In the case of Stilz v. United States, 1925, the Supreme Court was asked to determine whether a federal law that imposed taxes on distilled spirits was applicable in Kentucky. The appellant, George Stilz, argued that he should not be required to pay these taxes because his distillery operations were conducted under state authority and therefore exempt from federal taxation. However, the court ruled against him stating that even though states have their own laws regarding alcohol production and distribution; they are still subject to federal laws as well due to Supremacy Clause of Constitution which gives precedence over state legislation when there is conflict between two. Therefore it held Mr.Stilz liable for payment of tax levied by Federal Government on distilled spirits produced by him.

In the dissenting opinion for Stilz v. United States, Justice Oliver Wendell Holmes Jr., joined by Justice Louis Brandeis, disagreed with the majority's interpretation of the Volstead Act and its application to this case. They argued that Congress did not intend to criminalize every act related to alcohol but only those acts which contributed directly or indirectly towards intoxication. In their view, Mr. Stilz’s actions in selling a concoction containing 1% alcohol didn't meet this standard as it was non-intoxicating and therefore should not be considered illegal under the Volstead Act. The dissenting justices believed that interpreting the law otherwise would lead to absurd results such as making criminals out of people who sold bread or other food items containing trace amounts of alcohol.