Last Call

I Got Some Action at the August Tennessee Alcoholic Beverage Commission Meeting

By - August 26, 2014 | Alcoholic Beverage Law | Email Will Cheek

Today’s August 26, 2014 Tennessee Alcoholic Beverage Commission meeting featured some notable firsts.  We like it when the ABC takes action in unchartered territory.

Reminds us of the classic disco tune “I Love The Nightlife” by Alicia Bridges from Adventures of Priscilla: Queen Of The Desert:

I want some action, I wanna live
Action, I got so much to give
I want to give it
I want to get some too
 
I love the nightlife, I got to boogie
On the disco ’round, yeah
I love the nightlife, I got to boogie
On the disco ’round, yeah
 

Wineries.

Bootleggers Homemade Wine LLC in Gatlinburg was approved for the first satellite winery under new 2014 legislation PC 1015.  Bootleggers will open a satellite store in nearby Pigeon Forge.

The satellite winery law allows Tennessee wineries to open up to two additional retail stores for tastings and sales of bottles and merchandise.  Satellite wineries cannot make or bottle wine.

In addition, the new winery law allows wineries to hold a restaurant or limited service restaurant LBD license.  Previously, winery owners were prohibited from owning a restaurant.

We see the new privileges as being very positive for the winery business in Tennessee.

Wholesalers.

Tennessee passed legislation that significantly expanded the location of liquor wholesalers.  The new law allows liquor wholesalers to be located in any “county in which the voters of any municipality or other jurisdiction within that county have approved retail package sales or consumption of alcoholic beverages on premises by referendum as provided in this title.”

Holston Beverages was the first wholesaler approved by the Tennessee ABC under the new law.  Holston primarily serves the tri-cities: Kingsport, Johnson City, and Bristo.  Previously, state law required Holston to be located in Knoxville.

Bone McAllester Norton Alcoholic Beverage team member Rob Pinson represented Bootleggers and Holston today at the ABC.

License Revocation.

In what we believe to be a first for the Commissioners appointed by Governor Haslam to the Tennessee Alcoholic Beverage Commission, Commissioners voted to revoke the liquor license of a retail liquor store. The manager was accused of lying to the ABC in connection with a no buy, based on a falsified letter.

The take away is never ever lie to the ABC.  Whatever you may have done, it most likely pales in comparison to the punishment you will get from trying to conceal the truth from the ABC.

Good News for Trendy Cocktails in Tennessee

By - August 22, 2014 | Alcoholic Beverage Law | Email Will Cheek

Infused alcoholic beverages became headline news last year as the Tennessee Alcoholic Beverage Commission questioned the legality of infusing for cocktails. Industry members and the TABC reached a compromise that became Tennessee law this summer.

We repeatedly hear two questions about the Tennessee infusion law:

1. The law limits infusions to a 10 day period.   When does the 10 day limit begin – when the infusion process begins or when the infusion is ready to be sold to the public?

2. How are bitters treated?

Conjures up the 1967 Cream classic Strange Brew:

Strange brew, kill what’s inside of you.
She’s a witch of trouble in electric blue,
In her own mad mind she’s in love with you
 

Reliable sources tell us that the ABC says that the 10 day period for infusions begins when the infused product is offered for sale.  This gives cocktail connoisseurs time for lengthy infusion processes, perhaps even including barrel aging.  We thought that 10 days was too short to properly infuse and sell all infused product.

Recently, bitters have emerged as a subject of discussion among the ABC and industry members.

Personally, we think bitters are non-beverage under federal law, and therefore are not alcoholic beverages subject to ABC jurisdiction.  Non-beverage products contain alcohol, but are not drinkable.  Think of peppermint extract, which is around 180 proof, or Scope.  Both have significant amounts of alcohol, but are not regulated as alcoholic beverages.

We understand that the liquor wholesalers are pressing the Tennessee ABC to require that bitters be distributed by liquor wholesalers and only sold at liquor stores.

In our humble opinion, this is plainly wrong.  Will the wholesalers’ next target be cooking wine or Calvin Kline Eternity perfume?

Brings to mind another classic rock song, this time from The Beatles:

You say you want a revolution
Well, you know
We all want to change the world
 

We hear that the ABC is moving toward a position that will allow barkeeps to continue making and using house-made bitters.  We see this as great news.  Nashville is reaping the benefits of being a trendy designation for tourists.  The freedom to serve cutting edge cocktails is an important part of pleasing trend-setting tourists.

Tennessee Liquor Stores Given Free Booze for Tastings

By - August 17, 2014 | Alcoholic Beverage Law | Email Will Cheek

The Tennessee Wine in Grocery Stores law was a game changer on many levels.  One obscure victory for retail liquor stores is the ability for distilleries and importers to donate product for tastings at retail liquor stores.

