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UPDATE 1-U.S. Supreme Court strikes down Tennessee liquor retail regulations

Lawrence Hurley

(Adds background on case, details on ruling written by Justice Alito)

WASHINGTON, June 26 (Reuters) - The U.S. Supreme Court on Wednesday ruled in a case concerning alcohol regulations enacted following the Prohibition era that Tennessee residency requirements for liquor retailers violate the U.S. Constitution's interstate commerce provision.

The 7-2 ruling held that Tennessee's regulations unlawfully discriminated against out-of-state businesses in violation of the Constitution's so-called Commerce Clause.

The case pitted two constitutional provisions against one another: the 21st Amendment, which repealed the 18th Amendment ban on alcohol, and the Commerce Clause, which prevents states from discriminating against out-of-state businesses.

The state law imposed a two-year in-state residency requirement for business owners applying for a license and 10-year residency requirements for license renewals.

"Because Tennessee's two-year residency requirement for retail license applicants blatantly favors the state residents and has little relationship to public health and safety, it is unconstitutional," conservative Justice Samuel Alito wrote for the court.

The 21st Amendment explicitly gave states the power to regulate alcohol sales within their borders. But Supreme Court rulings regarding the Commerce Clause prevent states from discriminating against out-of-state businesses. The court in 2005 ruled that states could not let in-state wineries ship wine to consumers but prevent out-of-state wineries from doing so.

(Reporting by Lawrence Hurley; Editing by Will Dunham)