Home Distilling Ban Faces Test as Courts Rethink Federal Power

A 157-year-old ban on home distilling is taking center stage at a federal appeals court amid an increased judicial appetite to push back against an expansive interpretation of federal power.

The Reconstruction-era ban enacted during what’s known as the “Whiskey Wars” has survived numerous legal challenges over the years. That is, until a federal district court in Texas last year deemed the law unconstitutional.

Now, the US Court of Appeals for the Fifth Circuit is set to hear oral arguments Aug. 4 over the viability of the prohibition, contained in a provision of the Tax Code regulated by the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau.

The Fifth Circuit could take a “middle ground” that allows distilling but also clarifies rules around it, said Jeffrey O’Brien, who leads Husch Blackwell LLP’s alcohol beverage practice group.

He expects that the appeals court’s trend toward favoring state rather than federal regulation of commerce to elicit some kind of change.

That opportunity to place constitutional boundaries on the ban could interest the Fifth Circuit in spite of the government’s argument that the plaintiffs lack standing, said Michael Educate, a partner at Thompson Coburn LLP.

Three of four plaintiffs in the suit already were dismissed because they didn’t show a “credible threat of prosecution.”

But recently, courts have tended to deal with issues of this type, such as growing marijuana at home, head-on, he said.

The government argues the law is a “necessary and proper” exercise of its taxing powers, Educate said, but will need good policy arguments that the ban belongs in the Tax Code.

Whiskey Wars Legacy

The law dates back to when the government raised taxes on whiskey to fund the Civil War effort and repay debts after it.

Moves by commerical distillers, bootleggers, and moonshiners to evade those taxes led President Ulysses S. Grant to launch an aggressive crackdown that spurred violence in many cities as revenue agents—with military backing—shut down massive illegal distilling operations.

The tax on commercial distillers was eventually lowered, but the home distilling ban remained in the Tax Code.

Section 5601(a)(6) and Section 5178 prohibit distilleries in homes, sheds, yards, and enclosures connected to houses, as well as boats, premises where beer and wine are produced, where liquors are retailed, and where most other businesses are carried on.

Legal observers say the issue cries out for the US Supreme Court to step in.

“There’s no clear line of where this is no longer interstate commerce, or where it should fall under state power,” Edward Zelinsky, professor at Benjamin N. Cardozo School of Law said. “I’m rooting for the Supreme Court to get this case, because it would be useful to put points on the map.”

The justices rarely weigh in on alcoholic beverage issues, O’Brien said.

But that might change, as another case brought by an Ohio craft beer maker over the home distilling ban is on appeal at the Sixth Circuit, potentially setting up a circuit split.

The argument that regulation in this area belongs with the states might prevail over the federal government’s assertions that the unique safety issues of home distilling, such as alcohol poisoning, warrant keeping the measure in place.

“I can see states saying they should be able to take this over if the government prevails, because they often have the jurisdiction to create rules around commerce,” O’Brien said. “If the government loses, you would see a rush of states passing laws to regulate.”

Economic Case Lacking

The case arose last year when the Hobby Distillers Association and several individuals sued the ATTTB, arguing that the home distilling ban lacks an adequate connection to taxation to justify the measure.

The US District Court for the Northern District of Texas ruled for the distillers, saying “neither Congress’s enumerated taxing power nor its incidental powers” can sustain the ban.

There isn’t a clear economic case for ending the ban on home distilling in the same way that the craft beer explosion followed a loosening of brewing rules, said Grady Hummer, an associate attorney at Lerhman Beverage Law.

“It’s not like every whiskey drinker is going to go out and buy a still to save a few bucks on excise tax,” he said.

But there has been a trend generally toward loosening federal enforcement of alcoholic beverages, and there’s also the argument that the states should take a more proactive role in regulating distilling, Educate said.

“The government is cobbling together a theory for how it can thread the needle” to justify federal enforcement, Educate said. “It doesn’t neatly line up.”

The Competitive Enterprise Institute and Griffith Barbee PLLC represent HDA.

The case is McNutt v. Dep’t of Justice, 5th Cir., No. 24-10760, oral arguments scheduled 8/4/25.