Tennessee liquor stores earned the right to conduct tastings in 2011.  We blogged about the new law here.

The Tennessee ABC cracked down on free liquor beginning on July 1, 2014.  Only nonprofits and liquor stores tastings can receive free liquor under Tennessee law.

The crackdown on free liquor was a big change for the Tennessee liquor industry.  Reminds us of a classic Beastie Boy tune about rebellion:

Yo ho ho and a pint of Brass Monkey
And when my girlie shakes her hips she sure gets funky
Skirt chasin’, free basin’, killin’ every village
We drink and rob and rhyme and pillage

 

Retail liquor stores scored a number of huge victories in the WIGS battle and we commend their lobbyist David McMahan for making the best out of WIGS. Grocers cannot conduct tastings, much less receive free product for doing so.

What Can I Sell at My Tennessee Retail Liquor Store?

By - August 10, 2014 | Alcoholic Beverage Law | Email Will Cheek

The Tennessee Wine in Grocery Store law, which we affectionately call WIGS, allows Tennessee liquor stores to sell a list of very specific items.  We understand that this list was the result of complicated and contentious negotiations.

We find it most interesting that before the specific list is a lawyerly phrase that gives enormous flexibility about what a retail liquor store can sell:  “Such items may include but are not limited to.”

Hank Williams’ classic “All My Rowdy Friends” comes to mind for no apparent reason:

And the hangovers hurt more than they used to
And corn bread and iced tea took the place of pills and 90-proof
And it seems like none of us do things quite like we used to do
And nobody wants to get high on the town
And all my rowdy friends have settled down

 

The list of items approved for sale at Tennessee retail liquor stores is quite specific.

Printed or video material related to alcoholic beverages or food
Utensils and supplies related to alcohol, including corkscrews, strainers, pourers, flasks, wine racks, etc.
Gift cards, packages and baskets
Nonalcoholic beverages, such as water, soft drinks, red bull, mixers, etc.
Kegs and growlers of beer, wine and possibly liquor (be aware of TTB restrictions and licensing requirements for liquor and wine)
Beer and wine-making kits and related products and supplies
Lemons, limes, cherries, olives, etc.
Peanuts, pretzels, chips, cheese, crackers and other snack foods
Coolers, ice chests and ice
Party supplies, decorations, bags, greeting cards, etc.
Articles of clothing and accessories related to alcoholic beverages
Combined packages of multiple alcoholic beverages
Cigarettes, cigars, lighters, etc.
Lottery tickets

 

Gas, for example, was excluded from the list, presumably by convenience stores.  Bread, milk and other food staples was excluded for grocery stores.

From a legal perspective, saying “include but are not limited to” suggests that the list should be read broadly.

For example, WIGS allows the sale of tobacco products.  Can a liquor store also sell e-cigarettes and other vaping devices?

Does “Peanuts, pretzels, chips, cheese, crackers and other snack foods” include stuffed olives, pate, humus, smoked sausages and cocktail shrimp?

Does party supplies include rented chairs, tables and tablecloths?

Given the Tennessee ABC’s strict construction of liquor laws and large monetary fines for alleged violations, retail liquor store owners have good reason to worry that deviating from the specific list is fraught with danger.

The compromises that lead to the passage of WIGS includes new opportunities for retail liquor stores.  It will be interesting to see how broad the Tennessee ABC will construe these privileges and how profitable the new lines of business will be for stores.

Where Is My Wine in Tennessee Grocery Stores?

By - August 06, 2014 | Alcoholic Beverage Law | Email Will Cheek

Tennessee’s Wine in Grocery Stores law, which we affectionately call WIGS, is deep into its next test.  Will enough local voters sign petitions to place the local option election authorizing WIGS in your city or county on the ballot for approval?

Whilst Tennessee wallows in the WIGS battle, we hear Pink Floyd singing:

Tired of lying in the sunshine staying home to watch the rain
You are young and life is long and there is time to kill today
And then one day you find ten years have got behind you
No one told you when to run, you missed the starting gun 

 

WIGS legalized wine in food stores.  But each city or county must have a local option election to authorize the sale of wine in food stores.  To place the local option on the ballot requires the signatures of 10 percent of the residents that voted in the last gubernatorial election.

Petitions must be completed and shared with the local election commissions by August 21 to be on the ballot for November 4th elections.

Although WIGS is hugely popular, the local option requirements pose a problem for some cities.

