Last Call

Tennessee ABC Under Attack

2012-02-14T21:33:00.000-08:00

One of the national hot button issues among liquor licensing experts is the pressure to merge state ABC's with other agencies, generally as a cost saving measure. Based on what we have heard from the few states that have merged, it is a disaster for licensees.

In Tennessee, a seemingly innocuous bill is pending that takes away criminal enforcement powers from ABC agents. We see this as a step toward merging the ABC with another agency. Removing ABC police powers makes it easier to merge the ABC with other agencies.

Without authority to prosecute crimes, we suspect that pay for agents will be slashed. ABC agents are already paid less than many other state law enforcement officials. This has been a problem for retaining experienced agents.

Liquor laws are complicated. Having qualified ABC agents is good for the industry.

Licensees may see the demise of ABC agent enforcement as a good thing. Based on what we hear from other states, elimination of ABC agents is bad for business.

For example, Missouri merged the ABC and virtually eliminated ABC officers. Lawmakers presumed that local police would enforce sales to minors, among other important laws. Not surprisingly, local police were not trained to enforce liquor laws and aggressive owners are openly flaunting basic industry rules.

ABC agents may not be your favorite visitor, but by laying a level foundation for enforcement of basic liquor laws, we believe that having competent law enforcement agents is much better than a lawless business environment.

This Round Is On Me - NOT per Tennessee ABC

2012-02-08T18:08:00.000-08:00

The Tennessee ABC closed the loop on a policy that previously allowed bar owners and marketers to "buy" drinks for patrons, a marketing strategy that avoided the prohibition against giving away drinks. Beginning today, February 8, 2012, ABC agents have been asked to first warn and then cite bars and restaurants that allow individuals to buy drinks for marketing.

Tennessee state law has a long-standing prohibition against giving away liquor at bars and restaurants. No free samples, no "this one is on me" from bartenders, and no free drink happy hours. The rule does not apply to beer.

Some clever owners and marketers exploited a loophole in the prohibition against free drinks and bought rounds of drinks at regular cost from the bar, and then handed them out to strangers. The bar was not giving away drinks - it was an individual. Of course, the ABC suspected that the bar or marketing company ended up paying the individual back for the round.

The practice has grown in popularity and promoters have started sending "shooter girls" into popular watering holes to buy free samples of shots marketed to young binge drinkers.

The ABC declared that the practice constitutes dispensing alcohol without a license, which is a crime in Tennessee punishable by real jail time. We recommend that folks stop the practice immediately.

Wine in Tennessee Groceries DOA - Again

2012-02-06T20:24:00.000-08:00

Reliable sources tell us that wine in grocery stores is dead on arrival, once again. For insiders, this is not surprising, particularly in an election year.

Although wine is mainstream in urban and suburban districts, many legislators representing more rural districts tend to vote against alcohol, as a matter of policy. Legislators in socially conservative districts fear opponents will use any pro-alcohol votes against them.

Wine advocats launched a new tactic this year. Instead of trying to pass a statewide law legalizing wine in groceries, the idea was to allow the voters in each city or county to make the decision to allow wine in groceries, based on a general election in each city or county.

This is the way that state law enables Tennessee cities and counties to decide whether liquor can be sold at package stores and restaurants. The practice is called local option, and most agree that it has been a good way to allow local residents to decide the often contentious decision of allowing local alcohol sales.

Forces opposed to wine in groceries know that wine in groceries is overwhelmingly popular in places like Nashville and Franklin. Allowing local option for wine in groceries means that key cities will adopt wine in groceries.

Although the idea may have merit, it lacked traction in the legislature. Tennessee House Republican Representative Jon Lundberg of Bristol proposed the legislation, but no companion bill was filed in the state Senate. The deadline to do so has passed, the Knoxville News Sentinel reports. This means the bill cannot be passed this year.

Tennessee liquor store owners also effectively advocated that putting hundreds of locally owned businesses at risk of closing based on competition from huge out of state companies like Wal-Mart and Kroger was particularly unfair in the recession. State liquor laws currently require that all liquor stores be owned by Tennessee residents.

We hear from reliable sources that wine in groceries is dead for 2012.

The Golden Rule Pays Off for Woodbury Distillers

2012-01-27T19:46:00.000-08:00

Jack Daniels does it, so why can't we?

This is the spirit that drives the Kauffman bothers of Woodbury Tennessee to pioneer the opening of a new distillery in a dry county in rural Tennessee. Their dream is about to come to fruition for their company, Golden Rule Distilling Company.

At the link is a photo of master distiller Josh Smotherman with one of the stills.

Short Mountain Distillery is in a picturesque setting in Southern Middle Tennessee. Problem is, the county is dry. No liquor stores or bars.

That did not stop the Kauffman's. They lead a county-wide election that successfully approved of distilling in Cannon County. In a county where you cannot buy booze at a store or a restaurant. Some would say they did the impossible.

Short Mountain Shine has some real professionals distilling authentic Tennessee whiskey - three experienced local moonshiners are distilling Short Mountain Shine.

Working with Golden Rule COO Christian Grantham, we helped navigate the byzantine labyrinth of federal, state and local registrations and laws. At the January 2012 Tennessee ABC meeting, Short Mountain got final approval from the state liquor board.

We expect Short Mountain to begin distilling this spring.

Serious Spanking for Sales to Minors

2012-01-25T18:56:00.000-08:00

La Hacienda of Franklin incurred the wrath of the Tennessee ABC today, January 25, 2012. The ABC laid down the law and imposed a $10,000 fine plus a 30 day suspension for six sales to minors on Cinco de Mayo.

We bet the the owners of the popular Mexican eatery wished they had just paid the original fine. La Hacienda was cited for six counts of sales to minors and asked to pay a fine of $9,000, based on $1,500 for each sale.

We encourage owners to resolve citations by negotiating with ABC staff. The other option is to set the citation for hearing before an administrative judge, which is what La Hacienda did.

The administrative judge was not as charitable as the ABC staff and, after the hearing, imposed a 60 day suspension. La Hacienda had a history of sales to minors that did not play well in court - they had three or four prior violations. And with a table full of six minors illegally quaffing alcoholic beverages on Cinco de Mayo, the case was not good.

At the hearing today, ABC Commissioner Jones made it clear: "We will not tolerate continued sales to minors."

The Commissioners recognized the tremendous financial hardship of suspensions, and offered the restaurant the option paying a $10,000 fine for a 30 day reduction of the 60 day suspension. The owners choose the fine and will pay $10,000 and then serve a 30 day suspension.

ABC Director Elks mentioned that the staff would speak to the Franklin Beer Board about the ABC penalty. The Franklin Beer Board has a reputation for imposing harsh penalties for repeat sales to minors. La Hacienda's woes may only be beginning.

Will We Be Sipping Wine at Nashville Sidewalk Cafes Like Gay Paris?

