Cincinnati, Ohio-based Urban Artifact Brewing has filed a lawsuit against Pennsylvania Liquor Control Board (PLCB) chairman Tim Holden and Pennsylvania State Police commissioner Col. Christopher Paris alleging the state “enforce[s] cost-prohibitive trade barriers on out-of-state breweries” and those barriers “prevent out-of-state breweries from competing freely with in-state breweries in violation of the dormant Commerce Clause.”
In-state breweries can “sell and ship beer directly to Pennsylvania consumers in unlimited quantities” under their brewery license using third-party carriers such as UPS or FedEx.
However, out-of-state breweries must obtain a direct malt or brewed beverage shipper license from the PLCB, which also requires those breweries to hold wholesaler or off–premise retail licenses in their home states. The direct shipper license costs $250, according to Sovos ShipCompliant.
Out-of-state breweries are limited to shipping Pennsylvanians 192 oz. of beer per person per month, and no more than 96 oz. of any single brand per person per year, according to Sovos ShipCompliant.
“Out-of-state breweries may avoid these restrictions if they sell through a Pennsylvania-approved ‘importing distributor,’” Urban Artifact wrote in its complaint. “These distributors charge significant fees for their services.”
Urban Artifact obtained a beer shipping license to sell directly to consumers (DTC) in the Keystone State in 2021, but allowed it to expire at the end of that year because “the quantity restrictions made shipping to Pennsylvania cost prohibitive,” according to the complaint filed in the U.S. District Court for the Middle District of Pennsylvania’s Harrisburg Division,.
The brewery has updated its DTC website to explain it cannot ship to Pennsylvania, but consumers there still ask to order Urban Artifact products.
“But for the laws discriminating against out-of-state breweries, Urban Artifact would resume its direct-to-consumer beer shipping business in Pennsylvania,” the brewery wrote. “Urban Artifact would comply with all the other requirements in the direct shipping statute concerning taxes, permits, age verification, and reporting requirements.”
The Commerce Clause has been interpreted “as having a ‘dormant’ or ‘negative’ aspect that prohibits states from enacting laws that excessively burden interstate commerce in relation to their putative local benefits and allows courts to strike down state laws that discriminate against out-of-state economic interests,” Urban Artifact wrote in the complaint. It has been invoked in several landmark bev-alc lawsuits, such as Tennessee Wine and Spirits Retailers Association v. Thomas, which struck down the state’s law that residents seeking retail licenses needed to live in the state for two years before receiving them, and Granholm v. Heald, which paved the way for broader DTC shipping of wine.
Urban Artifact is seeking a declaratory judgment that the PLCB violates the Commerce Clause by treating out-of-state breweries differently than in-state ones, a permanent prohibition against the defendants and the representatives to stop enforcing quantity limits and attorneys’ fees.
The Pacific Legal Foundation (PLF) is representing Urban Artifact at no charge.
“Such discriminatory treatment of out-of-state breweries is also blatantly unconstitutional,” the PLF wrote on its website. “By unfairly favoring in-state breweries and fomenting protectionism – while serving no legitimate health or safety goals – Pennsylvania’s beer-shipping restrictions violate the Constitution’s dormant Commerce Clause, which prohibits states from interfering with interstate trade.”
Urban Artifact’s production volume declined -2%, to 9,778 barrels in 2023, according to data from the Brewers Association (BA).