According to our friends at Google, one of the most popular questions in Tennessee is about drinking laws in Memphis.
Memphis is near the top of our list for unusual liquor licensing laws.
In general, Tennessee liquor laws require that a restaurant, hotel or bar has to have a liquor license from the state and a beer permit from the city. The state licensees wine and spirits and the city licenses beer.
In Memphis, the beer board is known as the Memphis Alcohol Commission. Anyone that has obtained a beer permit in Memphis knows about sign posting, petitions and other quirks of licensing in Memphis. As with many Tennessee cities and counties, the beer permitting process in Memphis is an exercise in red tape.
Don’t get us wrong. Memphis staff members Yolanda Fullilove, Aubrey Howard and Roane Waring are some of our favorite Tennessee licensing officials.
Memphis features the only area in Tennessee where open container laws do not apply. Within the Beale Street historic district, patrons can carry an open container on public streets and between bars. No special license is needed – the bar or restaurant just needs to be located in the historic district.
The special Beale Street law also authorizes the sale of alcohol after the typical 3 am last call. State law allows Memphis to set last call on Beale Street, but currently, Beale Street closes at 3 am.
Blues pioneer WC Handy inked an appropriate tune:
I’ve seen the lights of gay Broadway,
Old Market Street down by the Frisco Bay,
I’ve strolled the Prado, I’ve gambled on the Bourse;
The seven wonders of the world I’ve seen,
And many are the places I have been,
Take my advice, folks, and see Beale Street first!
The Tennessee Department of Revenue announced a new price schedule as part of an effort to modernize its forms and tax reporting. All liquor-by-the-drink license holders have to file a price schedule.
Unbeknownst to most, the price schedule is critical evidence in a tax audit. Incorrect pour amounts or prices can lead to massive tax assessments. We have seen assessments of over $100,000 for an innocent error in the amount of each pour, for example.
An explanation of the new price schedule is here.
Cheap Trick penned a classic about taxes:
You work hard, you make money
There ain’t no one in this world who can stop you
You work hard, you went hungry
Now, the taxman is out to get you
We encourage folks to make sure that price schedules are accurate and updated regularly.
Hailed as a “robotic bartending machine that can prepare your favorite drink in seconds,” Monsieur was a magnet for curious liquor industry insiders at the 2015 NCSLA annual conference. Monsieur can mix up to 30 different drinks from alcohol and mixers stored inside the machine. Monsieur offers security software to monitor the number of drinks consumed by each patron, for example.
Monsieur describes the machine as being easy to use:
“Order a drink in 3 easy steps.
1. Place a glass in the cup compartment.
2. Scroll through the on-screen cocktail menu.
3. Tap the beverage of your choice to place your order.”
1980’s Human League synth-pop star Philip Oakey and Italian composer and producer Giorgio Moroder get it:
We’ll always be together
However far it seems
(Love never ends)
We’ll always be together
Together in electric dreams
Looking beyond the wow factor of a machine that can mix cocktails, we question whether Monsieur will appeal to a broad market. Inventory in the machine is paltry for high volume applications. Although admirable for a trail-blazing cocktail machine, drink selections are too limited to replace a traditional bartender. The initial zing of the machine may attract technophiles, but we wonder if Monsieur is destined to be an expensive pet rock or lava lamp – an unsustainable fad.
Monsieur may be a good fit for bars at limited service hotels that lack sufficient traffic to justify paying for a bartender. If inventory quantities are increased, Monsieur may also be useful for preparing simple drinks at high volume chain restaurants – allowing servers to make popular cocktails at drink stands and freeing up bartender time for more creative offerings.
We have photos that tell the story.
The product is expected to launch later this year.
Beverage innovator Steven Hollenkamp unveiled Cocktail Caviar at the 2015 annual meeting of the National Conference of State Liquor Administrators. We found the idea quite unique, with the potential to become a successful staple among cocktail enthusiasts and creative chefs.
