Fighting New York’s unfair restrictions on out-of-state distilleries

While working in real estate in his native California, Théron Regnier’s passion for spirits and cocktails led him to make a career pivot. On St. Patrick’s Day 2020, Théron filed paperwork to establish The Obscure Distillery. 

The timing was both a blessing—the number of craft distilleries in the nation grew from just 75 to 2,283 between 2006 and 2022—and a curse: The Obscure Distillery opened for business on the eve of the 2020 COVID-19 pandemic. Undeterred, Théron began selling directly to California consumers. The Obscure’s taproom finally opened in 2022, offering downtown LA visitors a “guided tasting” experience in a fantasy-themed setting, with storytelling for each tasting.  

Today, The Obscure attracts more than 30,000 visitors a year from all over the country, many of whom want spirits from their tasting experience shipped to their home states. This includes New York, which has a special connection to the distillery: The Obscure makes a special rye whiskey using chestnut tree trimmings from the American Chestnut Foundation’s New York chapter. It then donates 10% of this whiskey’s sales to support the Foundation’s work. 

Would-be purchasers in New York were out of luck, however, because of a state law kneecapping out-of-state distilleries from fairly competing. The law allows in-state craft distilleries to ship spirits directly to New Yorkers, rather than going through the standard alcohol distribution system of selling through retailers. However, the law only permits out-of-state distilleries to ship to New York if their home state offers reciprocal privileges to New York distillers. 

Because California didn’t have reciprocity with New York, The Obscure was prohibited from shipping directly to New York consumers.   

California’s law was discriminatory too. But that doesn’t mean that New York can discriminate against businesses in California. It is unjust to burden hardworking entrepreneurs with additional, onerous hurdles that limit market access and economic opportunity to businesses located out of state. These discriminatory laws created an unfair trade barrier, violating the Constitution’s Commerce Clause. 

Represented at no charge by Pacific Legal Foundation, Théron and The Obscure Distillery fought back with a federal lawsuit challenging New York’s discriminatory treatment of out-of-state distilleries. 

While The Obscure’s case was pending in federal court, lawmakers took action in Sacramento to resolve the problem. California 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.