Alcoholic BeveragesConstitutional Law – Whether Non-Durational Residency Requirements for Alcoholic Beverages Licensees in Harford County are Permissible Under the Commerce Clause of the United States Constitution

82 [106 Op. Att’y

ALCOHOLIC BEVERAGES

CONSTITUTIONAL LAW – WHETHER NON-DURATIONAL

RESIDENCY REQUIREMENTS FOR ALCOHOLIC BEVERAGES

LICENSEES IN HARFORD COUNTY ARE PERMISSIBLE

UNDER THE COMMERCE CLAUSE OF THE UNITED STATES

CONSTITUTION

May 4, 2021

The Honorable Walter A. Tilley, III

Chair, Liquor Control Board for Harford County

On behalf of the Liquor Control Board for Harford County

(“Harford County Board”), you have requested our opinion on the

constitutionality of the non-durational residency requirements for

alcoholic beverages licenses in Harford County, as amended by

Chapter 462 of 2020. 1 Chapter 462 abolished durational residency

requirements for alcoholic beverages licenses, which had required

licensees to reside in the relevant county (or, for some licenses, in

the State) for a certain period of time before applying for a license.

The stated purpose of that change, see 2020 Md. Laws, ch. 462,

§ 2, was to bring Maryland law into compliance with the decision

of the United States Supreme Court in Tennessee Wine & Spirits

Retailers Ass’n v. Thomas, 139 S. Ct. 2449 (2019) (“Thomas”),

which had held that Tennessee’s durational residency requirement

for alcoholic beverages licenses—requiring the applicant to have

resided in the state for a period of two years prior to the

application—violated the Commerce Clause of the U.S.

Constitution by discriminating against nonresidents of the state

and was not saved by the Twenty-First Amendment’s reservation

of state authority to regulate alcohol. 2

1

The Liquor Control Board for Harford County is formally named the

Board of License Commissioners for Harford County, Md. Code Ann.,

Alc. Bev. (“AB”) §§ 22-201, 22-301, and performs the usual functions

of a Board of License Commissioners: the licensing and regulation of

retail sellers of alcoholic beverages in Harford County, see 99 Opinions

of the Attorney General 31, 32, 35 n.6 (2014).

2

The conclusion that durational residency provisions violate the

dormant Commerce Clause was not a dramatic break with prior law.

Other courts had reached the same conclusion, Cooper v. McBeath, 11

F.3d 547, 548 (5th Cir. 1994); Southern Wine and Spirits of Texas, Inc.

v. Steen, 486 F. Supp. 2d 626, 628 (W.D. Tex. 2007); Glazer’s Wholesale

Gen. 82] 83

At the same time, however, the General Assembly in enacting

Chapter 462 also retained non-durational residency requirements

for alcoholic beverages licenses issued in Harford County and

many other counties in Maryland, as well as for certain alcoholic

beverages licenses issued by the State. See 2020 Md. Laws, ch.

462. Under those non-durational residency requirements, licensees—

or, in some cases, at least one licensee—must reside in the relevant

jurisdiction at the time of the license application, and in many

jurisdictions, including Harford County, the licensee is also

required to remain a resident throughout the term of the license.

See, e.g., AB §§ 4-103(b), 22-1401(a)(2), 22-1402(a), 22-1405(a)(2),

(3). The question you have asked is whether the non-durational

residency requirements applicable in Harford County can survive

under the Commerce Clause in light of Thomas. 3

As we will explain, it is our view that Harford County’s non-

durational residency requirements would likely also fail under the

reasoning of Thomas. The Supreme Court’s analysis in Thomas

did not distinguish between durational and non-durational

residency requirements. In finding the durational requirements

there to be unconstitutional, the Court rejected several justifications

for a durational residency requirement under the Commerce

Clause, reasoning that nondiscriminatory alternatives could

advance the same objectives. And those nondiscriminatory

alternatives could just as easily advance the objectives of a non-

durational residency requirement. Thus, we think that a court

applying Thomas would likely invalidate the current non-

durational residency requirements for alcoholic beverages licenses

in Harford County. Although we recognize that much of this

analysis may apply to the other non-durational residency

requirements in Chapter 462, we have not separately analyzed each

residency requirement in the Alcoholic Beverages Article and do

not specifically address whether any of those other requirements

are constitutional.

Drug Co., Inc. v. Kansas, 145 F. Supp. 2d 1234, 1244 (D. Kan. 2001),

as had attorneys general in at least two states, Tenn. Op. Att’y Gen. 14-

83, 2014 WL 4664826 (Sept. 12, 2014); Tenn. Op. Att’y Gen. 12-59,

2012 WL 2153491 (June 6, 2012), Kan. Op. Att’y Gen. 06-12, 2006 WL

1722435 (June 21, 2006).

3

To be clear, when we refer to residency requirements in this opinion,

we mean the residency requirements for alcoholic beverages licensees.

We do not address restrictions that require the licensed business itself to

be located in or have a physical presence in the State or the relevant local

jurisdiction within the State.

84 [106 Op. Att’y

I

Background

Thomas considered the interaction of two provisions of the

United States Constitution: Congress’s power “[t]o regulate

Commerce . . . among the several States,” U.S. Const. art. I, § 8, cl.

