Jackson Jambalaya

 You might soon be able to make your own bourbon at home thanks to the Fifth Circuit Court of Appeals.  The Court struck down a federal law barring home distilleries used for alcohol consumption Friday as it held the government could not ban an activity under its power to tax.  

The court fight began when a group of home distillery hobbyists sued the federal government in Court after the the Alcohol and Tobacco Tax and Trade Bureau (TTB) warned them against breaking the law while refusing to issue permits for such home distillation.  

Note: If you don't want to read the post but would rather hear a podcast, check out the podcast on this opinion created in Gemini Pro.  

Rick Morris is a "connoisseur of bourbon who formed the Hobby Distillers Association to encourage the "legalization of at-home hobby distilling."  Plaintiffs Thomas Cowdrey, Scott McNutt, John Prince, III, all distilling enthusiasts, joined Morris and HDA in the lawsuit.  

It has been illegal to distill "consumable" spirits at home since 1868 when Congress pass the Internal Revenue Act, imposing excise taxes on alcohol and tobacco.  The law prohibited the making of spirits at home: 

Sec . 12. And be it further enacted, That no person shall use any still, boiler, or other vessel for the purpose of distilling in any dwelling-house, nor in any shed, yard, or enclosure connected with any dwelling-house, .... Penalty for so using, or aid- ing in the use. for rectifying; and every person who shall use any still, boiler, or other vessel for the purpose of distilling, as aforesaid, in any building or other premises where the above-specified articles are manufactured, produced, refined, or retailed, or other business is carried on, or on board of any vessel or boat, or in any dwelling-house, or other place as aforesaid, or shall aid or assist therein, or who shall cause or procure the same to be done, shall, on conviction, be fined one thousand dollars and imprisoned for not less than six months nor more than two years....

Congress later strengthened the maximum penalties to five years in prison and/or a $10,000 fine.  A stiff penalty indeed for making your own bourbon at home .  

Indeed,  TTBsuspected Mr. McNutt of buying a still  and warned him in 2014 of the penalties.* Time passed until McNutt and the plaintiffs had their lawyer call TTB in 2023 to inquire if they could purchase permits for home distillation.  Unfortunately, TTB said no as it considered all such distilleries to be illegal. 

The plaintiffs sued TTB and the Justice Department in U.S. District Court in Fort Worth, Texas in December 2023.  The Court dismissed Morris, Prince, and Cowdrey for lack of standing but found for McNutt and HDA as it determined the law barring home distilleries was unconstitutional.  However, the fight was not over as both sides appealed to the Fifth Circuit.  

The Court decreed the three dismissed plaintiffs indeed had standing.  They had the means to distill at home as Morris owned a company that manufactured stills for the distillation of fuel alcohol.  McNutt was already distilling fuel alcohol at a shed by his home.  Prince was already making homemade wine and beer.  In short, the plaintiffs were not mere citizens who claimed they wanted to engage in home distilling but were people who had the means and expertise to do so.  

The statute directly affected the plaintiffs as it threatened them with prison and fines if they so much as made a thimbleful of bourbon at home.  They faced a credible threat of prosecution as well since TTB had already sent a warning letter and had a history of prosecuting such offenses.  

With the standing issue settled, the Court moved on the matter of whether 26 USC 5178 (a)(1)(B) is constitutional.  

The Justice Department argued the law was a "necessary and proper" exercise of the government's power to tax.  The Court disagreed, holding the prohibition is outside "the scope of Congress's taxing power."  The plaintiffs do not dispute Congress's power to tax spirits but the law at issue mentions nothing about taxing spirits.  If anything, the law barred activity that "would generate taxable spirits", said the Court.  

The Court held the law lay outside Congress's power to tax because it did not concern itself with raising revenue but rather with reducing revenue. The Justice Department claimed striking down the law would enable more tax evasion.  However, the Court said Congress can't ban an activity since it is harder to tax.  

If anything, the Court decreed, removing the prohibition would increase tax revenue as the home distillers would have to obtain licenses through the same process under the same regulations as licensed distillers.  Non-compliance could be penalized.  

The judges had a few words for the government's expanded interpretation of its power to tax: 

Under the government’s logic, Congress may criminalize nearly any at-home conduct only because it has the possibility of concealing taxable activity. Home-based businesses may be forbidden. Remote work may be deemed a crime. But “the taxing power does not give Congress the same degree of control over individual behavior [as the Commerce Clause].” NFIB,... Logically, the Necessary and Proper Clause cannot expand the reach of the taxing power to criminalize conduct that could produce taxable revenue under the pretext that generating revenue for the federal government will be enhanced.

Such are the finer points of constitutional law but upon such points are laws changed.   

The Court concluded the law criminalizing home-distillation "is not a proper means of exercising the taxing power."  

The case was assigned to Judges Jones, Graves, and Rodriquez.  

* The letter mistakingly said he could be fined up to $500,000.  Imagine getting that letter from the feds.