In the case of James Everard's Breweries v. Day, Prohibition Director of the State of New York et al., 1923, the U.S Supreme Court was asked to determine whether a state could prohibit alcohol under its police power during a time when federal law allowed it. The plaintiff, James Everard's Breweries had been producing non-alcoholic beer in compliance with federal law but was prosecuted by New York officials for violating state prohibition laws. The brewery argued that since they were complying with federal regulations regarding alcoholic content in their product, they should not be subject to prosecution under stricter state laws. The court ruled against Everard’s Breweries stating that while there may have been some conflict between Federal and State legislation on this issue at one point; however, after ratification of the Eighteenth Amendment and passage of Volstead Act (which defined intoxicating liquors), any such conflict ceased to exist as both levels adhered to similar standards concerning alcohol production and sale. Therefore states retained authority over enforcement within their jurisdiction even if more stringent than national regulation.

In the dissenting opinion for James Everard's Breweries v. Day, Justice Oliver Wendell Holmes Jr. argued that the 18th Amendment did not give Congress the power to prohibit all beverages with alcohol content, but only those which could be used as a substitute for intoxicating liquors. He believed that beer containing less than one-half of one percent of alcohol was not an intoxicant and therefore should not fall under prohibition laws. Furthermore, he contended that if such non-intoxicating beverages were included in prohibition laws then it would lead to absurd results like prohibiting sterilized water because it contains traces of alcohol or even bread due its fermentation process during baking.