3 (the “Commerce Clause”), and the Twenty-First Amendment’s

reservation of state authority to regulate the alcohol trade, id.

amend. XXI, § 2. The Commerce Clause has long been understood

not only as an affirmative grant to Congress of power to regulate

interstate commerce, but also as a restriction on states’ ability to

adopt “protectionist” legislation that “unduly restrict[s] interstate

commerce.” Thomas, 139 S. Ct. at 2459. That implied “negative

command” is typically referred to as “the dormant Commerce

Clause.” Oklahoma Tax Comm’n v. Jefferson Lines, Inc., 514 U.S.

175, 179 (1995).

The dormant Commerce Clause’s limitation on state authority

is in some tension with the Twenty-First Amendment, ratified in

1933, which ended nationwide alcohol prohibition but also

provided:

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.

U.S. Const. amend. XXI, § 2 (“Section 2”). Section 2 was intended

“to give each State the authority to address alcohol-related public

health and safety issues in accordance with the preferences of its

citizens.” Thomas, 139 S. Ct. at 2474. It was left unclear, however,

whether Section 2 superseded other constitutional limitations on

state regulatory authority, such as the Commerce Clause, and

authorized state alcohol regulations that the federal Constitution

would otherwise prohibit, such as provisions favoring the state’s

own residents over nonresidents.

A. Procedural History in Thomas

Thomas involved a provision of Tennessee law that required

applicants for an initial license to have resided in the State for the

prior two years. The Tennessee Attorney General had twice opined

that this statute was unconstitutional. In the first opinion, Tenn.

Op. Att’y Gen. 12-59, 2012 WL 2153491 (June 6, 2012), the

Attorney General concluded that the two-year residency requirement

Gen. 82] 85

for a retail liquor license violated the Commerce Clause in light of

the Sixth Circuit’s decision in Jelovsek v. Bredesen, 545 F.3d 431,

439 (6th Cir. 2008), which had concluded that Tennessee’s two-

year residency requirement for a winery license was facially

discriminatory against out-of-state wineries. In the second opinion,

Tenn. Op. Att’y Gen. 14-83, 2014 WL 4664826 (Sept. 12, 2014),

the Attorney General concluded that an amended version of the law

that retained the two-year residency requirement also violated the

Commerce Clause. As a result, the Tennessee Alcoholic Beverage

Commission (“TABC”) stopped enforcing the provision. Thomas,

139 S. Ct. at 2458.

Two years later, two companies—one formed as a limited

liability company but owned by residents of Maryland and one

owned and controlled by two individuals who had only recently

moved to Tennessee—applied for retail licenses. Neither met the

two-year residency requirement. In line with the Attorney

General’s opinions, TABC staff recommended approval of the

applications, Byrd v. Tennessee Wine & Spirits Retailers Ass’n, 259

F. Supp. 3d 785, 788 (M.D. Tenn. 2017), but the Tennessee Wine

and Spirits Retailers Association (“the Association”) heard of the

recommendation and threatened to sue. The Executive Director of

the TABC responded by filing an action for declaratory judgment

in Tennessee state court, which was subsequently removed to

federal district court. Thomas, 139 S. Ct. at 2458. 4 The Executive

Director asked the court to determine the validity of three

provisions of Tennessee law: the two-year durational residency

requirement for initial retail license applicants, Tenn. Code Ann.

§ 57-3-204(b)(2)(A); a requirement that a person seeking renewal

of a retail license have resided in the state for at least 10

consecutive years, id.; and a requirement that all officers, directors,

and stockholders of a corporate applicant meet the two-year

durational residency requirement for initial applications and the 10-

year residency requirement for renewal applications. Tenn. Code

Ann. § 57-3-204(b)(3)(A)-(B).

The district court found that all three of these residency

requirements violated the Commerce Clause. Byrd, 259 F. Supp.

4

The Executive Director, represented by the Attorney General,

apparently took inconsistent positions about the validity of the provision

over the course of the litigation. Byrd v. Tennessee Wine & Spirits

Retailers Ass’n, 883 F.3d 608, 613 n.1 (6th Cir. 2018).

86 [106 Op. Att’y

3d at 797. 5 The Sixth Circuit affirmed, Byrd v. Tennessee Wine &

Spirits Retailers Ass’n, 883 F.3d 608, 612 (6th Cir. 2018), although

one member of the panel dissented in part, and would have held

that the two-year residency requirement was reasonably related to

Tennessee’s interest in “[p]romoting responsible consumption and

orderly liquor markets,” id. at 633 (Sutton, J., concurring in part

and dissenting in part).