2012-01-19T19:17:00.000-08:00

Mayor Karl Dean spoke about relaxed rules for sidewalk cafe seating at the Downtown Nashville Partnership's January open house meeting, reports Bone McAllester Alcoholic Beverage Team member Rob Pinson.

Under current ABC and Metro Beer Board views of the law, outdoor seating must have a barrier to prevent folks from leaving with a drink or passing a drink to someone outside the patio. Historically, regulators have required a permanent barrier, like an iron railing.

Relatively narrow Nashville sidewalks do not have enough room for traditional patios. Ideally, sidewalk cafe seating would not be permanent. Blocking off valuable sidewalk space only makes sense when folks will be sitting outdoors. Who wants to sit outside right now in the middle of the winter?

Mayor Dean made a point of speaking in favor of sidewalk cafe seating. Mayor Dean does not make a habit of publicly discussing a subject, unless he is interested in making a change. The lobbyist for the Tennessee Hospitality Association spoke to the Metro Beer Board about the issue at the last meeting. We hear that no specifics were discussed.

We look for movement on this issue before winter thaws. Stay posted.

Jackalope Fires Up Big Girl Brew Kettle

2012-01-18T18:30:00.000-08:00

Jackalope Brewery opened in May 2011 with mystique befitting of the mythical namesake killer hare.

Jackalope founders Bailey Spaulding and Robyn Virball initially opened the Nashville tap room for just a few hours a week. Buzz among beer aficionados drew crowds that quickly drained the limited supply of beer.

Recently, Jackalope has been appearing at area watering holes. Spaulding says: "We're so excited to have our brews on tap at great places around town."

Jackalope's full scale brewing equipment came on line earlier this month. Spaulding and Virball can now brew enough beer to share the successful suds with more fans.

Spaulding is enthusiastic about the new big girl brew kettle: "I've been brewing beer for about five years in small batches, and its pretty surreal that in the course of three weeks, I brewed more gallons of beer than I previously brewed in my entire life."

You can now quaff Jackalope at:

12 South Tap Room
Broadway Brewhouse Midtown
Flying Saucer
Village Pub
Beyond the Edge
Frugal MacDoogal
Midtown Wine and Spirits
Family Wash
Stogies
Corsair's Tap Room
Beer Sellar

The tap room at 701 Eighth Avenue South is now open Thursday, Friday and Saturday from 4 to 8 pm.

Tennessee Whiskey for and by Bikers

2012-01-12T19:18:00.000-08:00

News broke about a distillery project we are working on with the owner of Full Throttle Saloon, which is the site of a top 10 cable TV series. Read more here.

Full Throttle Saloon is billed as the world's largest biker bar, located in Sturgis, South Dakota. The bar is only open for 10 days a year in August. More than 300,000 people visit Full Throttle during the annual event. Being open only 10 days a year has been hugely successful for Full Throttle.

Turns out, Full Throttle Saloon owner Michael Ballard hails from the Dyersburg area in Northwest Tennessee. And he wants to distill spirits. He has recipes and is ready to start making Tennessee whiskey, legally. That's where we come in.

Jack Daniels is a popular tourist site for bikers. We expect Ballard's Tennessee distillery to become an instant destination for bikers and other fans of the popular TV show.

Whole Foods Legally Sells Wine in Groceries

2012-01-03T18:49:00.000-08:00

Whole Foods quietly rolled out wine and high alc beer at its new location in Franklin on McEwen Drive. Working within existing Tennessee laws, Whole Foods offers select wine and high alc beers at its restaurant 1799 & Vine, located inside the grocery store. The CityPaper has more.

Whole Foods has worked with our liquor team since coming to the state a few years ago. For construction of the Franklin store, we helped the grocer build a store that legally allows the sale of wine - without changing existing laws.

Essentially, Whole Foods Franklin has a separate restaurant inside the grocery. Like restaurants, it sells food. It also sells beer, wine and high alc beer with meals. During the construction of the store, we worked closely with ABC officials to ensure that the store would qualify for a restaurant license, once built. Whole Foods management has patiently worked to ensure compliance with arcane Tennessee liquor laws.

The concept of selling wine at a grocery store is very controversial. Whole Foods has respected the laws and been an exemplary model for playing within the existing rules.

Food Trucks Cocktailing?

2012-01-02T18:40:00.000-08:00

Food trucks have rapidly proliferated, bringing a plethora of new ethic and gourmet options to foodies. The explosion in food truck growth has rocked the local restaurant scene.

Local food fans welcome the new food options, but lament the competitive advantage food trucks have over local restaurants because of the lack of rent and traditional build out costs.

A new controversy is looming. Food critics are talking about the next trend with food trucks - cocktails. Read more here.

We do not see cocktails being a viable option for food trucks in Tennessee. The Tennessee ABC has a catering permit that allows service of wine and spirits at mobile locations. However, the license also requires a permanent catering hall. Based on our experience, this is a kitchen in a fixed location, an expense food trucks avoid.

More importantly, the ABC has traditionally required that any place where catered alcohol is served must have a defined premises. For example, restaurants have fenced in patios and nonprofit fundraisers have fencing around outside areas.

In contrast, food trucks usually serve in open areas like parking lots.

Another huge issue is the lack of catering permits for beer in most cities.

We do not see cocktailing as the next big thing for food trucks in Tennessee.

Chattanooga Closing a Bad Church Nightclub?

2011-12-30T19:05:00.000-08:00

Tennessee club owners have felt the pressure from local officials looking to shutter their business for being a nuisance because of violent patrons outside the club.

Ironically, Chattanooga officials are looking to close a church teen outreach program - with the same nusinance laws used against clubs. Read more here.

Recently in Nashville, Bar Louie was shuttered by the local DA for violence in a public parking lot. A Chancery Court overturned the closing, but the publicity about shootings and the financial blow from being closed were fatal and the bar went out of business.

The Chattanooga church has a teen outreach program called Club Fathom. One of the missions is to support teenage gang members quitting gangs. Unfortunately, quitting gangland is not like joining a ten step program. Gang members that resign are often punished, and in gangland, being killed is a common punishment.

Like many of the club cases, Fathom's problems mostly occurred outside the business. It will be interesting to see how the city fares against a church outreach program with problems in areas around the club. Stay tuned.

Ironically, Chattanooga beer laws prohibit beer permits from being issued within 500 feet of teen social clubs.

Monkeying with Nashville Distance Law?

2011-12-19T18:46:00.000-08:00

Tennessean columnist Gail Kerr had some strong arguments to overturn Metro Nashville's longstanding prohibition on beer being sold within 100 feet of a house, school, park or church. Read her story here.

Problem is, the existing opt out from the 100 foot rule works. Kerr cites 6 businesses that have been exempted by the rule - saying that they have not been problems for the neighboring churches or homes. This is proof that the current Metro opt out law works. Metro should not completely eliminate the 100 foot distance rule.

