The 1st Circuit Court of Appeals in Anvar v. Dwyer (1st circuit decision) affirmed the district court in part, vacated it in part, and remanded for further proceedings.


The 1st Circuit vacated the district court’s decision in very strong terms. It rejected theoretical arguments about essential elements, health and safety, and the blanket defense of the three-tier system being unquestionably legitimate. Instead, it mandated a concrete evidence test as required in Tennessee Wine, in order to justify discrimination.

The judge qualified the unquestionably legitimate doctrine in Granholm as dictum, and indicated that although it permits a three-tier system to operate, it does not provide for discrimination.

The case will go back to the lower court, but the instructions are very clear to the judge, find the evidence to justify your conclusion.

Also, the Judge noted that nothing inherent in the three-tier system demands an in-state physical presence requirement.

One other interesting part of this decision is how the judge dealt with non-discriminatory alternatives, which he did not deem to be a necessary analysis of a Commerce Clause challenge of a Twenty-first Amendment issue.

District Court decision

In the District Court decision, the lower court held that the physical presence requirement was necessary to the state’s three-tier system and was necessary to promote the health and safety of Rhode Island residents.

The District Court did not examine concrete evidence in coming to its conclusion on health and safety. The in-state wholesaler purchase was upheld on similar grounds.

Additionally, the plaintiffs challenged the law, which did not permit common carrier shipping and limited delivery to company owned vehicles. The court found no Commerce Clause violation, as in-state retailers were not permitted to utilize common carriers.

The Court did not address the issue if the common-carrier prohibition, although it evenly applies, had a discriminatory effect or purpose, especially to those retailers a good distance from Rhode Island.

The bedrock principles of the 1st Circuit’s decision

The 1st Circuit before going into the decision laid out the important elements of analyzing a Commerce Clause challenge to discriminatory state liquor laws.

The Court must first determine whether a challenged law is facially discriminatory or is discriminatory in effect or in purpose on interstate commerce.

The next step in the inquiry is whether the law  “serves a State’s legitimate [section] 2 interests” such as addressing ‘’the public health and safety effects of alcohol use.” Tenn. Wine, 139 S. Ct. at 2469, 2474 . Under the Tennessee Wine standard mere speculation or unsupported assertions are not enough, the state  must proffer “concrete evidence” demonstrating that the main effect of the law is the advancement of, say, public health and safety, not economic protectionism.”

If the law’s predominant effect is protectionist and can’t be saved by a Twenty-first Amendment interest, then the court examines whether the law “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.”

The decision

What it is about

The plaintiffs challenged the Rhode Island retail delivery law, which allows Rhode Island retailers to deliver wine but does not afford this privilege to out-of-state retailers, as facially discriminatory. It also challenged the law, which bans common carrier shipping as discriminatory in purpose or effect. The law prohibits both Rhode Island and out-of-state retailers from using common carriers, but the effect of the law is to shut out-of-state retailers, a good distance from Rhode Island, out of the market.


The first issue addressed was whether the law, which required licensed retailers to purchase alcohol from licensed in-state wholesalers, represented the state’s valid Twenty-first Amendment interest. The Court noted that because the plaintiffs didn’t challenge it in district court, and didn’t mention this interest in their opening brief, and only mentioned it in a reply brief, that it was deemed waived by the plaintiffs and hence the Court affirms the District Court’s decision.

The Court next dealt with the issue of discrimination. At the District Court, the judge ruled in favor of the state based on positive treatment from dictum in Granholm. The District Court Judge stated:

“Given the United States Supreme Court’s endorsement of this system as “unquestionably legitimate” and that finding in Plaintiffs’ favor would dismantle this system, the Court cannot find that Rhode Island’s alcohol regulatory system violates the dormant Commerce Clause.” Anvar v. Dwyer, C. A. 19-523-JJM-LDA, at *8 (D.R.I. Sep. 29, 2022)

The 1st Circuit acknowledges that the district court relied on Granholm’s dictum to justify discrimination, and agrees the Supreme Court indicated that the three-tier system can be justified under the Twenty-first Amendment, however, based on recent Supreme Court rulings, which “cautioned that the Twenty-first Amendment does not necessarily “sanction [] every discriminatory feature that a State may incorporate into its three-tiered scheme.”, the Court is required to judge each state’s specific system as opposed to applying an overarching principle.

The District Court held that the physical in-state presence requirement is an essential element of the three-tier system because “it allows state officials to conduct on-site inspections to ensure compliance with the law.” It arrived at this conclusion not based on concrete evidence but based on an expert report.

The 1st Circuit indicated that the district court failed to engage in the proper test under Granholm and Tennessee Wine. As the 1st Circuit stated “At no point did the court engage with any “concrete evidence” as to how the in-state-presence requirement furthers the legitimate aims of the Twenty-first Amendment. Tenn. Wine, 139 S. Ct. at 2474 (quoting Granholm, 544 U.S. at 490). For instance, the court made no mention of whether such enforcement actions actually take place, whether such efforts have effectively curtailed behavior deleterious to the public health, or whether the requirement has tangibly benefited public health and safety in some other way.”

Further, the 1st Circuit noted that the lower court failed to consider plaintiffs’ arguments or evidence against the state’s position. The Judge lists the plaintiffs’ evidence that was not considered and states that whether it outweighs the defense’s case is a decision the lower court should have made.

Finally, the judges finishes this issue by holding that a discriminatory trait of a three-tier system can’t stand on its own based on the virtues of the three-tier system or some theoretical benefit to public health and safety. He also indicates that nothing inherently in the three-tier system-which aims to prevent vertical integration, demands a retailer maintain an in state physical presence. If it does the state most present concrete evidence “demonstrating that its predominant effect advances the goals of the Twenty-first Amendment and not merely the protection of in-state business interests.”

The third issue dealt with non-discriminatory alternatives. The plaintiffs argued that the district court erred when it did not consider if nondiscriminatory alternatives were available. The judge determined that this conflates a Twenty-first Amendment inquiry with a traditional dormant Commerce Clause analysis. The judge stated that the district court may find alternatives relevant to its inquiry , but that the mere existence of alternatives does not, for the purposes of the Twenty-first Amendment inquiry necessarily invalidate a challenged law.


The Judge concluded that the district court’s ruling upholding the constitutionality of the in-state-presence requirement is vacated. And that in district court, if the lower court finds that the delivery statute is facially discriminatory, it will have another inquiry on whether not allowing common carrier deliver (this is also banned for Rhode Island retailers) is discriminatory in effect or purpose.