The Association then filed a petition for certiorari with the

Supreme Court, arguing that the two-year durational residency

requirement for initial retail license applicants (and officers and

directors of corporate applicants) was consistent with the

Commerce Clause. 6 The Association no longer sought to defend

the ten-year residency requirement for renewals or the residency

requirements for shareholders of applicant corporations. Thomas,

139 S. Ct. at 2457; Brief for Petitioner, Tennessee Wine & Spirits

Retailers Ass’n v. Thomas, 139 S. Ct. 2449 (2019) (No. 18-96), 2018

WL 5962887, at *17.7 The Association also did not argue that a

two-year durational residency requirement could be upheld against

a Commerce Clause challenge if any commodity other than alcohol

5

The court did not address the plaintiffs’ alternative challenge under

the federal Privileges and Immunities Clause. That challenge would

likely have been unsuccessful. It has long been held that selling

alcoholic beverages is not a privilege of citizens of the United States and

thus state laws requiring state residence for that purpose do not violate

the Privileges and Immunities Clause. Mugler v. Kansas, 123 U.S. 623,

657, 675 (1887); Bartemeyer v. Iowa, 85 U.S. 129, 133 (1873); Trageser

v. Gray, 73 Md. 250, 255 (1890). More modern courts have reached the

same conclusion, Lebamoff Enters., Inc. v. Whitmer, 956 F.3d 863, 875

(6th Cir. 2020); Glicker v. Michigan Liquor Control Comm’n, 160 F.2d

96, 98 (6th Cir. 1947), which is not surprising in light of the fact that the

Twenty-First Amendment gives the states the right to ban the sale of

alcohol altogether.

6

The Executive Director did not appeal the district court’s decision

and did not join the Association’s petition for certiorari, which formally

identified the Executive Director as a respondent rather than a petitioner.

After the Court granted certiorari, however, the Attorney General of

Tennessee filed a letter on behalf of the Executive Director supporting

the Association’s position. Thomas, 139 S. Ct. at 2458-59.

7

The Supreme Court addressed this failure in dicta, saying these other

provisions were “so plainly based on unalloyed protectionism that

neither the Association nor the State [wa]s willing to come to their

defense.” Thomas, 139 S. Ct. at 2474. The Court later described the

challenged durational residency requirement as being “like the other

discriminatory residency requirements that the Association is unwilling

to defend,” in that the predominant effect was “simply to protect the

Association’s members from out-of-state competition.” Id. at 2476.

Gen. 82] 87

was involved. Thomas, 139 S. Ct. at 2462. Thus, the sole issue

before the Supreme Court was whether Section 2 of the Twenty-

First Amendment protected the action of the State in imposing a

residency requirement that would clearly violate the Commerce

Clause in any other context.

B. The Supreme Court’s Decision in Thomas

After a long discussion of the history of state attempts to

regulate alcoholic beverages and congressional efforts to shield

that regulation from Commerce Clause and other challenges in the

years leading up to the adoption of the Eighteenth Amendment, the

Thomas Court stated its view that Section 2 was meant to

“‘constitutionaliz[e]’ the basic understanding of the extent of the

States’ power to regulate alcohol that prevailed before

Prohibition.” Thomas, 139 S. Ct. at 2467-68 (citing Craig v. Boren,

429 U.S. 190, 206 (1976); Granholm v. Heald, 544 U.S. 460, 484

(2005)). The Court further concluded that this “basic

understanding” did not permit states “to impose protectionist

measures clothed as police-power regulations.” Thomas, 139 S. Ct.

at 2468. In other words, the pre-1933 understanding of the

Commerce Clause constrained states’ regulatory authority under

Section 2.

The Court recognized that early cases under Section 2 seemed

to rely on the theory that Section 2 overrode all other provisions of

the Constitution, id. at 2468, but explained that subsequent cases

showed that the Court ultimately “saw that [Section] 2 cannot be

read that way.” Id. at 2469. The Court noted, for instance, that it

had previously scrutinized laws regulating alcoholic beverages for

compliance with other portions of the Constitution including the

Free Speech and Establishment Clauses of the First Amendment,

the Equal Protection and Due Process Clauses of the Fourteenth

Amendment, and the Import-Export Clause. Id.

The Court further explained that the latter approach had also

been applied in cases raising Commerce Clause objections to

alcoholic beverages laws. Id. at 2470. In Bacchus Imports, Ltd. v.

Dias, 468 U.S. 263, 273, 276 (1984), for example, the Court

invalidated a discriminatory tax that applied to all out-of-state

liquor but exempted certain Hawai’i products. Similarly, in Healy

v. Beer Institute, 491 U.S. 324, 340-41 (1989), the Court found that

a requirement that out-of-state shippers of beer affirm that their

wholesale price for products sold in Connecticut was no higher

than the prices they charged to wholesalers in bordering states

88 [106 Op. Att’y

violated the Commerce Clause because it discriminated against

brewers and shippers of beer engaged in interstate commerce. And

in Granholm v. Heald, the Court struck down a set of

discriminatory direct-shipment laws that favored in-state wineries

over out-of-state competitors. 8 544 U.S. at 492-93. Thus, the

Court concluded that, while it had “acknowledged that [Section] 2

grants States latitude with respect to the regulation of alcohol,” it

had also “repeatedly declined to read [Section] 2 as allowing the

States to violate the ‘nondiscrimination principle’ that was a central

feature of the regulatory regime that the provision was meant to

constitutionalize.” Thomas, 139 S. Ct. at 2470.