Distance ordinances are not a perfect solution. The 100 foot distance rule sets a firm but arbitrary boundary for restaurants and bars to operate near protected places like churches and homes. No one wants a noisy tavern to open 25 feet away from their house.

The exception from the 100 foot rule is crafted to require owners of potential bars and restaurants to meet with neighbors, much like the owners of Puckett's met with Kerr's church. The law requires support from the council member that represents the area around the business. It requires a public hearing.

Based on experience with the restaurants that have obtained beer permits under the opt out law, council members asked neighbors to weigh in on the process. Businesses understood that if they wanted to locate near a house or church, they needed to be responsible and present a business plan that complimented being in a residential neighborhood.

For example, I love Broadway Brewhouse in Midtown Nashville. But I would never want to live next door. Its a fun happening place that is not a good neighbor for a residential neighborhood.

The 100 foot is an odd remnant from the past. But with the council opt out law, it works and should not be abandoned.

Tennessee Distillers Fork Over New License Fee

2011-11-16T19:09:00.000-08:00

The Tennessee Department of Revenue is collecting a $1,000 license fee that for years - or perhaps decades - was not imposed. We understand that an application for this license is being prepared and will soon be added to the extensive list of licenses required of distillers.

The Revenue license is a remnant of the colorful past of Tennessee's liquor industry. After the repeal of Prohibition in 1937, Jack Daniels and George Dickel operated under licenses issued by Revenue. The Alcoholic Beverage Commission was not created until 1963.

We thought that the Revenue license was replaced by the ABC manufacturer's license - and apparently, for quite some time, Revenue agreed.

In the past few weeks, we have heard from several distillers that Revenue has asked for the $1,000 license fee, payable under the 1937 law. One source at Revenue indicated that an application is being drafted for the license. Revenue is taking the position that the $1,000 fee is due every year.

We will update when information about the new application is available.

Hail to the New Chief at Nashville Beer Board

2011-11-16T18:33:00.000-08:00

Anne Arney was elected Chair and Brian Taylor Vice Chair at tonight's (November 16) Metro Nashville Beer Board Meeting. Both have served one term on the board, with 4 of 7 spots being newly appointed.

Chair Arney lead a spirited agenda and appeared to adopt many of the procedural traditions established by her predecessors. Ms. Arney is an attorney at Nashville law firm Bone McAllester Norton and specializes in representing doctors and other health care providers.

Changes at Metro Nashville Beer Board

2011-11-03T19:19:00.000-07:00

Today's Metro Nashville Beer Board Meeting presented lots of new faces. Mayor Dean appointed 4 new board members to the 7 member Board. Among the departed members was former chair Joy Sims.

With Anne Arney filling the position of interim chair, the change was profound to beer board regulars. Gone were perennial members Tamara Hart, Gary Larkins and Joy Sims. Their years of experience will be missed.

Meet the new members:

James Collier, attorney with a general practice
Anton Jackson, attorney at the Metro District Attorney's office, which prosecutes crimes
Brad Northcut, architect and President of 12South Neighborhood and District
Shannon Romain, attorney practicing divorce and family law

We understand that the new chair will be elected at the November 16 meeting.

We were pleased to see the new Board take up and correct an unintended consequence of the recently adopted catering rule. The new rule allows wholesalers to deliver beer to catered premises. Some had read the prior rule as requiring wholesalers to drop beer off only at the caterer's main business. For large events, caterers would have been required to transport scores of kegs from their stores to catered locations. This was a common sense fix and we appreciate the prompt action by the Board.

Metro Nashville Beer Board: Back to the Future

2011-10-26T19:08:00.000-07:00

We hear it all the time. When you ask a state or city official why something is done a particular way, you often hear: "Because it's always been done that way."

Eons ago, someone devised a form beer application that is used by lots of beer boards, including, until recently, the Metro Nashville Beer Board. We have found that the form is a model for creating confusion for business owners.

Abandoning more than two decades of tradition, the Metro Beer Board recently approved a new simplified form for beer applications. It is available as a writable PDF.

Mayor Karl Dean has filled a number of beer board appointments with members of the local business community. Dean appointee Brian Taylor comments: "Nashville is a business friendly city and although there are laws that are antiquated and that the Beer Board cannot itself change, the Metro Beer Board is making strides toward simplifying the process for those restaurants and bars looking to open in Nashville. The new application is a big step forward."

We applaud the board for making the beer application process more friendly to business owners.

Modernizing Liquor Laws Often Elusive

2011-10-24T18:45:00.000-07:00

The recent failure of an attempt to increase the number of liquor stores in Clarksville - from a limit set in 1963 - shows that the unholy alliance of liquor and religion is alive and well. Clarksville liquor store owners and local pastors opposed the increase, and it failed in the city council.

Clarksville Council Rep Deanna McLaughlin proposed the increase after two soldiers, looking to open a store, were told that no licenses were available. The 12 store rule was set back in 1963, when Clarksville had under 35,000 residents. Now the city has grown to over 130,000, but the number of liquor stores has remained the same because of the local store limit.

Clarksville liquor store owners understandably opposed the increase, because the antiquated limit increased the value of their stores. Pastors cited public safety concerns over increased access to alcohol.

Although local officials initially voiced no public safety concerns, the proposed increase died by a 9-3 vote at an October council meeting.

The defeat is a reminder that change is not easy with liquor laws.

Nashville Beer Board Targets Rogue Caterers

2011-10-18T20:06:00.000-07:00

Its been pretty easy over the past couple of years to find someone to provide beer service for Nashville businesses that cannot get a beer permit, for whatever reason. Some folks with beer catering permits have regularly allowed other businesses to use their catering permit when the business failed to apply for a beer permit on time or had some other issue that left the bar high and dry. This "service" was usually offered for a hefty fee.

A few folks really abused the catering permit by "catering" beer to nightclubs that did not qualify for beer.

On October 13, 2011, the Beer Board adopted a rule aimed at eliminating the practice. We hear that the beer inspectors have been out enforcing the new rule.

The beer catering law was intended to be a compliment to the ABC catering permit for wine and spirits. Before Metro adopted the law, caterers were left to play fast and loose with the law and provide beer service, despite the lack of any means to legally sell beer at catered events. Most towns have not even addressed the issue and have not specifically legalized beer catering.

We applaud the Metro Beer Board for tackling this issue. The catering law was intended to allow restaurants to provide adult beverages with food when catering. It was never intended as a way around regular licensing.

Tragic Loss for Tennessee ABC Director Danielle Elks

2011-10-13T07:28:00.000-07:00

Tennessee ABC Director Danielle Elks lost her husband early this morning in a car crash. Better known to the general public as the keyboard player for the Charlie Daniels Band, Taz DiGregorio and Director Elks have been long-time companions.

The Charlie Daniels Band released details and Billboard Magazine covers the story.

More news will follow as it becomes available.

