California’s new law ends discrimination against craft distillery

When Théron Regnier launched The Obscure Distillery in Los Angeles during the COVID-19 pandemic, he built something special. The craft distillery now attracts over 30,000 visitors annually, including many New Yorkers who appreciate the distillery’s unique connection to their state. But he soon found he was unable to ship to New York because of the state’s discriminatory shipping laws that favor local distilleries over out-of-state competitors. He filed a lawsuit to challenge the law earlier this year. This week, Pacific Legal Foundation filed a joint motion to dismiss the case after California changed its law to resolve the constitutional issue.

A New York product barred from New York

The Obscure produces a distinctive rye whiskey, Rites of Fall, using chestnut tree trimmings from the American Chestnut Foundation’s New York chapter. The distillery donates 10% of sales from this whiskey to support the Foundation’s conservation work. Despite this meaningful connection to New York, the distillery faced an unconstitutional barrier when New York visitors wanted to ship spirits home. New York’s 2024 law allows in-state distilleries to ship spirits directly to consumers but restricts out-of-state distilleries from doing so unless their home state offers reciprocal shipping privileges to New York distilleries. Since California lacked such reciprocity, The Obscure was banned from shipping to New York consumers who wanted to enjoy spirits from their California tasting experience. Pacific Legal Foundation challenged this discriminatory treatment in federal court in April, arguing that New York’s law violated the Commerce Clause by creating unfair trade barriers that favored local businesses over out-of-state competitors.

A legislative fix

While The Obscure’s case was pending in federal court, lawmakers took action in Sacramento to resolve the problem. California’s changed its laws, removing the barriers that prevented out-of-state distillers from shipping directly to California consumers. This established the reciprocity that New York (unconstitutionally) requires and will allow The Obscure to compete fairly with New York distilleries. With this discriminatory obstacle eliminated, The Obscure has applied to New York so that it can finally ship its New York chestnut rye whiskey to the very state that inspired it. “This demonstrates how constitutional principles can drive positive change,” said PLF attorney Christian Townsend. “When discriminatory barriers fall, businesses can compete fairly and consumers gain products they’ve been unfairly denied.” On December 4, PLF dismissed the lawsuit. This outcome benefits not just The Obscure, but craft distilleries nationwide and the consumers who enjoy their products by eliminating discriminatory shipping restrictions that harm interstate commerce.