Despite what many people think, the 18th Amendment to the Constitution, which prohibited the manufacture and sale of intoxicating spirits in the United States in 1920, was never repealed. Instead, the 20th Amendment, passed in 1933, provided the right to the States to regulate the manufacture and sale of alcoholic beverages. Since it was clearly intended that the States could bar the manufacture and sale of alcoholic beverages, this Amendment has been used by the States to regulate the interstate sale of alcoholic beverages-something which otherwise would not be possible because of the “Interstate Commerce” clause of the U.S. Constitution. Daniel McFadden, the distinguished economist who is the author of the following carefully reasoned economic analysis of this issue, is a professor at the University of California at Berkeley, a Nobel Prize recipient, a grape grower, and a winemaker. His paper was originally prepared at the request of the Federal Trade Commission.