Confusion about WIGS complicates the local option process.  In Memphis, the Memphis Business Journal declared victory for wine, although WIGS insiders know Memphis is far short.  On average, about half of the signatures on wine petitions are from folks that do not vote in the city where they sign the petition, or are not registered voters.

The failure of Memphis to approve WIGS could be a huge setback for Memphis food stores that compete with grocers in Germantown, Bartlett and other suburbs.  Memphis is about half way to having enough petitioners to place WIGS on the ballot.

In addition, we have real concerns that Memphis voters may not approve WIGS at a popular election.

Other Tennessee cites are more promising for WIGS.  According to reliable sources, the following have enough signatures to place WIGS on the November 4 ballot:

 Alcoa
Brentwood
Bristol
Church Hill
Clarksville
Clinton
Dunlap
Dyersburg
Fairview
Farragut
Gallatin
Gatlinburg
Greeneville
Harriman
Hendersonville
Jonesborough
Kingsport
Kingston
Unincorporated Knox County
Knoxville
Lebanon
Lenoir City
Loudon
Maryville
Morristown
Mount Juliet
Murfreesboro
Newport
Oak Ridge
Oakland
Paris
Pleasant View
Rogersville
Sevierville
Smyrna
Spring Hill
Thompson’s Station
 

We understand that WIGS is close to having enough signatures to be on the ballot in Nashville, Brentwood, Franklin and Hendersonville.  Same with Chattanooga.

But the August 21 petition deadline is just days away.  Wine in Tennessee grocery stores is at a critical crossroad in many cities.  Although WIGS is largely about convenience to customers, the failure of a city to approve WIGS will be a huge blow to grocers trying to compete against grocers in neighboring cities.

Here Is a Quick Fix for the Sales to Minor Problem in Tennessee Restaurants, Bars and Clubs

By - July 30, 2014 | Alcoholic Beverage Law | Email Will Cheek

Ask any restaurant, bar or club owner in Tennessee about recent stings for sales to minors.  With tough consequences, sales to minors is near the top of the worry list.

Cheap Trick’s classic tune Dream Police seems fitting:

The dream police
They live inside of my head
The dream police
They come to me in my bed
The dream police
They’re coming to arrest me
Oh no
 

Based on what we know, the stings involve undercover informants that produce driver’s licenses which clearly show the informant is under 21.  Problem is, servers and bouncers misread IDs and the informants order alcohol.

A second sale to minor in two years typically leads to two separate 14 or 15 day suspensions – one for liquor and one for beer.

Tennessee’s law about under 21 driver’s licenses is a big part of the problem.  Although underage drivers licenses are clearly marked as under 21, the licenses are valid for as long as three years after the person turns 21.

Instead of creating the impression that the person is too young to drink, servers are required to do math to determine if the person really is under 21.

The solution is easy.  Tennessee driver’s licenses should expire shortly after someone turns 21.  That way, almost no one with an under 21 license will be of age.

Other states have tackled this problem and we think Tennessee should change its laws to simplify carding.  Here are the laws in a few other

states:

Arizona – Under 21 licenses not valid for alcohol sales 30 days after the 21st birthday.

Colorado – Under 21 licenses expire 20 days after the 21st birthday.

Idaho – Under 21 licensees expire 5 days past 21st birthday.

Kansas – Minor license expires on 21st Birthday.

Kentucky – Under 21 licensees expire 90 days past 21st birthday.

Michigan – Under 21 licenses expire on the 21st birthday.

Minnesota –  Under 21 licenses expire on the 21st birthday.

Montana – Under 21 licenses expire on the 21st birthday.

Nebraska – Under 21 licenses expire on the 21st birthday.

New Hampshire – Under 21 licenses expire on the 21st birthday.

Ohio – Under 21 licenses expire on the 21st birthday.

South Dakota – Under 21 licenses expire 30 days after the 21st birthday.

West Virginia – Under 21 licenses expire 30 days after the 21st birthday.

Wyoming – Under 21 licenses expire on the 21st birthday.

We are encouraging the Tennessee Hospitality and Tourism Association to back legislation to make 21 year olds get new driver’s licenses at or closely after their 21st birthday.

If under 21 IDs expire at or close to the 21st birthday, servers can presume that the person is underage.  This significantly reduces the chances of math errors.

If legislation is introduced next winter, we will call on our loyal readers to contact legislators to get the law passed.  Stay tuned.

Tennessee ABC Defers Decision on New Payment Rule for Restaurants and Bars

By - July 22, 2014 | Alcoholic Beverage Law | Email Will Cheek

The death of the 10 day payment law for liquor purchases by restaurants and bars in Tennessee officially has an afterlife.  Zombie or Angel, the issue was on today’s July 22, 2014 agenda of the Tennessee Alcoholic Beverage Commission.