By featuring the new product at NCSLA, Hollenkamp may have deflected potentially false negative protests about his product – directly to an audience of regulators that might field complaints about what could be perfidiously called an alcoholic beverage bomb destined for abuse by binge drinkers.
Hollenkamp described Cocktail Caviar as a very small 26 proof orb, about 3/8 in diameter based on our visual observation. It sank to the bottom of cocktails and glasses of wine and did not dissolve.
We found the product to be a small burst of flavor when added to a cocktail or sampled off a spoon. With an alcoholic content equivalent to wine, the vodka-based product produced a slightly spirituous jolt that was quickly overwhelmed by natural tasting flavors.
Cocktail Clavier will not be popular among binge drinkers, in our humble opinion. We see it being a niche product, popular among craft cocktail bartenders looking to add color and a flavorful surprise to their concoctions. We also see creative pastry chefs using Cocktail Caviar to add color and small bursts of flavor to gourmet desserts.
For no particular reason, makes us think of the Def Leopard classic “Pour Some Sugar on Me”
Pour some sugar on me
Ooh in the name of love
Pour some sugar on me
C’mon fire me up
Hollenkamp hopes to release Cocktail Caviar later this year in select markets. A little more about the product is here.
Fan Fair is here. Nashvillians are decidedly divided about the influx of nearly 100,00 country music fans for the annual CMA Fest, previously known for years as Fan Fair.
Many locals hate it; we love it. Nearly everyone loathes the traffic.
Country music is popular overseas and CMA Fest is attracting a fair share of international fans. Herein lies the collision of Tennessee liquor laws and Nashville’s largest tourist event.
Although state law does not require mandatory carding for the sale of beer, wine and spirits at restaurants, bars and venues in Tennessee, purveyors of alcohol are strictly liable for sales to minors and violators face harsh sanctions. The Tennessee ABC has intensified compliance checks for sales to minors and license holders have seen a sizable uptick in citations.
We think it is safe to say that the industry is justifiably concerned about the impact of ABC stings.
For a tourist mecca like Nashville to thrive, folks must be friendly to tourists. Imagine being an Irish music fan at one of our favorite watering holes, Robert’s Western World on lower Broad. You order a PBR in a can. The bartender asks for an ID. Your passport is at your hotel, where it should be, so you whip out your Irish driver’s license, which looks a lot like this:
The bar is mobbed, the bartender gets fired and criminally charged for selling to a minor, so the bartender says sorry, I cannot serve you. Not exactly a positive Nashville experience for an Irelander.
We applaud Nashville Convention & Visitors chief Butch Spyridon for publicly asking folks to respect our international travellers with unfamiliar IDs.
We will never forget being stopped in college by a French army officer in Paris who asked for ID and all we had was our lowly Tennessee driver’s license. Facing an unfriendly serviceman in uniform with a large rifle, it totally sucked to hear that the ID was not acceptable and that we needed to show a passport, which of course, was safely stored at our hotel.
Calls to mind Simon and Garfunkel’s hit America:
So we bought a pack of cigarettes,
And Mrs. Wagner’s pies,
And walked off
To look for America.
Mr. Spyridon’s e-mail is below:
The changes from passage of Wine in Groceries legislation in Tennessee, which we affectionately call WIGS, are epic. We predict that the unintended consequences of WIGS will dwarf the changes folks planned for when WIGS was made law.
We learned of one such unexpected result today when we were forwarded a copy of the attached letter here.
Unlike convenience stores, gas stations and groceries, before WIGS, retail package stores in Tennessee were not required to comply with health and food safety codes imposed by local health departments and the Tennessee Department of Agriculture. The sale of sealed containers of non-perishable wine and spirits does not present many health hazards.
With the introduction of potentially perishable products like cheese in liquor stores, we see Agriculture oversight as reasonable, if not predictable.
However, this means more governance for what is already a heavily regulated industry. Tennessee liquor store owners are going to have to learn new sets of rules and train staff on required procedures. Owners will have to file applications, pay fees and be inspected for the new requirements.