Tennessee Guns in Bars Advocate Makes Big Oops

2011-10-12T20:21:00.000-07:00

Guns in bars advocate Tennessee State Representative Curry Todd was arrested late last night (October 11, 2011) in Nashville for DUI and possession of a gun while intoxicated. The Tennessean has details about the arrest, and Tom Humphrey has insightful political commentary.

Representative Todd has been an effective advocate for a number of conservative causes and is known for being a Republican leader. The arrest will certainly challenge Representative Todd's credibility as a conservative crusader for mixing gun rights with alcohol.

Although national media has picked up the story, we do not see Rep. Curry's personal issue affecting current Tennessee gun laws.

Busted! Tennessee ABC Stings Retail Liquor Stores for Sales to Minors

2011-10-04T19:34:00.000-07:00

Many Nashville area liquor stores were visited by Tennessee ABC agents over the past couple of weeks for "compliance checks." We know of several stores that failed to properly identify and refuse to sell to ABC confidential informants.

Expect ABC citations to be issued and $1,500 fines to be imposed for stores without a checkered past. We have heard that the ABC will reduce the fine to $1,000 if a store employee completes the ABC identification class.

The ABC is also working with local police to issue criminal citations to employees selling to minors. Although this may be new to liquor store owners, holding employees accountable for sales to minors is consistent with Commission and industry requests. Recently, LBD servers have been regularly cited criminally for sales to minors.

A conviction for sale to minor disqualifies an employee from working in the industry for eight years. Although charges are routinely reduced to a non-disqualifying conviction, employees should treat the citation seriously.

There's a New Kid in Town: Tennessee Liquor by the Drink Has New Chief

2011-09-29T19:12:00.000-07:00

Keith Bell accepted an appointment by the Tennessee ABC to serve as Assistant Director, at yesterday's ABC meeting. We hear he starts Monday October 3.

The Assistant Director has historically been in charge of restaurants, hotels and other on-premise LBD licensees. We expect Mr. Bell will assume the role of LBD chief from TABC Director Danielle Elks, who has been filing in for Caroline Smith for nearly a year after her resignation.

Mr. Bell will have to become indoctrinated in the byzantine laws and unwritten customs that are all too familiar to industry insiders.

Mr. Bell most recently comes from a real estate title company in Hendersonville. He is a 1982 grad of the University of Tennessee law school.

In other LBD news, reliable sources report that Nashville ABC front desk staffer Melissa is being trained to take over LBD renewals for Grace, whose last day is this Friday. Melissa will be sorely missed at the front desk, but we wish her well with handling the huge volume of renewals.

Stay tuned for more.

Purgatory for Tennessee Liquor License Renewals?

2011-09-27T18:37:00.000-07:00

Renewing restaurant, hotel and liquor-by-the-drink licenses in Tennessee has never been painless. Busy staff regularly forget to pass along the renewal paperwork to corporate. Even after filing, renewals are often delayed - and citations issued - because Revenue shows taxes due or reports LBD bond issues. Exacerbating the frustration, Revenue records frequently show taxes owed, when in fact, no taxes are due.

Hold on to your seats. Things are poised to get worse.

Longtime Nashville Tennessee ABC renewal staffer Grace Buchanan is leaving for a new gig at Vanderbilt this Friday.

Tennessee LDB staff have been stretched thin for nearly a year. ABC Director Danielle Elks has been covering for two vacant staff attorney positions. The ABC handles thousands of LBD licensees, without the benefit of modern computer systems.

To make matters worse, Tracey Richards at Revenue, who gives tax clearance and manages bonds, has been promoted and transferred, leaving her colleague, Rondle John, and supervisor Martha Potter to handle LBD tax clearance and bonds for the entire state. Their job is complicated by ancient technology that often shows incorrect tax data, for no apparent reason.

We hear that there are no plans to replace either Grace at the ABC or Tracey at Revenue. Despite both positions being critical to a large source of tax revenue (LBD pays up to 24.75% tax on sales), the state hiring freeze may mean the positions remain vacant indefintely.

Renewals could be considerably more complicated for some time. Welcome to Hades.

Wine in Tennessee Groceries: Worthy Progeny of the Whiskey Rebellion

2011-09-23T19:28:00.000-07:00

Controversy surrounding alcoholic beverages is not a new phenomenon. Tennessee is currently torn by the debate over wine in grocery stores. But alcohol has divided Americans politically since our nation was born, often causing unusual alliances like the coalition of conservative church groups, liquor wholesalers and liquor store owners that currently oppose wine in grocery stores in Tennessee.

The Whiskey Rebellion is a fascinating nugget from the colorful history of alcohol, worthy of reflection.

The Whiskey Tax was the very first federal internal revenue tax, levied in 1791 to help pay for revolutionary war debt. The tax divided large and small distillers, by taxing smaller distillers at about twice the rate as large distillers.

The tax also pitted more-established Eastern towns, home to larger distillers, against frontier areas with small distilleries, where distilling crops to whiskey was one of the few ways to make money to purchase essential goods. Hauling whiskey by wagon on mud roads over the Appalachian Mountains was a much easier way for farmers to make money than trying to haul corn or other crops.

The tax - and unfairness of the tax for small distilleries in the frontier - fueled discontent about the lack of federal support for basic frontier needs, like troops to protect frontier towns from Native American attacks. Federal revenue agents were tarred and feathered, and eventually, frontier folks rose in arms in Western Pennsylvania.

The dispute ultimately lead President Washington to become the only sitting President to command troops in battle. The insurrection was quashed and the federal government's ability to tax was firmly established. The tax also established the government's ability to require every distillery to register.

The TTB has a great article about the rebellion here.

No Krogering for Beer in Memphis?

2011-09-12T18:40:00.000-07:00

A few days ago according to a reliable source, Memphis police visited a Kroger store and told the store to stop selling beer because some of the employees did not have Memphis employee cards. Memphis police were reported as advising Kroger that beer sales should be halted in any Memphis store where employees lacked the Memphis employee card.

We blogged about the card last month. Every employee that touches beer in Memphis must have a card, unless they have an ABC server permit card. The card costs $50 and requires a TBI background check.

We wondered if Memphis police would enforce the requirement. The Kroger raid shows that Memphis is serious.

The raid has drawn attention from several large retail chains concerned about compliance with the law. Reliable sources report that the Mayor of Memphis unofficially asked the police chief to stop enforcing the law for the next 30 days, presumably to allow retailers time to come into compliance.

Several industry members are using the unofficial moratorium to advocate against the law, hoping to repeal or simplify the employee registration requirement. We see the law as an expensive and burdensome requirement that does little to prevent sales to minors, or promote other legitimate regulatory concerns.

The employee card requirement also appears to exceed the city's power to regulate beer, making it illegal.

We encourage retailers and Memphis wholesalers to speak up quickly to help bring balance to the debate.

New Rules for Tastings at Tennessee Liquor Stores

2011-08-24T20:57:00.000-07:00

Toward the end of this year's legislative session, retail tastings were legalized for Tennessee package stores. The change surprised many and the law was also wide open about what retail stores could do at tastings. Read more about the law here.

