Discarding the North Dakota Dictum: An Argument for Strict Scrutiny of the Three-Tier Distribution System

In Granholm v. Heald, the Supreme Court held that states must treat in- state and out-of-state alcoholic beverages equally under the dormant Commerce Clause and established a heightened standard of review for state alcohol laws. Yet in dictum the Court acknowledged that the three-tier distribution system—a regime that imposes a physical presence requirement on alcoholic beverage wholesalers and retailers—was “unquestionably legitimate.” Though the system’s physical presence requirement should trigger strict scrutiny, lower courts have placed special emphasis on Granholm’s dictum, refusing to subject the three-tier distribution system to Granholm’s heightened standard of review. This Note argues that the dictum should be discarded and that courts should carefully scrutinize the three-tier distribution system. Under Granholm’s heightened standard of review, the three-tier distribution system would be found unconstitutional.