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
 

Cutting Edge Craft Cocktails Test Boundaries of Liquor Laws in Tennessee and Other States

By - July 08, 2014 | Alcoholic Beverage Law | Email Will Cheek

A fabulous panel of mixologists that are upping the ante for cocktails were featured at this year’s 2014 National Conference of State Liquor Administrators “NCSLA” conference. But the creative concoctions are pushing the boundaries of many state laws, including Tennessee.

The art of the craft cocktail was largely lost during Prohibition, when tipplers turned to substandard illegal spirits for a quick buzz at illicit speakeasys.

Recently, fashionable barkeeps have revived the lost art of the cocktail.  From Alchemy in Memphis, The Patterson House in Nashville, Easy Bistro & Bar in Chattanooga to Peter Kern Library in Knoxville, craft mixology is cool.

Warren Zevon captures the moment in one of our favorites, Werewolves of London:

I saw a werewolf drinking a pina colada at Trader Vic’s
His hair was perfect
Aaahoo! Werewolves of London
Draw blood
Aaahoo! Werewolves of London
 

One hot trend is barrel aging cocktails – mixing large batches of drinks and aging them for 4 to 6 weeks in a used oak whiskey barrel.  Avoiding fruit or other ingredients that are health issues, barkeeps age craft cocktails like Manhattans or bacon old fashioneds.

Barrel aging improves consistency and is much faster to serve than scratch made cocktails.  Cocktail enthusiasts say that barrel-aged cocktails are more flavorful, better-blended and delicious.

In Tennessee, for example, barrel-aging cocktails probably runs afoul of Tennessee’s recent efforts to restrict infusions.  See Section 9 of the attached new Tennessee law on infusing.  Although a bit ambiguous, we read the law as restricting infusing to 240 hours, which is a clever way of saying you must sell all infused product within 10 days.  Not long enough for barrel aging.

Hot tea drinks are also in vogue.  Bar flies enjoy the vapors and tastes of bourbon, berry and tea.

Punch cocktails are being elevated from the frat house to fashionable canteens.  One Manhattan watering hole features 10 craft punch mixtures in drink machines on Wednesdays, and then serves the concoctions for the rest of the week, until it is gone.  As long as the mixture is moving in the drink machines, the NYC health department says no bacteria can grow.  Punch is delivered to tables in a punch bowl, allowing for speedy service and well-blended flavors for a group cocktail.

In Tennessee, we hear from reliable sources that the ABC has been gathering information about bitters at several high-end cocktail purveyors.  Bitters is defined as “a liquid, often an alcoholic liquor, in which bitter herbs or roots have steeped, used as a flavoring, especially in mixed drinks, or as a tonic.” 

House-made bitters are a key component for most craft cocktail enthusiasts.  From what we know, house-made bitters present thorny issues under both federal and Tennessee laws.  Stay tuned for more information.

Puff Yourself to Death: Are Electronic Cigarettes and Other Nicotine Vaporizers Legal in Tennessee Restaurants and Bars?

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

E-cigarettes have ignited a controversy among state and federal regulators. Willie Nelson sums it up:

Smoke smoke smoke that cigarette
Puff puff puff
And if you smoke yourself to death
Tell St Peter at the Golden Gate
That you hate to make him wait
But you just gotta have another cigarette

We did a little research on the issue and, as of now, it is legal to have an e-smoke at a bar or restaurant in Tennessee.  A call to the local health department confirms that e-smoking is legit.  The U.S. Food & Drug Administration is looking into rules for vaping, but as of now, e-cigarettes are legal.

A business can voluntarily ban vaping.  There is no law that prevents restaurants and bars from prohibiting e-smoking.  For example, Vanderbilt recently added e-cigarettes to its smoking policy.

The Federal Airline Administration has banned e-cigarettes, not because of health concerns, but because there is insufficient information about possible interference with aircraft navigation.  E-cigarettes are electronic devices.

Interestingly, Sumner and Rutherford county jails have approved of e-cigarettes, presumably because of the revenue stream.

Stay tuned for more on this emerging legal issue.  Thanks to intern and recent Vanderbilt grad Jaziree Smith for her research on vaping.

ABC Issues New Rules for Retail Liquor Stores within 500 Feet of Food Stores

By - June 27, 2014 | Alcoholic Beverage Law | Email Will Cheek

The Tennessee Alcoholic Beverage Commission has issued new rules for the controversial 500 foot notice.  Under prior rules, a liquor store had to give written blanket approval to any food store located within 500 feet of a food store, allowing the grocery store to start selling wine on July 1, 2016.  The rule included other methods of notice – but following the rule was the prescribed way to authorize a retail liquor store to sell beer, corkscrews and other items allowed under WIGS beginning July 1, 2014.

We applauded the ABC Director for implementing clear rules, but some industry members have been lobbying for a different rule.  The Director’s detractors appear to have emerged victorious in this round.  The following was posted this afternoon on the ABC website under news:

“For Information Purposes Only

Today, Friday, June 27, 2014, Commissioner and staff members of the Tennessee Alcoholic Beverage Commission meet with sponsors and members of the Tennessee General Assembly, their staff and representatives of Tennessee’s retail liquor stores and Tennessee’s food stores in order to discern the legislative intent of PC 554, 2014, the WIGS legislation. After considerable discussion, it was determined and concluded that:

 TCA 57-3-404(e)(2) and TCA 57-3-404(e)(4), as amended in Section 10 of PC 554, 2014, effective July 1, 2014, authorizes an off-premises retailer, licensed pursuant to TCA 57-3-204, (retailer), to begin selling at retail, on Tuesday, July 1, 2014, beer and other malt beverages as well as merchandise and supplies related to special events or parties (as enumerated but not limited to the items noted in the amended TCA 57-3-404(e)(4)), without a requirement of the retailer granting permission to food stores located within 500 feet of the retailer to sell wine.
Please note that the amended TCA 57-3-404(e)(2) and TCA 57-3-404(e)(4) granting authorizations as noted above in number 1, DO NOT remove prohibitions in any lease an off-premises retailer, licensed pursuant to TCA 57-3-204, may have with their landlord. Generally, restrictive covenants between contracting tenants and landlords are valid and a breach of such restrictive covenant may prompt a civil action by the offended party.

