Why It Matters

A federal ban on home spirit distilling that has stood for more than 150 years now faces competing court rulings that could reshape alcohol policy and congressional authority. Two appellate decisions reached opposite conclusions about whether the ban violates the Constitution.

The Fifth Circuit struck down the prohibition as unconstitutional in April, while the Sixth Circuit upheld it weeks later, creating a circuit split that threatens to pull Congress into a high-stakes debate over federal regulatory power. The stakes are immediate: the current administration is defending the 150-year-old ban, but a new bill introduced in August seeks to overturn it entirely, and the competing court rulings leave the law's future in limbo.

The Big Picture

The Fifth Circuit in McNutt v. U.S. Department of Justice ruled on April 10 that Internal Revenue Code sections 5601(a)(6) and 5178(a)(1)(B), which prohibit home distillery production, violated both the Taxing Clause and the Necessary and Proper Clause. The court granted a permanent injunction preventing federal enforcement against plaintiffs in Louisiana, Mississippi, and Texas. The Fifth Circuit reasoned that the home distilling ban reduces revenue rather than raises it, criminalizes conduct rather than offering a taxable choice, and improperly encroaches on states' reserved police powers.

The Sixth Circuit took the opposite view on April 21 in Ream v. Department of the Treasury, upholding the same provisions as a lawful exercise of Congress's Necessary and Proper Clause authority. The Sixth Circuit's decision is binding precedent in Kentucky, Michigan, Ohio, and Tennessee.

Both courts cited the Supreme Court's 2012 decision in National Federation of Independent Business v. Sebelius for the principle that Congress's taxing power is limited to requiring an individual to pay money into the Federal Treasury, no more. Yet they applied that principle differently. The Fifth Circuit held that the prohibition did not fall within Congress's Taxing Clause authority because the provisions did not raise revenue. The Sixth Circuit majority concluded that while the provisions exceeded Congress's authority under the Taxing Clause standing alone, they were a lawful exercise of Congress's power under the Necessary and Proper Clause.

The ban itself dates to the Act of July 20, 1868, originally established in response to rampant distilled spirit tax evasion. The federal excise tax on distilled spirits is imposed at $13.50 per proof gallon. The Alcohol and Tobacco Tax and Trade Bureau currently enforces the federal ban.

The Bottom Line

The circuit split is already generating congressional activity.

Rep. Harshbarger (R) introduced the Freedom to Home Distill Act on August 27, which would amend the Internal Revenue Code to exempt home distillery establishments from federal excise taxes and other IRC requirements. The bill was referred to the House Committee on Ways and Means.

With the Fifth Circuit's reasoning that the ban improperly encroaches on state powers echoing a broader trend of federal courts scrutinizing federal regulatory overreach, Congress faces pressure to clarify its constitutional authority or abandon the prohibition entirely. The federal government petitioned the Fifth Circuit for rehearing en banc in May, which the court denied.

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