The Court went on to reject the Association’s arguments

about how the line between Section 2 and the Commerce Clause

should be drawn. Specifically, the Court rejected the argument that

the nondiscrimination principle applied only to discrimination

against out-of-state products and not to laws regulating in-state

alcohol distribution. Id. at 2470-71. Although the Court had

previously suggested in Granholm that Section 2 protects the

traditional “three tier system” of alcohol distribution, under which

manufacturers, wholesalers, and retailers must obtain state

licenses, the Thomas Court opined that durational residency

requirements could not be considered an essential feature of that

system, given that many states with three-tiered systems do not

impose durational residency requirements and some do not impose

residency requirements at all. Id. at 2471-72. The Court also held

that the long history of durational residency requirements did not

mean that they were constitutional. Id. at 2472-73.

In sum, the Court concluded that Section 2 “allows each State

leeway to enact the measures that its citizens believe are

appropriate to address the public health and safety effects of

alcohol use and to serve other legitimate interests, but it does not

license the States to adopt protectionist measures with no

demonstrable connection to those interests.” Id. at 2474. Thus, the

court crafted an “inquiry” that would apply specifically to alcoholic

beverage regulations, in an effort to balance the interests of Section

2 and the Commerce Clause. Id.

8

See also Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691, 716

(1984) (invalidating ban on TV wine ads emanating from other states);

California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445

U.S. 97, 114 (1980) (invalidating wine-related resale price maintenance

and price posting statutes); Hostetter v. Idlewild Bon Voyage Liquor

Corp., 377 U.S. 324, 331-32 (1964) (invalidating regulation of alcohol

passing through JFK Airport that would not be used until arrival at

international destination).

Gen. 82] 89

In conducting that inquiry, the Court looked to “whether the

challenged requirement can be justified as a public health or safety

measure or on some other legitimate nonprotectionist ground.” Id.

at 2474. The Court also identified two relevant factors to help

determine whether that was the case: (1) whether the requirement

“actually promotes public health or safety” and (2) whether

“nondiscriminatory alternatives would be insufficient to further

those interests.” Id. If consideration of these factors demonstrates

that “the predominant effect of a law is protectionism, not the

protection of public health or safety, it is not shielded by [Section]

2” and is instead subject to ordinary Commerce Clause scrutiny.

Id. 9 The Court placed the burden on the defender of the law to

provide “concrete evidence” in support of the law’s nonprotectionist

justifications, stating that “‘mere speculation’ or ‘unsupported

assertions’ are insufficient to sustain a law that would otherwise

violate the Commerce Clause.” Id.

Because the Association had relied on its argument that the

Commerce Clause did not apply (and the State offered no

independent argument), the Court found the record “devoid of any

‘concrete evidence’ showing that the 2-year residency requirement

actually promotes public health or safety,” nor was there “evidence

that nondiscriminatory alternatives would be insufficient to further

those interests.” Id. The Court then considered and rejected all of

the nonprotectionist justifications for the requirement that had been

suggested in the arguments before the Court and found that “the

Association has fallen far short of showing that the 2-year

durational-residency requirement for license applicants is valid.”

Id. at 2475-76.

For example, in response to the Association’s argument that

the residency requirements were justified because resident retailers

are “amenable to the direct process of state courts,” the Court

suggested that problem could easily be addressed by requiring

nonresident licensees to designate an agent to receive process or to

consent to suits in Tennessee courts. Id. at 2475 (citing Cooper v.

McBeath, 11 F.3d 547, 554 (5th Cir. 1994)).

9

Under ordinary Commerce Clause scrutiny a provision that

discriminates against interstate commerce is “virtually per se . . .

invalid[],” City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978),

and will be upheld only if the state is able to show that it is “narrowly

tailored to ‘advanc[e] a legitimate local purpose,’” Thomas, 139 S. Ct. at

2461 (citing Department of Revenue of Ky. v. Davis, 553 U.S. 328, 338

(2008)).

90 [106 Op. Att’y

Similarly, in response to the Association’s argument that the

two-year requirement improved the ability of the State of

Tennessee to determine the fitness of applicants, the Court pointed

out that state law already required criminal background checks and

that more searching checks could be ordered if necessary,

concluding that “if the State desires to scrutinize its applicants

thoroughly . . . it can devise nondiscriminatory means short of

saddling applicants with the burden of residing in the State.” Id.

(internal quotation marks and alterations omitted). The Court went

on to explain that the residency requirement was not well-designed

to serve the goal of judging the fitness of applicants because, if a

person were to move to the state with the intent to apply for a

license in two years, the state would have no reason to begin an

investigation until the person actually applied for a license at the

end of the two-year period. Id. Moreover, a prospective applicant

would not be obliged “to be educated about liquor sales, submit to

inspections, or report to the State” during the two-year waiting

period. Id.

The Court also rejected the argument that the residency

requirement was necessary to maintain oversight over liquor store

operators. The Court pointed out that the retail stores in question

were located in the state, allowing the state to monitor their

operations through on-site inspections and audits and to address

violations of the law with penalties up to and including revocation

of the license. Id.

