National Review: A Trade War in Your Liquor Cabinet
While everyone is focused on international tariffs, a trade war is roaring here at home. And it’s affecting craft distilleries across the country, making it harder for entrepreneurs to break into the spirits industry and more expensive for people to enjoy a bottle of rye.
One unlikely casualty is The Obscure, a boutique distillery in Los Angeles that’s become a favorite among travelers for its immersive tasting experience and imaginative cocktails. It was founded in 2020 by Théron Regnier, a real estate professional who decided to chase his passion for spirits and storytelling at the onset of the pandemic.
The Obscure offers a two-hour guided tasting experience in a fantasy-themed taproom straight out of a storybook. In the few years since it opened, it’s become a destination for travelers visiting L.A. — including many New Yorkers — who fall in love with the experience and want to re-create the magic by ordering a bottle once they return home.
But they can’t.
Why not? Because New York bans out-of-state distilleries from shipping directly to New York consumers unless their home state offers the same privilege to New York distillers. That might sound fair on the surface, but it’s not. It’s economic protectionism wrapped in the language of reciprocity. And it’s exactly the kind of interstate bickering the Constitution was designed to prevent.
Unfortunately for The Obscure, California allows only in-state distilleries to ship directly to California consumers. Thus, New York’s reciprocity requirement kicks in and prevents The Obscure from shipping to New Yorkers. It’s a modern-day version of the economic discord that plagued the country under the Articles of Confederation.
Back then, states frequently imposed tariffs on each other, playing favorites with in-state businesses. But the weak Continental Congress was powerless to stop them. In his Vices of the Political System of the United States, James Madison warned that these trade wars were “adverse to the spirit of the Union” and “destructive of the general harmony.” In Federalist No. 22, Alexander Hamilton decried “unneighborly regulations” that he feared would “multiply” absent national control.
The Founders assembled at the Constitutional Convention in Philadelphia to strengthen the Articles of Confederation and empower the national government to end these trade wars. But they ended up throwing out the articles altogether and replacing them with the Constitution. The new governing document included the interstate commerce clause, which gave Congress the power to regulate interstate commerce. The Supreme Court has since said that the clause naturally implies that states cannot unduly interfere with interstate trade or discriminate against out-of-state businesses.
But that hasn’t stopped states from trying, especially when it comes to the frequently anticompetitive alcohol industry. In Granholm v. Heald (2005), the Court struck down New York and Michigan laws that allowed in-state wineries to ship directly to consumers but denied the same privilege to out-of-state wineries. And in Tennessee Wine & Spirits Retailers Assn. v. Thomas (2019), the Court rejected residency requirements for liquor retailers, reaffirming that the Constitution “precludes states from adopting protectionist measures that unduly restrict interstate commerce.”
New York’s reciprocity requirement is no different. It privileges local distilleries and punishes out-of-state ones — like The Obscure — for nothing more than their location. That’s textbook discrimination. And it doesn’t harm just Théron Regnier, who built The Obscure from scratch during a pandemic — it harms all entrepreneurs daring to chase a dream across state lines.
The Obscure doesn’t want a handout. It just wants the same opportunity that New York distilleries already enjoy: to ship spirits directly to customers who ask for them. It’s ready to follow every other rule New York imposes — including age verification, tax collection, and reporting. But it’s being shut out simply because California is similarly anticompetitive.
The upshot is that New York points the finger at California, California points back at New York, and distilleries like The Obscure are caught in the middle — forced to forgo new markets or to pay unnecessary and expensive New York middlemen to reach their customers. That’s not how a national marketplace is supposed to work.
The Obscure has brought a civil rights lawsuit, arguing that New York is violating the careful scheme that the Framers set up back in 1787. The Obscure’s lawsuit against New York isn’t just about one distillery’s rights — it’s about restoring the constitutional principle that states can’t play favorites when it comes to commerce. And it’s a reminder that the Constitution frowns upon trade wars and champions economic freedom.
This op-ed originally appeared in National Review on May 8, 2025.