ABC Regs for retail store tastings were inevitable. The ABC was proactive and held its first meeting with industry members last week, on August 17, 2011.

Many legal issues were discussed, including whether store employees had to hold server permits or complete LBD server training, could food be served, and were there limitations on how often and how long tastings could be offered. Retailers want clarification that they may have glassware, ice and mixers to be able to conduct tastings.

One store owner acknowledged the problem with leaving bottles out front for customers to taste at any time of the day, but wanted to be able to allow a potential purchaser of high end scotch to try the product without any time limitation. This issue may be one of the hardest to resolve.

The meeting identified a number of practical issues with retail store tastings, as well as one important political position. When food service was raised as part of tastings, wholesale representatives pointed to wine in grocery stores as a reason not to allow liquor stores to pair food with wine at tastings. This would allow grocers to say that liquor stores can pair wine with food, and why shouldn't we?

The tastings law prohibits wholesale participation in retail tastings, and the wholesaler representatives at the meeting expressed no interest in helping wineries and distilleries to pass free product to retailers for tastings.

This is a huge limitation - retailers have to purchase all product given away at tastings at the wholesale price.

The next step is a draft of regulations from the ABC and a second opportunity for industry to weigh in. We encourage interested retailers to follow this process closely. Tastings are a tremendous opportunity for stores that market to consumers.

Grocers and C Stores Pay the Piper In Memphis

2011-08-23T20:28:00.000-07:00

Memphis has always had its share of odd liquor rules. A recent change in the law is different, because it makes doing business in Memphis much more cumbersome and expensive.

For some time, Memphis required beer permit holders to register all employees that touch beer. This mostly affects grocers, drug stores and convenience stores, requiring every sales clerk and stocker to go downtown and obtain the permit. The rule does not apply to restaurants and other businesses with liquor licenses.

We suspect that lots of businesses were clueless and did not comply. Although a pain, however, compliance only involved a $10 fee per employee.

Beginning July 1, the fee jumped to $50 per employee: $29 for a TBI background check and $21 for an affidavit. For most C stores, drug stores and small groceries, this means every employee must have the $50 card.

Memphis is telling new applicants about the new employee card rule. It remains to be seen how closely the rule is enforced with existing permit holders.

The good news is that the card follows the employee, meaning that it is valid if an employee moves between stores or is hired from a competitor. The card must be renewed every 2 years.

We see this as being quite an expensive requirement for most retailers, from Wal-Mart to mom and pop stores. Given the turnover among clerks, compliance could be costly and difficult.

The big question is how closely Memphis enforces the new law. The Memphis Alcohol Commission does not have enforcement officers and must rely on police or other city officials to enforce the beer laws. It is possible that the new law will be largely ignored without consequence.

Breweries of Tennessee Unite!

2011-07-26T18:22:00.000-07:00

The recently passed law legitimizing high alc beer has another happy ending. A Tennessee Craft Brewers trade association. 18 breweries from across the state gathered and unanimously voted to form a guild at an organizational meeting in Nashville on July 16.

A bit of history. This spring, a high alc beer bill was hijacked in the legislature by powerful forces that sought to limit brewing high alc beer to a single brewery that was looking to locate a large brewery in Tennessee. Local Tennessee craft brewers started coming out of the woodworks, and when the dust settled, the high alc beer law applied to all Tennessee breweries. Read more on the high alc beer law here.

A lot of the credit goes to the one selected brewery, which made it clear that it would not come to Tennessee unless all breweries in Tennessee could brew and taste high alc beer in their taprooms.

Credit also goes to Linus Hall of Yazoo and several smaller craft breweries that quickly called legislators to help ensure the right of all Tennessee breweries to brew high alc beer.

The legislative fight brought Tennessee craft breweries together, perhaps for the first time on a state-wide scale. Folks discovered that the state has over 30 breweries operating or in the process of opening. Here is one list, which we know does not include a handful of our clients looking to open breweries, and undoubtedly there are others opening breweries. Brewing in Tennessee is poised to flourish.

Adam Palmer of Knoxville’s Marble City Brewing Company was quoted as saying: “The formation of the Tennessee Craft Brewers Guild is exciting for a few reasons. There is a reason there aren’t more breweries in this state and it is in large part due to the restrictive laws. Setting up a unified and organized guild will help give the breweries a stronger voice when it comes time for writing or re-writing legislation as it pertains to beer laws. The guild will also be used to promote craft beer in the state of Tennessee through discussion boards, seminars, festivals, and other special events.”

We also see the association as an excellent marketing opportunity. The success of Kentucky's Bourbon Trail shows that organized marketing can draw more tourists to several competing distilleries. For example, beer aficionados visiting Nashville could sample beers from several local craft taprooms, with proper marketing from the Tennessee Craft Brewers Guild.

The future is bright for Tennessee Craft Breweries.

Miller Time Out?

2011-07-13T14:38:00.000-07:00

You never know what will happen when you file your renewal at the 11th hour. MillerCoors just learned the hard way. The beer giant has been asked to pull all 39 brands of beer off the shelves in the entire State of Minnesota. All because their brand registration renewals did not get processed before state government was shut down over a budget dispute.

According to early media reports, MillerCoors' check for renewal of the 39 brands was delivered to the state liquor control days before the registrations were set to terminate. But they overpaid, and had to submit a new check.

Normally, no big deal. Unless the government shuts down before you deliver your check.

Minnesotans love their suds and the hot summer months are huge for the beer business. If the state follows through on its order to remove product, restaurants, bars, grocery stores and even the Minnesota Twins will be out of Coors, Miller Lite, Blue Moon and 36 other MillerCoors brands.

We've said it before - we'll say it again. Renew your licenses on time.

Pay the Tax Man Or Go Straight To Jail

2011-06-30T20:42:00.000-07:00

Liquor-by-the-drink licensees feel the double whammy pain of 15% liquor taxes and 9%+ sales taxes every month when taxes come due. For some, the temptation not to honestly report sales is tempting.

Recent Tennessee Department of Revenue activity is a reminder that paying taxes is a priority. Failure to pay the tax man is a crime.

Anthony Campbell, owner of Tony’s Bar & Grill in Memphis, Tennessee, learned the hard way. Campbell was sentenced to one count of Sales Tax Fraud, a Class E felony, and one count of Theft of Property Over $10,000, a Class C felony. Campbell was placed on five years of probation and was ordered to pay full restitution to the Tennessee Department of Revenue in the amount of $15,860.19.

This disqualifies Campbell from owning or working in the liquor industry.

Likewise William (Curtis) Givens, Jr., an employee of Silver Spoon Restaurant & Lounge in Memphis pled guilty to one count of falsifying tax returns, a Class E felony, and one count of Theft of Property Over $10,000, a Class C felony. Givens was ordered to pay $37,517.86 and faces 5 years in jail if he fails to follow his sentence, which includes educating business owners about the consequences of violating state sales tax laws.