Finally, in response to the argument that the two-year

residency requirement would promote responsible alcohol

consumption, the Court found that it was “very poorly designed”

to accomplish this purpose because it applied to the license holder

rather than the person who would actually be making the sales,

because it required residence in the state generally rather than in

the community where the store would be located, and because a

license holder who lived right over the border might actually be

closer to the community in question than a license holder in a

distant part of the same state. Id. at 2476. The Court also pointed

to other nondiscriminatory alternatives that could promote

responsible consumption, including limiting the number of licenses

in an area, placing volume limits on sales to individuals, mandating

more extensive training for managers and employees, requiring

managers and employees to show familiarity with the

neighborhood, or requiring managers of liquor stores to obtain

permits, satisfy background checks, and undergo “alcohol

awareness” training. Id.

Gen. 82] 91

C. Residency Requirements in Harford County

After the Supreme Court’s decision in Thomas, the General

Assembly repealed Maryland’s durational residency requirements

for alcoholic beverages licenses and replaced them with non-

durational residency requirements. See 2020 Md. Laws, ch. 462.

As relevant here, under the law as amended in Chapter 462,

individuals applying to the Harford County Board for an alcoholic

beverages license must reside in the county at the time of the

application and during the license term. AB § 22-1402. An

alcoholic beverages license may only be issued for the use of a

partnership if all partners meet the same residency requirement. Id.

§ 22-1401(a)(2) (incorporating AB § 4-103). And the Harford

County Board may issue a license for the use of another type of

legal entity, such as a corporation or limited liability company, only

if at least one officer and shareholder of the entity is a resident of

the county and acts as a day-to-day manager of the business. Id.

§ 22-1405. These requirements apply to all classes of licenses

issued by the Harford County Board. See id. §§ 22-1402, 22-1405.

II

Analysis

We now turn to your question of whether the non-durational

residency requirements for licensees that were retained in Chapter

462 for Harford County are unconstitutional under the Supreme

Court’s decision in Thomas.

A. The Attorney General’s Role in Assessing the

Constitutionality of a Statute

When our Office is asked to advise on the constitutionality of

a Maryland law, we must be “mindful of the obligation of the

Attorney General to defend, in litigation, the constitutionality of

statutes enacted by the Legislature.” 93 Opinions of the Attorney

General 154, 160 (2008) (citing State v. Burning Tree Club, Inc.,

301 Md. 9, 36-37 (1984)). However, we also have an obligation,

at least when there is “neither pending nor imminent litigation,” to

provide an opinion with “our best legal analysis” on the

constitutionality of the law at issue so as to help our clients avoid

constitutional liability and “administer statutes in compliance with

constitutional provisions.” Id. at 160-61; see also, e.g., 71

Opinions of the Attorney General 266, 269-70 (1986) (concluding

that statute debarring certain labor-law violators from state

contracts was preempted pursuant to the federal Supremacy Clause,

92 [106 Op. Att’y

in light of Supreme Court decision invalidating a similar Wisconsin

statute); 70 Opinions of the Attorney General 3, 12, 15, 17-18

(1985) (concluding that various abortion laws were

unconstitutional pursuant to then-recent Supreme Court authority);

Letter from Kathryn M. Rowe, Assistant Attorney General, to the

Hon. Edward R. Reilly (Dec. 12, 2019) (advising that a citizenship

requirement for liquor license holders is likely unconstitutional);

Letter from Gerald Langbaum, Assistant Attorney General, to

Joseph P. Oates & Joseph Val Collom (July 19, 1976) (same). 10

To be clear, “even if we conclude that the statute is

constitutionally deficient, an Attorney General opinion cannot

itself invalidate an act of the General Assembly.” 93 Opinions of

the Attorney General at 161. It is, after all, not the role of the

Attorney General to “declare” laws unconstitutional. 63 Opinions

of the Attorney General 644, 645 (1978). “Only a court has the

power to declare a statute invalid because it does not comply with

constitutional requirements.” First Cont’l Sav. & Loan Ass’n v.

Director, State Dep’t of Assessments & Taxation, 229 Md. 293, 301

(1962). But, with those limitations in mind, we will provide our

“best legal analysis,” employing “all of the presumptions in favor

of, and against, the statute that a court would consider,” 93

Opinions of the Attorney General at 160, to determine whether

Harford County’s non-durational residency requirements are likely

to be found unconstitutional.

B. The Application of Thomas to Harford County’s Non-

Durational Residency Requirements

The residency requirement at issue in Thomas, like the ones

in effect in Harford County prior to the passage of Chapter 462,

required that the applicant be a resident of the jurisdiction for a

certain period of time prior to filing an application for a license.

But in holding that Tennessee’s durational residency requirement

10

When reviewing bills that have been passed by the Legislature prior

to their approval or veto by the Governor, this Office applies what we

call a “not clearly unconstitutional” standard. 93 Opinions of the

Attorney General at 161 n.12 (citing 71 Opinions of the Attorney General

266, 272 n.12 (1986)). Because Chapter 462 has already been enacted,

we need not consider in this opinion whether it was “clearly

unconstitutional” under that standard. But even if Chapter 462 were

clearly unconstitutional, we would not have recommended that the

Governor veto it because the bill was, at the very least, less

constitutionally problematic than the law as it existed at the time, in that

it eliminated the type of durational residency requirements that the

Supreme Court had expressly struck down in Thomas.

