the initial impression that the plain language of the 21t Amendment gives the states the power to do whatever they want to, the Supreme Court has not interpreted it that way and it is absurd to think that Congress intended that meaning.
Whatever the 21st Amendment does, therefore, there is no evidence that it was intended to overturn one of the fundamental purposes of the Constitution, which was to eliminate internal trade barriers that plagued the country under the Articles of Confederation. As James Madison stated, the Commerce Clause "grew out of the abuse of the power by the importing States in taxing the non-importing, and was intended as a negative and preventive provision against injustice among the States themselves."