We expect local heath departments to also look at regulating liquor stores. Based on our experience, pouring samples of wine and spirits, for example, falls within the purview of the health department. So does serving even the most basic food items, like crackers to cleanse pallets between tastings. Health will probably look at dishwashers for glassware, hand sinks for servers and other procedures that many retail liquor store owners have not even considered.
Store owners may be singing the classic Beatles tune:
You say you want a revolution
Well, you know
We all want to change the world
The art of distilling whiskey in Tennessee is a decidedly masculine job. Master distiller is a coveted position – the pinnacle of the profession.
We applaud Diageo for naming Allisa Henley master distiller of one of Tennessee’s most-storied distilleries, George Dickel. We are pretty sure that Allisa is the first woman to hold the title of master distiller in Tennessee. Allisa is definitely the first woman to lead a distillery in the Volunteer State post-prohibition.
Aretha Franklin’s anthem Respect comes to mind:
What you want
(Ooh) Baby, I got
(Ooh) What you need
(Ooh) Do you know I’ve got it
(Ooh) All I’m askin’
(Ooh) Is for a little respect when you come home (just a little bit)
Hey baby (just a little bit) when you get home
(Just a little bit) mister (just a little bit)
Our eccentric grandmother Bessie was fond of chiding us for leaving the door open as a child. She would call out in her country Tennessee twang: “Were you raised in a barn? Close that door!”
A recent Tennessee ABC citation reminded us of one of Bessie’s favorite pet peeves. Along with a more serious infraction, the ABC cited a restaurant for leaving the patio door open.
The restaurant was shocked.
Although the citation was resolved without a fine, the ABC was right about the law. Patios are supposed to be enclosed to remind patrons not to leave with an alcoholic beverage. As one ABC staffer noted, “the premises should be secured.”
Classic Neil Young song Don’t Spook The Horse is appropriate:
There’s a pretty little girl,
and she’s living down there,
Down on her daddy’s farm.
If you’re going to mess
around with that chick,
Be sure to close the barn door.
The take away. Make sure staff knows to close the barn door. Open patio gates are a no no.
Nonprofits in Tennessee have a huge fundraising advantage for special events. Unlike restaurants, bars, caters and other LBD license holders, nonprofits can accept donated alcohol and do not have to pay sales and liquor taxes, which average 24.25%.
For as long as we can remember, which takes us back just short of the Jurassic period, nonprofits could pull a license from the ABC for an event that was thrown by a restaurant, liquor store, promoter or just a strong supporter. The nonprofit got a check for doing essentially nothing.
The system was a simple way to raise money for nonprofits.
Recently, the Tennessee ABC changed the rules for nonprofit events, which we blogged about here.
Today, May 15, 2015, we received a copy of an official letter from the ABC that lays out detailed rules for special occasion events. A redacted copy is here.
Many of the rules in the letter are new to us. The rules significantly increase the role of nonprofits in special events. For large festivals, which rely on nonprofits for licensing, but are far too complicated to be thrown by a nonprofit, the new rules present major obstacles.
Many festivals may not survive the new rules. The new ABC rules may put large music events and food festivals out of business.
Nonprofit fundraising brings to mind the Grandmaster Flash rap classic The Message:
Bill collectors they ring my phone
And scare my wife when I’m not home
Got a bum education, double-digit inflation
Can’t take the train to the job, there’s a strike at the station
Section 3 of the letter is a game changer for many events. The letter prohibits event promoters from being paid based on revenue. A promoter can only be paid a flat fee.
Most festivals make a donation to a nonprofit – either a fixed amount, a portion of profits or a mix of the two. The promoter takes the risk that the festival will lose money, but also profits if the festival makes money.
As we read the ABC letter, promoters are prohibited from participating in profits. This also suggests that the nonprofit must bear the risk of loss from an event.
The letter also requires that nonprofits file a copy of all contracts with a promoter. Based on our experience, these agreements are generally an oral understanding. The new ABC rule requires that promoter agreements be in writing and a copy must be filed with the ABC.