During the eleventh hour of the 2014 legislative session, the long-standing 10 day credit rule was eliminated for on-premise liquor license holders.  We blogged about it here.

Elimination of the 10 day credit rule came as a surprise to the restaurant and hotel industry.  Conjures up the Gap Band’s classic 1982 hit:

You dropped a bomb on me, baby 
You dropped a bomb on me
 

The change has led to a host of problems for on-premise liquor license holders.  Fortunately, the ABC issued informal rules at the April 2014 meeting.  But there are issues with the informal rules.

We raised a few of the issues at today’s ABC meeting, and were joined by legal counsel to the Tennessee hospitality association and legal counsel to the wholesalers’ association.

Unfortunately, Commissioner Jones could not attend the meeting.  The issues were deferred until the August meeting on August 26, 2014 at 1:30 pm CDT.

Stay tuned as we cover this important issue.

Are Tennessee Liquor Stores in for a Bad Romance with Beer, Cheese & Corkscrews?

By - July 17, 2014 | Alcoholic Beverage Law | Email Will Cheek

Beginning July 1, 2014, Tennessee liquor stores can sell beer, cheese, corkscrews and many other items.  Before passage of wine in grocery stores, which we affectionately call WIGS, liquor stores could only sell wine, spirits, lottery tickets and cash checks.

Lady Gaga gets the dilemma

I want your love and
All your lover’s revenge.
You and me could
Write a bad romance.

Liquor store owners are not going to get rich from selling low-profit items like Budweiser and Fritos.  We see the right to sell additional items as more about marketing and retaining traffic flow in stores than making up for lost profits from losing Yellow Tail sales to WIGS.

This month’s Tennessee ABC agenda has a handful of retail liquor store owners seeking approval to consolidate beer and liquor store operations.  The ABC must approve expansion of a liquor store premises if the owner wants to include an adjacent beer store or other expansion space.

Embracing WIGS is an enormous challenge for Tennessee retail liquor stores.  We wish owners well as they embrace previously-forbidden merchandise and prepare to compete against the goliath grocery stores.

Adding fuel to the fire is strong consumer demand for wine to be legalized in groceries sooner, like July 1, 2015.

Why the New Wine in Grocery Law Leaves Gas Stations and Convenience Stores High and Dry in Tennessee?

By - July 15, 2014 | Alcoholic Beverage Law | Email Will Cheek

Most folks knew that pharmacies like Walgreens and CVS were left out in the cold under Tennessee’s Wine in Grocery Store law, which we affectionately call WIGS.  The 20% food requirement dashed the hopes for wine in Walgreens.

Problem is, the 20% food requirement may also prevent almost all convenience stores from selling wine.

Somehow, the undecipherable lyrics to Mac Arthur Park come to mind:

Someone left the cake out in the rain
I don’t think that I can take it
Cause it took so long to bake it
And I’ll never have that recipe again
Oh, nooo!

 

Convenience stores benefit from the exclusion of gas sales.  Gas has a separate tax that does not count as taxable sales under the WIGS law.

But the definition of food sales leaves convenience stores high and dry for wine.  Food is defined as items that are taxed at the lower food tax rate, like flour, sugar, bread and other grocery items used to prepare food.  Ready to eat food items – think hot dogs, chips and other snack foods, and Coke and Red Bull, are excluded from the definition of food for purposes of the 20% food requirement.

We expect many businesses, including convenience stores, to ask the Tennessee Legislature to tweak WIGS to treat everyone fairly.  WIGS was an ugly truce reached at the height of a bloody battle.  When the dust settles, we see WIGS being tweaked to take care of many folks that were excluded from WIGS.

Stay tuned.

Memphis to Benefit from Tennessee Distillery Law

By - July 11, 2014 | Alcoholic Beverage Law | Email Will Cheek

D. Canale & Co. announced plans to resurrect the classic Memphis whiskey brand “Old Dominick.”  The distillery and tasting room will be at 301 South Front Street, across from Gus’s World Famous Fried Chicken.

The distillery was named for the company’s founder, Dominick Canale, great-great grandfather of Chris Canale, president of D. Canale & Co.  “We are so eager to be back in business in the city our family has called home for over 150 years,” Canale said.  Read more at The Memphis Business Journal.

Distilleries have been opening across Tennessee following recent changes in state law.  From what we know, Old Dominick is the first for Memphis.

The classic 1964 Roger Miller hit comes to mind:

Chug-a-lug Chug-a-lug
Make u wanna holla hidy hoe,
Burns your tummy don’t you know
Chug-a-lug chug-a-lug