A Michigan law banning out-of-state retailers from shipping wine directly to Michigan consumers will stand after the U.S. Supreme Court on Monday denied an appeal from a company and wine drinkers challenging the rule. 

The U.S. Sixth Circuit Court of Appeals in April overturned the decision of a Detroit federal judge who called a 2016 law limiting direct shipment to consumers to in-state companies “unjustifiable protectionist regime.” The Appeals Court panel dismissed the district judge’s opinion and ruled Michigan’s law “promoted plenty of legitimate state interests.”

Lebamoff Enterprises, which operates the Cap n’ Cork in Indiana, and three wine drinkers who filed the initial suit appealed to the U.S. Supreme Court in July, which denied the petition Monday.

The state has argued that, without the 2016 law, in-state retailers would be undercut by out-of-state competitors who could avoid abiding by Michigan’s three-tier distribution system. 

“By affirming the 6th Circuit, the Supreme Court has recognized state rights under the 21st Amendment and the need for alcoholic beverages to pass through in-state businesses to ensure public health and safety, and tax compliance,” said Spencer Nevins, president of the Michigan Beer & Wine Wholesalers Association. 

The association said out-of-state shipments to Michigan have been an “increasing problem.”

During the first half of 2018, more than 1 million bottles of alcohol were shipped and at least 300,000 were from out-of-state retailers, according to the association’s research. In the first three quarter of 2019, about 1.5 million bottles of alcohol were shipped to state customers and 484,000 were found to be shipped illegally from out of state. 

In October, Attorney General Dana Nessel filed suit against two California companies alleged to have illegally shipped beer and wine directly to drinkers in Michigan. 

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