Written by: Sonali Ciolino
On October 19, 2026, the Supreme Court of the United States granted certiorari to review the decision of the United States Court of Appeals for the Fifth Circuit which held the federal ban on home distilling unconstitutional and an overextension of Congress’s power under both the Taxation and Necessary and Proper Clauses of the United States Constitution. The central question the Supreme Court will focus on is whether the almost 160-year-old criminal prohibition is a lawful way for the federal government to collect taxes on distilled spirits. However, any decision on this question will not be the final rule as the Court is not considering the government’s second part of its defense, Congress’s power to regulate interstate commerce.
The Fifth Circuit’s Decision
In McNutt v. United States Department of Justice, the Fifth Circuit affirmed the United States District Court for the Northern District of Texas’ ruling that statutes 26 U.S.C. § 5178(a)(1)(B) and 26 U.S.C. § 5601(a)(6) (hereinafter “provisions”), the ban on home distilling and its associated criminal penalties, violate the Taxation and Necessary and Proper Clauses of the United States Constitution. A group of home distillers and its associated Hobby Distillers Association (HDA) brought suit challenging the prohibition as unconstitutional under the Constitution’s Commerce, Taxation, and Necessary and Proper Clauses. The Fifth Circuit declined to address the Commerce Clause argument because it was not challenged on appeal.
The Fifth Circuit determined that both provisions exceed the constitutional limits imposed on Congress’s Taxation Power because (1) neither provision raises revenue for the government, the purpose of a tax, and (2) in prohibiting home distilleries, the statutes act as anti-revenue provisions that prevent distilled spirits from coming into existence. In McCulloch v. Maryland, the Court determined that to be “necessary,” a law must be “plainly adapted” to an enumerated power. The Fifth Circuit judged the prohibition on the McCulloch standard and determined that prohibiting home distilling is not “plainly adapted” to effectuate Congress’s taxation of spirits because the provisions challenged do not tax the distilled spirits, they altogether ban and penalize at-home distillation. Additionally, McCulloch determined a law to be “proper” when it is “not prohibited” by another enumerated power and is consistent with the “letter and spirit of the Constitution.” Again, in judging the provisions on the McCulloch standard, the Fifth Circuit determined that the provisions are not a proper way for Congress to exercise its Taxation Power because it removes the Plaintiffs’ choice to pay the tax by engaging in otherwise legal, licensed, and regulated activity.
The Government’s Position
In defending the provisions, the government argues that the prohibition was enacted for the purpose of preventing tax evasion because (1) distillers can easily conceal a spirit’s strength and therefore avoid the proper tax rate or (2) conceal the distilling operation as a whole because it is in his house or connected to it. However, the government’s primary defense of the prohibition is based in the Necessary and Proper Clause. The government points to the legislative justification of § 5178(a)(1)(A) and argues that the then-rampant evasion of the spirits tax and the perceived need to curb evasion by regulating the location of distilleries makes the provisions necessary. Additionally, the government cites that § 5178 as a whole authorizes the Treasury Secretary to license distilleries and prohibit their location, without express approval, and that these provisions have set up a legislatively– created system designed to protect the revenue on distilled spirits.
The Constitutional Limits of Federal Power
The competing arguments are based on distinguishing regulating a taxable activity from prohibiting that activity altogether. The government’s theory relies on historical tax evasion and the potential for future noncompliance to justify the ban. This raises the question of whether Congress may prohibit an otherwise lawful activity based on the risk that the activity could be used to evade federal taxes. However, the Fifth Circuit’s decision raises the question of whether a legitimate purpose alone is sufficient to satisfy the Necessary and Proper Clause. The court concluded that preventing an activity solely because it might produce taxable revenue does not necessarily make prohibiting that activity a proper exercise of Congressional power. The Supreme Court’s decision may clarify how courts should evaluate the relationship between a federal regulation and the enumerated power it is intended to support.
Implications & Conclusion
The challenge to the federal home-distilling ban emphasizes the tension between effective tax enforcement and the constitutional limits on congressional authority. The Supreme Court’s review will likely clarify the scope of the Necessary and Proper Clause when Congress seeks to prohibit conduct to protect federal revenue. The outcome may have implications beyond the alcohol industry by helping define when Congress has authority to restrict private activity in pursuit of its enumerated powers or a legitimate federal objective.
Sources:
26 U.S.C. § 5178(a)(1)(A)-(B)
26 U.S.C. § 5601(a)(6)
Greg Stohr, US Ban on Making Liquor at Home to Be Reviewed by Supreme Court , Bloomberg L. (Oct. 19, 2026).
License Tax Cases, 72 U.S. 462 (1867)
McCulloch v. Maryland, 17 U.S. 316 (1819)
McNutt v. U.S. Dep’t of Just., 173 F.4th 204 (5th Cir. 2026).
NFIB v. Sebelius, 567 U.S. 519 (2012)
U.S. Const. art. 1, § 8, cl. 1
U.S. Const. art. 1, § 8, cl. 18