Don't mess with the tax man.

NCSLA Liquor Conference Vegas Style

2011-06-27T20:00:00.000-07:00

Last week, the National Conference of State Liquor Administrators seized the Wynn Encore Hotel in Vegas for the 2011 Annual Conference. Tennessee made waves on a number of fronts.

TABC Director Danielle Elks served as President of NCSLA and also chaired the host committee that planned the program and social agenda. Here is Director Elks at the podium on closing night with a Charlie Daniels autographed violin auctioned for the benefit of NCSLA.

We served on the NCSLA planning committee and worked with a small talented group that created a stellar program. Great American Success Stories featured Jim Koch, founder of Boston Beer, Richard Sands, CEO of Constellation Brands and John McDonnel of Patrón Spirits. Jim poured a Sam Adams for his speech and was a personal favorite.

Tennessee's retail package store tasting law was too new to make the program, but was a popular topic at the hospitality lounge. We are not sure if retail tastings, or the lack of rules governing tastings, created the interest, but industry members - and regulators - were definitely inquiring.

Last but not least, we moderated a panel on growlers and wine kegs. Featuring Master Brewer Kevin Reed of CraftWorks Restaurants & Breweries and growler compliance expert Alex Heckathorn, we covered cutting edge issues presented by the popular demand for growlers.

Check out photos from the conference.

Tennessee Governor Haslam Signs High Alc Brewery and Retail Liquor Store Tastings Law

2011-06-13T19:27:00.000-07:00

Governor Haslam has signed the high alc brewery and retail liquor store bill into law. It is official. As of Friday June 10, 2011, brewing high alc beer is truly legit in Tennessee, and retail stores can offer tastings at the store. Huge changes to Tennessee law.

Read more about high alc beer brewing.

Read more about retail store tastings.

Coyote Ugly Vindicated: Coyotes Approved to Advertise at Nashville CMA Fest

2011-06-10T20:08:00.000-07:00

CMA Fest fans swarmed downtown Nashville much like the cicadas in May. Unlike the red-eyed bugs, CMA festival goers are looking to spend money, and competition among downtown Nashville bars is intense.

This Thursday, the first big day of the fest, Coyote Ugly Coyotes were asked to stop promoting the Saloon to festival goers on lower Broad. Police were polite but firm: no handouts in the main festival area on lower Broad.

Coyote Ugly contacted us Thursday afternoon to see if there was a way to legally advertise to the thousands of festival goers on lower Broad. Based on fliers distributed earlier in the day, scores of fans were taking advantage of the promotions handed out by Coyotes.

Metro police responded well. Police allowed Coyotes to hand out leaflets Thursday night and Friday, while Metro considered the legal issues.

Late Friday afternoon, Police Chief Anderson sent advice to Metro Police. Handing out leaflets is ok. Selling on the streets without a license is not.

Vindicated, the Coyotes are braving the heat and crowds to drum up business at the Fest. We appreciate Metro's attention to this issue and thank Police Chief Anderson, Metro Law Director Sue Cain and their staff.

Free Shots of Tequila to be Legal in Tennessee Liquor Stores

2011-06-09T21:08:00.000-07:00

Tennessee is legalizing consumer tastings of wine and spirits in retail package stores. The new law will take effect upon signing by the governor.

Previously, package stores had to conduct tastings at restaurants or other venues. Consumption of alcohol was absolutely taboo at liquor stores.

The new law is quite simple: "A retail licensee may offer complimentary samples of the products it sells for tastings to be held on the premises of the retail licensee. Such tastings shall be for sales, education and promotional purposes. No person holding a license under § 57-3-203 shall, directly or indirectly, provide any products, funding, labor, support or reimbursement to a retailer for the consumer tastings authorized by this subdivision (2)."

The simplicity of the law leads to questions. Under existing tasting laws, notices of tastings are required and tastings must be poured by licensed servers, for example. Under the new law, existing tasting rules are not necessarily applicable to package store tastings.

Does this mean that a liquor store can offer customers a taste of any product for sale at the store, at any time? Can a retailer leave bottles of wine and spirits open on a table for customers to pour samples? The new law provides no guidance.

We strongly encourage store owners to consult with insurers before offering tastings. Existing policies may not cover tastings in the store. Insurers may also impose limitations.

The ABC is undoubtedly considering regulatory rules to govern liquor store tastings. Until ABC regs are in place, we encourage stores to be responsible with tastings. This should minimize liability risks, as well as curb public opposition to liquor store tastings during the regulatory approval process.

Brew Baby Brew

2011-05-31T20:19:00.000-07:00

Tennessee is poised to "legalize" brewing of high alcohol content beer. Much to the surprise of Tennessee beer brewers, a bill before the state legislature earlier this year would have outlawed brewing high alcohol beer for most breweries.

Like many of its liquor laws, Tennessee has an odd rule about beer. Regular beer is beer that has an alcoholic content of 5% or less by weight. Don't confuse this with the alcoholic content by volume, which can push the measurement to nearly 7%.

In Tennessee, any beer over 5% by weight is an alcoholic beverage, taxed at a higher rate, sold through liquor distributors and not available for sale at groceries and convenience stores. Called high alc beer by many in the industry, high alc beer can only be purchased at package stores and at restaurants and bars, after payment of additional taxes that push the price up considerably.

In most states, and at the federal level, there is no distinction between high alc and regular beer. Both are treated and taxed the same.

The Scoop.

We represented a city that was trying to recruit a brewery to locate in Tennessee. We wanted to clarify that brewing high alc beer was legal. Most folks thought it was, and Nashville brewery Yazoo had a permit and was brewing a high alc beer called "Sue." But the law was not entirely clear. The law allowed manufacturers to "distill," but not brew alcohol, and high alc beer was not listed among the products that were defined as alcoholic beverages under state law.

Some important folks thought differently about the legality of brewing high alc beer, and a squabble ensued. After the dust settled, a bill was passed that allows breweries to obtain a special license to brew high alc beer, as well as some other privileges. We expect the governor will sign the bill into law soon.

Lipman Brothers Picks Up Blockbuster Brands

2011-05-26T07:52:00.000-07:00

Nashville liquor wholesaler Lipman Brothers is poised to become the largest single liquor wholesaler in the State of Tennessee. Starting August 1, 2011, Lipman will acquire all of the brands of Tennessee Wine & Spirits, including Crown Royal, Smirnoff, Jägermeister, Evan Williams, Seagram's 7 Crown and Grey Goose. These will join Jack Daniels, Bacardi, José Cuervo and Tanqueray Gin at Lipman.

Lipman will begin consolidating operations on August 1 and expects to have all the inventory shipping from Lipman within two weeks.

The Tennessee Alcoholic Beverage Commission approved the transaction yesterday at its regular meeting on May 25, 2011.

Foreign Passport Proof of 21 Age for Booze?