Drafting and filing promoter contracts is an additional burden for nonprofits. Because of the strict rules set out by the ABC for special events, we encourage nonprofits to be very careful about the terms of written agreements with promoters. The contracts could be fertile ground for big fines.
We have not had an opportunity to discuss these new rules with the ABC and caution readers that the ABC may issue more guidance.
The Tennessee Legislature had a busy 2015 session for new liquor laws. Many industry pundits expected a relatively quiet year in the wake of the passage of wine in groceries law n 2014. Not so.
Courtesy of our friend and lobbyist to the stars, Baylor Bone Swindell of Windrow Phillips Group, attached is a preliminary summary of liquor laws passed this last session. Passed Alcohol Bills 2015
AC/DC knows alcohol all too well and immortalizes cocktailing:
So don’t worry ’bout tomorrow
Take it today
Forget about the cheque we’ll get hell to pay
Have a drink on me
Beer Tied House
The new tied house law for beer is perhaps the most sweeping change this session. The legislature adopted a traditional three-tier system for beer. Download the new law here Beer Tied House.
Prior Tennessee beer laws lacked a strong three-tier system. The law did not clearly prohibit a brewer like Anheuser-Busch from holding a wholesaler permit and cutting out Tennessee beer wholesalers. That would not be popular with Anheuser-Busch’s wholesalers, who we suspect were behind the legislation.
10 Day Credit Rule
Much ado has been made over the ambiguous “elimination” of the 10 day credit rule for sales by wholesalers to retailers. This session, the law was amended to provide that 10 day credit sales are legal, if payment is made by electronic funds transfer or escrow payment.
We have always seen the 10 day credit rule as protecting wholesalers from credit risk. The new law is no exception. The law creates a rebuttable presumption that a licensee is not financially responsible if the licensee fails to satisfy its obligations to any wholesaler twice within a twelve-month period. The ABC is required to set a hearing upon notification by the wholesaler, to determine if the licensee can rebut the presumption. The ABC may issue a fine, suspend or revoke the license, or make any other order it deems appropriate, upon finding that the licensee is not financially responsible.
We love hearing from entrepreneurs inspired by consumer demand. One of the most-frequent questions we hear is “how can I deliver alcohol to consumers?” Tennessee liquor laws and Tennessee ABC policies clearly prevented delivery of wine and spirits.
Legislation passed this year legalizes delivery of alcohol to consumers, but limits the practice to meal delivery services. The new law is here. Delivery Law. We find it odd that the delivery service must derive at least 50% of its income from the delivery of food, but rather than delivering alcohol from a restaurant, the delivery service must transport alcohol from a retail package store. The new law establishes a new license for delivery services.
Temporary Liquor License
The Legislature also codified a simple fix for a problem with sales of restaurants and hotels that hold liquor-by-the-drink licenses. The common practice was to enter into an Interim Management Agreement to allow the purchaser to use the seller’s liquor license. From a legal perspective, the Interim Management Agreement made no sense. It was merely a formality to allow a sale to close before a new licenses could be approved.
The new law is not perfect, but provides:
Notwithstanding any law or rule to the contrary, upon collection of a fifty-dollar licensing fee, the commission may issue temporary licenses not to exceed thirty (30) days to any new applicant for a license issued pursuant to this chapter.
We expect the ABC to adopt formal or informal guidance on how to qualify for the new temporary permit. Based on our experience, the 30 day period is too short and may create problems. We see the new law as limiting temporary permits to 30 days, with no authority to extend the 30-day period. We suspect that the ABC will stop recognizing Interim Management Agreements, meaning that the 30 day temporary is the only option for sales.
We advise folks to pay close attention to this change.
Tennessee Whiskey Wars
In the waning hours of the 2015 legislative session, a bill was amended to require that “Tennessee Moonshine” be distilled in Tennessee. The penalty is a one year suspension or revocation of the distillery license. The effective date of the requirement is July 1, 2016, which allows the bill to be revised next legislative session before it becomes binding law.