It was further determined that before any off-premises retailer, licensed pursuant to TCA 57-3-204, (retailer), may begin deliveries of alcoholic beverages that such retailers must comply with the requirements regarding transportation of alcoholic beverages within the State of Tennessee as enumerated at TCA 57-3-401 et seq.”

Complicating all of this is the impending July 4 holiday, which brings a big boost to liquor and beer sales. Punk masters X penned a classic Fourth of July song:

On the stairs I smoke a
cigarette alone
Mexican kids are shootin’
fireworks below
Hey baby, it’s the Fourth of July
Hey baby, Baby take a walk outside

We are still digesting the comments concerning delivery.  Notably absent is any guidance for whether an order can be placed over the phone or internet.  No one goes to Dominos to pay for a pizza and then goes home to wait for the pizza guy to deliver the pizza.  But that was the original rule articulated by the ABC – sales have to be completed at the store.

More to follow.

Homestilling: There is no law preventing me from distilling spirits at home, is there?

By - June 24, 2014 | Alcoholic Beverage Law | Email Will Cheek

We hear the question all the time.

I can distill spirits at home for my own use?  It’s like home-brewing beer and winemaking, right?

The answer: hell no.

Distilling whiskey, brandy, vodka, gin or other spirits is a violation of federal and state law.  Making spirits for personal use at home – commonly known as homestilling – is a serious crime.  Just having an unregistered still is a federal crime.

Drinking King George Jones gets it in his 1959 hit “White Lightning:”

Well the “G” men, “T” men, revenuers, too
Searchin’ for the place where he made his brew
They were looking, tryin to book him,
But my pappy kept a-cookin’
Whshhhoooh . . . white lightnin’

 

Many folks interested in opening a distillery ask if they can run test batches to perfect their recipes and hone distilling skills. The answer: “Are you kidding?”

Not only is distilling without appropriate federal and state licenses a crime, conviction of a crime involving illegal manufacturing of alcohol disqualifies you from being an owner of a distillery.

Think about it practically.  If it were legal for a distillery to run test batches, every illegal moonshiner would say “just testing” when caught by federal or state authorities.

We know that Oklahoma, Tennessee and Virginia have been targeting high volume moonshine operations over the last couple of years. Illegal moonshiners are typically avoiding significant federal taxes and mark ups from distribution through wholesalers and retail liquor stores. Although we hear that a few illegal moonshine operations focus on quality, licensing authorities have found use of risky equipment and poor sanitation, which creates an additional health-safety risk.

A Conversation About Cider at the National Conference of State Liquor Administrators NCSLA

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

The raw unedited results of our 50 state cider survey are here: cider survey says.

Join us for the festivities at the 2014 Annual Conference of the National Conference of State Liquor Administrators in San Antonio Texas on June 18, 2014.  More at NCSLA.

Who Has to Card Everyone for Liquor in Tennessee?

By - June 13, 2014 | Alcoholic Beverage Law | Email Will Cheek

If we had a Casey Kasem Top 40 Chart for the most popular Tennessee liquor question, this query has been sitting at number one for weeks.  Do I have to card everyone for liquor sales?

Known in the industry as universal carding, the well-intentioned law is criticized for taking the focus off preventing sales to young-appearing purchasers.  Universal carding has also become fertile ground for fining licensees for failing to card.

The Police’s 1980 hit is appropriate for inappropriate reasons:

Inside her there’s longing
This girl’s an open page
Book marking – she’s so close now
This girl is half his age
Don’t stand, don’t stand so
Don’t stand so close to me
 

Several years ago, Tennessee required universal carding for off-premises sales of beer.  Universal carding was a concession to prevent local beer boards from suspending beer permits for C-Stores and groceries that enrolled in a training program.

Universal carding was part of the many trade-offs in the 2014 wine in grocery store law, which we affectionately call WIGS.  Starting July 1, 2014, all retail liquor stores in Tennessee must card everyone.  Grocery stores will have to card everyone starting July 1, 2016, when wine becomes legal in groceries.

Selling to a minor has been a Class A misdemeanor for as long as we can recall.  WIGS imposes the same criminal citation for failure to card – even failing to card a 75 year little old lady.  A criminal conviction for the sale of alcohol disqualifies the person from being an employee or owner of a license holder.

Who has to card everyone?

  • Beer – off premises (C stores, groceries, pharmacies) – Yes, card everyone
  • Beer – on premises (beer bars) – No, carding is discretionary
  • Wine and spirits off premises (liquor stores) – Yes, card everyone beginning July 1, 2014
  • Wine stores (groceries) – Yes, card everyone beginning July 1, 2016
  • Wine and spirits on premises (restaurants, bars) - No, carding is discretionary

Failure to card could be a huge source of revenue for citations by the Tennessee ABC.  Watch out.