Gen. 82] 93

violated the Commerce Clause, the Thomas Court never suggested

that a non-durational residency requirement—i.e., that the licensee

be a resident of the jurisdiction only at the time of the application

or from the time of the application through the end of the license

period—would merit different treatment. Although the Court’s

opinion primarily spoke in terms of durational residency

requirements because that was the nature of the licensing regime

before it, Thomas’s reasoning strongly suggests that non-durational

residency requirements will likely be difficult to defend. Cf. 139

S. Ct. at 2471 (rejecting Association’s effort to limit Granholm to

the regulatory regime at issue in that case).

As an initial matter, Tennessee’s durational residency

requirement triggered Commerce Clause scrutiny because it

“discriminate[d] on its face against nonresidents.” Id. at 2474. A

non-durational residency requirement does the same; it expressly

bars nonresidents from applying for or retaining an alcoholic

beverages license, whereas residents may do so. And although the

residency requirements at issue here require licensees to reside in

Harford County (meaning that residents of other Maryland

jurisdictions are also ineligible), it seems clear based on Supreme

Court precedent that a requirement of residency in the county still

facially discriminates against interstate commerce. See, e.g., Fort

Gratiot Sanitary Landfill, Inc. v. Michigan Dep’t of Natural Res.,

504 U.S. 353, 361-63 (1992) (invalidating Michigan statute

preventing landfills from accepting out-of-county waste, reasoning

that allowing such measures at the county level, when they are not

permissible at the state level, would enable a state to “avoid the

strictures of the Commerce Clause”); C&A Carbone, Inc. v. Town

of Clarkstown, 511 U.S. 383, 392 (1994) (observing that an

ordinance excluding out-of-locality as well as out-of-state

competition “just makes the protectionist effect of the ordinance

more acute”).

Accordingly, a court confronted with a non-durational

residency requirement like the ones applicable in Harford County

would apply the test developed in Thomas, arising from the

intersection of the Commerce Clause and the Twenty-First

Amendment. That test, in turn, asks whether “the challenged

requirement can be justified as a public health or safety measure or

on some other legitimate nonprotectionist ground” and, in

answering that question, examines whether the requirement

“actually promotes public health or safety” and whether

94 [106 Op. Att’y

“nondiscriminatory alternatives would be insufficient to further

those interests.” Thomas, 139 S. Ct. at 2474. 11

The Association and its amici raised several health and safety

justifications for Tennessee’s durational residency requirement,

each of which the Court rejected as “implausible on its face.” Id.

at 2475. Critically, several of the justifications the Court

considered and rejected are best understood not as justifications for

requiring a licensee to have two years of residency prior to the

application, but as arguments for requiring residency at the time of

the application and/or during the period of the license—that is, as

arguments that would support non-durational residency

requirements like Harford County’s.

For example, the Association argued in Thomas that a

residency requirement was needed to ensure that licensees would

be amenable to service of process in Tennessee. Id. at 2475. It

11

The Supreme Court did not fully explain how the test it established

in Thomas for alcoholic beverage regulations differs from the standard

dormant Commerce Clause analysis. The Thomas Court indicated that

Section 2 gives states more “leeway” to regulate alcohol than they would

otherwise have under the Commerce Clause. 139 S. Ct. at 2457-74. But

both the Thomas test and the standard Commerce Clause test require that

the law be supported by nonprotectionist justifications and that a

reviewing court examine whether nondiscriminatory alternatives would

advance the same purpose. See, e.g., Maine v. Taylor, 477 U.S. 131, 138

(1986). As one possible distinction, Thomas did suggest that Section 2

protects the “essential feature[s]” of traditional state “three-tiered

alcohol distribution systems.” 139 S. Ct. at 2471. Such systems require

alcoholic beverage producers to sell to state-regulated wholesalers,

wholesalers to sell only to state-regulated retailers, and only state-

regulated retailers to sell to consumers. Id. at 2457. Thus, the Twenty-

First Amendment may allow a state, in the interest of maintaining the

integrity of its three-tier system, to require alcohol retailers (as contrasted

from their owners) to be physically located in the state—a requirement

which might be questionable under the ordinary Commerce Clause

framework. See Sarasota Wine Mkt., LLC v. Schmitt, 987 F.3d 1171,

1182-84 (8th Cir. 2021) (upholding Missouri requirement that “retail

liquor stores be physically located within the State” as a “core

provision[] of Missouri’s three-tiered system”); Lebamoff Enters., Inc.,

956 F.3d at 870, 875-76 (same in Michigan). However, the Thomas

Court was clear that it did not consider residency requirements for liquor

store owners—whether durational or not—to be an essential feature of

the traditional three-tier system. See 139 S. Ct. at 2471-72. In any event,

we do not decide here the exact contours of how the Court’s test in

Thomas differs from its ordinary dormant Commerce Clause test.