2011-05-24T19:47:00.000-07:00

Chipotle Mexican Grill is at the center of a brewing debate about the validity of foreign passports as proof of age for beer and liquor sales. Having recently been hammered in the press over employment of illegal Mexican immigrants, the Mexican-themed chain has stepped into another briar patch.

According to news reports. Laurencio Valadez, a Mexican national, said a Chipotle store manager rejected his Mexican passport as proof of his identity and age, saying several times that only a U.S. passport would be acceptable, according to a legal complaint filed against the company.

"My client felt particularly humiliated being a Mexican, at a self-advertised Mexican grill, who was denied service,' Bruce Nestor, a lawyer for Valadez, now 39, said in an interview.

We understand the difficulty of monitoring the validity of 50 different state driver's licenses as proof of age. Requiring that passports from other countries be accepted makes the job significantly harder.

We will watch this case, as it may impose a duty to accept foreign passports as proof of age.

For now, we encourage licensees to use common sense. If a customer presents a foreign passport and appears to be 21 or younger, try to obtain another age ID or refuse service. If the customer with the foreign passport appears to be older, like the 39 year old Mexican plaintiff, let him belly up to the bar.

Federal Calorie Labeling Not to Include Booze?

2011-05-19T20:32:00.000-07:00

The FDA says that the impending mandatory calorie labeling requirement will not apply to alcoholic beverages. Plans are to require all restaurants with 20 or more locations to post calorie counts on menus and menu boards in 2012.

According to the Wall Street Journal, “the new regulations will mean that the calorie counts of everything from a Chipotle burrito to a Starbucks Frappuccino must be posted in a font size that is ‘clear and conspicuous’ and color that's ‘at least as conspicuous as’ the print listing the menu item, according to the agency's guidance.”

But booze seems to be the exception, despite claims that alcohol is a big source of empty calorie consumption among Americans.

Smaller chains and independent restaurants should follow the menu labeling debate, as many observers believe the rules may eventually be expanded to include all food purveyors.

Regime Change at the Tennessee Alcoholic Beverage Commission

2011-04-25T18:49:00.000-07:00

John Jones has chaired the Tennessee ABC for longer than we recall. Long before Al Gore invented the Internet and direct shipment of wine. Through at least three gubernatorial administrations.

At the conclusion of April's regular ABC meeting, Commissioner Jones announced that he was stepping down as chair. He mentioned his faltering eyesight, but gave no firm reason.

The resignation appeared to have been planned. After Commissioner Jones spoke, Commissioner Bryan Kaegi nominated Commissioner Mary McDaniel as Chair. Jones promptly seconded and closed the matter for a vote. Commissioner McDaniel's nomination was approved.

Although some might attribute the selection of Commissioner McDaniel as being political, we think not. Republican Governor Haslam could have easily chosen not to reappoint Commissioner Jones, who has long ties to both the state Democratic party and the Tennessee ABC. The ABC is a three member Commission that has not been traditionally dominated by the Chair, and has been blissfully free of partisan politics.

In other ABC news, ABC Commission meeting dates have been changed to the fourth Wednesday of each month, beginning in July. June's meeting will be held on the third Wednesday, because ABC Director Danielle Elks will preside as president at the annual meeting of the National Conference of State Liquor Administrators, held during the last week in June.

TABC Director Asks: Where Are My Minions?

2011-04-18T19:13:00.000-07:00

Staff is pretty lean at the Tennessee ABC headquarters in Nashville. There are numerous high level vacancies. Most recently, Acting Assistant Director Melinda Arrington gave notice that she will be leaving at the end of the month. Former Assistant Director Carolyn Smith departed late last year. Senior ABC agents Mike Cawthon and Al Watson have been forced to retire because of budget constraints. Hiring freezes have left a number of key positions vacant.

The ABC is a thinly staffed agency charged with overseeing several thousand licenses. Director Danielle Elks is now filling the role of three staff attorneys and also leading the agency. ABC agents are sparse. Although licensees do not look forward to stings, ABC agents are vital to conducting inspections necessary for issuance of licenses to new businesses and changes of ownership.

So far, the ABC has done an admirable job of working through this tough time. We hope that help is on the way, as backlogs are certain to build up and morale can easily suffer.

Wine Withers on the Vine

2011-04-13T19:45:00.000-07:00

Once again, wine in grocery stores is DOA in Tennessee. Hopes were high this year that business-friendly Republican majorities in both houses and a Republican governor would approve a popular change in state law to allow wine to be sold in groceries. One recent poll shows 69% favor wine in grocery stores.

But late today, April 13, 2011, the Tennessee House State and Local Government Subcommittee voted to defer the bill until 2012. This is the legislative equivalent of the death penalty for passage of the bill this year.

We frequently hear urban and suburban consumers asking: "Why don't we have wine in grocery stores. This is a no brainer."

For the record, we have not been hired by anyone to advocate on this issue. We have clients on all sides and remain neutral on the topic.

But Why Can't I Kroger for Wine?

Liquor has a storied history of controversy and change is not something that happens easily for liquor laws. Remember, this is a nation that outlawed all liquor sales less than 100 years ago with prohibition.

For decades, Tennessee legislative liquor politics has been dominated by the unholy alliance of those opposed to liquor and liquor industry businesses. Southern Baptists and liquor wholesalers often side together on liquor issues.

In the case of wine in grocery stores, liquor critics, liquor wholesalers, retail liquor stores and beer wholesalers found common ground. Critics opposed selling wine in more stores, particularly grocery stores frequented by minors. Seeing mommy and daddy picking up a bottle of wine at Kroger might make alcohol consumption more acceptable. Beer distributors feared that consumers might choose a bottle of wine instead of a profitable six pack of specialty beer.

For wholesalers, having 10,000 pound gorillas like Kroger and Wal-Mart for customers is a daunting change from serving small mom and pop liquor stores. Many retail liquor stores fear the loss of wine sales will put them out of business. Americans tend to favor convenience - look at the number of liquor stores located next to grocery stores.

Does Politics Matter?

Is the Pope Catholic?

Grocery stores have mounted a strong campaign for wine for five years. News media have focused attention on wine.

But Tennessee wholesalers and retailers have been active in Tennessee politics for decades. In particular, Tennessee wholesalers have worked hard to historically prevail in protecting their businesses with favorable liquor laws. Tom Hensley, the wholesale association lobbyist known as the Golden Goose, has been an influential presence on capital hill for decades.

Liquor wholesalers are generally strong Tennessee family businesses. We understand why owners want to protect the value of lucrative businesses that can be passed down to generations of children. Horizon Wine & Spirits was recently sold to a company controlled by Warren Buffett for reportedly more than $100 million dollars. In a 2008 interview, Horizon reported annual sales of over $90 million and more than 190 employees. These are large lucrative companies almost entirely owned by Tennessee residents.

