Arizona uses a three-tier system for regulation of wine sales in the state. Suppliers sell to wholesalers, who sell to retailers, who sell to the public.

However, an exception is provided for small wineries that produce no more than 20,000 gallons of wine annually; they may sell an unlimited amount of wine directly to the public and directly to retailers, regardless of where the small winery is located.

A second exception allows any winery to ship up to two cases of its wine per year directly to a consumer, but only if the consumer is physically at the winery when the order is placed. Black Star Farms, a winery that produces 40,000 gallons of wine annually and thus cannot take advantage of the small-winery exception, sued to have the exceptions struck down on grounds that they violated the dormant commerce clause. The district court found that there was no violation of the dormant commerce clause because the law treated both instate and out-of-state wineries the same. How do you think the appellate court ruled on Black Star Farm’s appeal and why?