Gen. 82] 95

would make little sense to require that individuals be amenable to

service of process prior to their application for a license, so this

argument makes the most sense as a justification for requiring

residency after issuance of the license. Similarly, the Association

argued that residency requirements would make it easier for the

state to oversee the operators of liquor stores. Id. This argument,

too, seems to be a defense of requiring licensees to maintain

residency during the license term, when the business is actually

operating. The Court rejected both of these justifications for a

residency mandate, noting that nondiscriminatory means were

available to pursue each objective. Id. And more to the point, the

alternatives the Court suggested, such as requiring applicants to

appoint an in-state agent for service of process or mandating that

retail staff undergo alcohol-awareness training, would function

equally well as substitutes for a non-durational residency

requirement. See id. at 2475-76.

The Court’s analysis thus suggests that it did not merely

consider the durational aspect of Tennessee’s residency

requirement—that is, the requirement that applicants reside in the

state for two years before applying—but instead evaluated and

rejected the purported benefits of residency requirements for

license applicants more generally. 12 Indeed, it is unclear what

health or safety interests would be advanced by a non-durational

residency requirement like Harford County’s that would not also

be advanced by a durational residency requirement. In other

words, it does not appear that a non-durational requirement would

have any additional advantages that the Thomas Court did not

consider.

In fact, in some ways, the justification for a non-durational

residency requirement is weaker than the justification for a

durational residency requirement. For example, if residency

requirements promote responsible sales practices by ensuring

retailers have a stake in the community, then a durational residency

requirement is superior to a non-durational requirement because it

12

The dissenting opinion in Thomas also appeared to assume that the

majority opinion’s analysis would govern all residency requirements, not

just durational residency requirements. See 139 S. Ct. at 2484 (Gorsuch,

J., dissenting) (wondering whether, “if residency requirements are

problematic,” a state may require a retailer to have a physical presence

in the state).

96 [106 Op. Att’y

ensures stronger community ties. 13 Given that it is unclear what, if

any, health or safety advantages a non-durational residency

requirement would have over a durational requirement, we think

the Court would likely reject a non-durational residency

requirement similar to Harford County’s if one were before it.

Attorneys general in other states have reached similar

conclusions. The Attorney General of Oklahoma, for instance, has

opined that “the inescapable conclusion from [Thomas] is that the

U.S. Supreme Court would strike down all residency

requirements” for alcoholic beverage retailers or wholesalers,

because “the Court's logic extends to non-durational residency

requirements and those outside the retail context.” Okla. Op. Att’y

Gen. 2019-13, 2019 WL 7424693, at *3-4 (Dec. 31, 2019).

Similarly, the Attorney General of Kansas recently concluded that,

in light of Thomas, a “constitutional challenge to . . . a ‘non-

durational’ residency requirement” would “likely be successful,”

because Thomas’s reasoning offers no basis for distinguishing

between durational and non-durational requirements. Kan. Op.

Att’y Gen. 2020-11, 2020 WL 7422704, at *2 (Dec. 10, 2020). 14

13

See Byrd, 883 F.3d at 633 (Sutton, J., concurring in part and

dissenting in part) (“Requiring individual retailers to reside in one place

for a sustained, two-year period ensures that they will be knowledgeable

about the community's needs and committed to its welfare.”); see also,

e.g., Brief for U.S. Alcohol Policy Alliance et al. as Amici Curiae

Supporting Petitioner, Tennessee Wine & Spirits Retailers Ass’n v.

Thomas, 139 S. Ct. 2449 (2019) (No. 18-96), 2018 WL 6168786, at *15

(“[R]equiring two years of residency, rather than something nominal,

like days or weeks, enhances the prospects that retailers are firmly

anchored in the state and have meaningful communal relationships that

matter to them.”).

14

We are not aware of any federal or state court decision that has

directly addressed this question after Thomas. One federal appeals court,

in concluding that a state may require alcohol retailers to be physically

located in the state, did characterize the Missouri licensing scheme at

issue as involving a separate “residency” requirement and did not reject

that requirement as unconstitutional. Sarasota Wine Mkt., LLC, 987 F.3d

at 1177. However, the focus of the court’s opinion was on a different

question, namely, the combined effect of the Missouri provisions—

especially the physical-presence requirement—that prevented out-of-

state alcoholic beverage retailers from shipping directly to Missouri

consumers. See id. at 1182-84. And it also appears that the plaintiff in

Sarasota could have satisfied the Missouri residency requirement simply

by appointing a Missouri resident as the manager of a physical retail

location in Missouri. See id. at 1178-79 & n.6. Sarasota thus did not

decide the validity of a non-durational residency requirement imposed

Gen. 82] 97

To be sure, a non-durational residency requirement imposes

less of a burden on nonresidents than a durational residency

requirement. But that distinction would have little relevance under

Thomas’s framework. Thomas indicates that whenever a state

alcoholic beverages law facially discriminates against

nonresidents, the burden shifts to the state to justify it; there is no

threshold inquiry into whether the law imposes an undue or

excessive burden on nonresidents. See 139 S. Ct. at 2474. 15

We also recognize that the justification for Harford County’s

non-durational residency requirements may be at least marginally

stronger than the justification for the Tennessee residency

requirement in light of certain differences between the two

statutory schemes. See Thomas, 139 S. Ct. at 2472 (“[E]ach

variation must be judged based on its own features.”). The Thomas

Court recognized that a state has a legitimate interest in promoting

“responsible sales and consumption practices” and considered the

argument that a residency requirement promotes that interest by

making it “more likely that retailers will be familiar with the

communities served by their stores.” Id. at 2475-76. This was the

health-and-safety justification that the dissenting opinions in the

Supreme Court and the Sixth Circuit appeared to find most

plausible. See id. at 2482 (Gorsuch, J., dissenting); Byrd, 883 F.3d

at 633 (Sutton, J., concurring in part and dissenting in part). The

Court rejected that justification, though, because Tennessee’s

requirement (1) mandated only that licensees live in the state, not

directly on the owner and licensee of an alcohol retail business. Instead,

the court was focused on the constitutionality of a physical presence

requirement for retailers. See id. at 1182-84. Of course, if one or more

courts were ultimately to conclude that non-durational residency

requirements are constitutional under Thomas, that would improve the

chances that the Harford County requirements would be upheld.

15

The Thomas Court also referred to the lack of record evidence

supporting Tennessee’s health and safety justifications for its durational

residency requirement as one reason for rejecting those justifications.

See 139 S. Ct. at 2474. But the Court’s treatment of those justifications

as facially implausible, in part because of the existence of “obvious”

nondiscriminatory alternatives, suggests that it is unlikely that additional

evidence would have altered the Court’s conclusion. See id. at 2474-76;

see also Kan. Op. Att’y Gen. 2020-11, 2020 WL 7422704, at *2 (“[W]e

do not consider it likely that the State could make a showing of a

legitimate local purpose that would satisfy constitutional muster, given

the Supreme Court's unsympathetic attitude toward the public health and

safety justifications put forth by Tennessee.”).

98 [106 Op. Att’y

in the particular community where the business operates; (2) did

not apply to bars and other businesses that serve alcohol for on-

premises consumption; and (3) governed license holders rather

than the individuals who actually make sales. Thomas, 139 S. Ct.

at 2476 (majority op.).

Harford County’s residency requirements, unlike Tennessee’s,

require the resident applicant to reside not just in the State but in

the county, AB §§ 22-1402, 22-1405; do not distinguish between

licenses for on-premises and off-premises consumption for

purposes of the residency requirement; and, for applications on

behalf of legal entities like corporations, require the resident

applicant to be a “manager or supervisor” and to be “physically

present on the premises for a substantial amount of time on a daily

basis,” AB § 22-1405(a)(4). 16 Thus, Harford County’s residency

requirements arguably better serve the objective of having locally

rooted licensees promote responsible consumption.

Ultimately, however, we believe that a court applying Thomas

would probably find these distinctions insufficient to produce a

different result. The Thomas Court placed great weight on the

availability of nondiscriminatory alternatives that would allow the

state to pursue the same objectives. 139 S. Ct. at 2474-76. As to

the community-knowledge justification specifically, the Court held

that states could achieve the goal of promoting responsible

consumption without discriminating against nonresidents in

several ways, including by placing limits on sales or by requiring

more extensive training for sales managers and employees. Id. at

2476. The same would presumably be true here. What is more, a

requirement of residency in the county, like a requirement of

residency in the State, still raises the concern, noted by the Court

in Thomas, that a person who lives close to the community at issue

but who happens to fall on the wrong side of a state or county

border could be excluded from the market, while someone who

lives farther away from the community, but within the same

county, could qualify for a license. See id. In other words, a

person’s jurisdiction of legal residence will often be a poor proxy

for their knowledge of a particular community.

Thus, even if Harford County’s residency requirements more

effectively “promote[] public health or safety” through community

knowledge by licensees than the residency requirement in Thomas,

id. at 2474, we suspect that a reviewing court would probably hold

16

We need not decide whether the General Assembly could require a

license holder to be physically present on the premises on a daily basis,

without also requiring that the license holder reside in the State or county.

Gen. 82] 99

that the nondiscriminatory alternatives suggested in Thomas (e.g.,

requiring more extensive training) remain available and would

serve the same interest “without discriminating against

nonresidents,” id. at 2476. That is, under the test set forth in

Thomas, a court would still be likely to conclude that the Harford

County residency requirements cannot be justified on “legitimate

nonprotectionist ground[s]” and that, instead, the requirements are

predominantly protectionist measures. Id. at 2474.

III

Conclusion

In our opinion, the non-durational residency requirements

imposed on alcoholic beverages license applicants in Harford

County likely violate the Commerce Clause of the United States

Constitution as interpreted by the Supreme Court in Thomas and

would not be saved by Section 2 of the Twenty-First Amendment.

That is, the reasoning in Thomas seems to extend to Harford

County’s non-durational residency requirements, even after the

enactment of Chapter 462. Although we recognize that much of

this analysis may apply to the other non-durational residency

requirements for licensees in Chapter 462 as well, we did not

separately analyze each residency requirement in the Alcoholic

Beverages Article and therefore do not specifically address

whether or not any of them would be upheld under Thomas.

Brian E. Frosh

Attorney General of Maryland

Kathryn M. Rowe

Assistant Attorney General

Patrick B. Hughes

Chief Counsel, Opinions & Advice

*Thomas S. Chapman, Assistant Attorney General, contributed

significantly to the preparation of this opinion.