Prohibition

Following the repeal of prohibition, liquor laws sought to restrict access to liquor. The restrictions affected the profitability of selling alcohol. Making liquor more expensive to buy at fewer locations was one of the goals. Liquor wholesalers and retailers profited from the post-prohibition goal of making liquor more expensive and difficult to purchase.

These rules may seem antiquated to modern consumers, but are firmly established in Tennessee's post-prohibition liquor laws. Change will not come easily.

Timing

Being in the midst of a recession did not help wine in grocery stores. Retail liquor owners made a strong case to legislators that wine in grocery stores would drive hundreds of small mom and pop businesses, all required to be owned by Tennessee residents by law, out of business. Although grocers claimed wine would drive job growth at Kroger and Wal-Mart, folks were understandably skeptical that wine would do more than displace other skews at stores. With all of the big grocery players being large out of state corporations, insiders believe the retailers had an advantage in this economy.

Not Dead Yet? Wine in Tennessee Grocery Stores Falters, Again

2011-04-12T18:27:00.000-07:00

The patient has a pulse, but the undertaker is standing by.

Despite strong consumer demand for wine in grocery stores and an overwhelmingly Republican legislature that trumpets promotion of business issues, wine in grocery stores apparently lacked enough votes to clear the Senate State and Local Government Committee today, April 12 2011. Instead, the Committee deferred the vote for one more week.

At last week's meeting, both sides argued their positions, but no vote was taken. Insiders say that a delay on voting means there are not enough votes for approval.

The bill must be voted out of the Committee to be considered by the full Senate, which is required to pass the bill into law. Generally, bills that do not make it out of Committee fail, even if a majority of legislators favor the law.

Stay tuned for more on this controversial topic.

Legalizing Liquor at Shelby County Restaurants

2011-04-11T19:52:00.000-07:00

Check this off as something that happens only in Memphis.

In an unusual fluke, about 7 restaurants are licensed by the ABC for full liquor licenses, but are outside the city limits of Memphis and are in legally dry areas of Shelby County. Although Memphis and most satelite cities have held a local option election to legalize liquor by the drink, Shelby County remains dry for wine and spirits.

The 7 restaurants are all located near the Memphis city limits and were probably identified as being in Memphis. From our experience, the city limits are not well known by some Memphis officials. In 2009, we obtained a Memphis beer permit at a site that was later determined to be outside the city limits.

The issue recently became a problem when the ABC discovered at renewal that an LBD licensee was in a dry area. Senator Reginald Tate, who represents most of the areas affected, introduced legislation to make Shelby County wet. The legislation is currently pending and licensees located in the dry areas of the county are undoubtedly looking for passage of the law to allow the ABC to renew licenses. Read more about the bill here.

Check back for updates on the bill.

Whining for Wine?

2011-03-29T14:31:00.000-07:00

Today, pro-wine in grocery advocates did more than whine about their cause. But insiders say that the wine law lacks the votes to get out of committee in the Senate.

At Tuesday's Senate Committee hearing, a local Memphis grocer with five stores testified about the many benefits from having wine in his stores. He committed to adding an extra employee to each store. He believes wine shoppers will pick up more expensive food items.

Chip Christianson of the retail wine association returned fire. Christianson asked retail store owners in the audience to stand, so that Senators could put a face with every small business owner that might be put out of business by wine in groceries.

Brian Reisinger of the Nashville Business Journal has more of the scoop.

Welcome New Tennessee ABC Commissioners

2011-03-24T19:08:00.000-07:00

Governor Haslam has made his choice for the three Tennessee ABC Commissions.

The Governor renominated current Chair John Jones, most likely to bring historical perspective to the three person board. A Jones family member has been on the Commission since its original formation in the 1960's. The nomination of Jones is unusual given his historic ties to the Democratic party, but should bring continuity to application of the complicated and often arcane laws that regulate liquor in Tennessee. We see this as consistent with Governor Haslam's broad vision of enhancing Tennessee's reputation as a business-friendly state.

The two new Commissioners are Mary McDaniel and Bryan Kaegi.

Commissioner Kaegi, the Middle Tennessee representative, has a long history of support for prominent Republican campaigns. He currently works with Persuasion Partners, a high-profile political campaign service. Commissioner Kaegi served on the 2010 Tennessee Victory Leadership Team that led and funded the successful TNGOP get out the vote campaign, was Finance Director for Senator Lamar Alexander and also the former Finance Director for the Tennessee Republican Party. He served as Finance Director for the Tennessee Victory program for President Bush in 2000 and 2004. His sister, Kim Kaegi, was Governor Haslam’s finance director.

Commissioner McDaniel, the West Tennessee representative, is recently retired FedEx Vice President of Aircraft Materiel. Her career with FedEx spanned 30 years and she managed aircraft parts inventory and technical support for the FedEx global fleet. She is President of the Board of Trustees for Southwest Tennessee Community College, her alma mater, and leads fundraising efforts for the college.

We say farewell to Senator Harlan Matthews and Cynthia Bond, who served the state well as Commissioners for the past eight years.

Hendersonville Flirts with Liquor Stores at Indian Lake

2011-03-21T19:30:00.000-07:00

Census results are leading to changes in many cities that limit the number of liquor stores based on population. Hendersonville may add one more liquor store to its quota for liquor licenses. More importantly, the city may allow liquor stores to locate off the Gallatin Road corridor. Currently, all liquor stores in Hendersonville must be on Gallatin Road.

Commercial growth in Hendersonville has recently focused on Indian Lake Boulevard. The city has added high profile retail stores and restaurants at Indian Lake. But city law prohibits liquor stores from being licensed in the trendy district.

At a March 15, 2011 meeting, a Hendersonville committee recommended that the Board of Mayor and Alderman change the law to allow liquor stores to be licensed in additional locations, including Indian Lake Boulevard. We do not expect any immediate change to the law, but after careful study, Indian Lake may be cleared for liquor stores.

Read the full story from the Hendersonville Standard.

Big Time Tea-Totallers in Nashville and Memphis?

2011-03-10T15:47:00.000-08:00

From the Nashville Business Journal.

Tennessee — home of Jack Daniel's, Beale Street and country music — landed three cities on The Daily Beast’s list of “soberest cities.”

Nashville, home to Yazoo Brewing Co., ranked No. 1 on the list. The Volunteer State swept the podium, with Kingsport-Bristol ranking No. 2 and Memphis — Memphis! — ranking No. 3.

We’ll let The Daily Beast briefly describe their methodology: “To find the driest towns in America, we considered the average alcohol consumption over a month, the percentage of binge and heavy drinkers, and the portion of the population that suffers the potentially dire health consequences of drinking too much.”

In Nashville, the typical adult consumed 8.92 drinks in an average month. Boston, where adults slam down the most drinks, averages 14.4 drinks per month.

See the entire list here.

Spring Forward and Lose an Hour at the Bar?

2011-03-02T19:23:00.000-08:00

Every year, we hear from bar and night club owners about the lost hour when we "Spring Forward" for Daylight Savings Time. At 2 am on Sunday March 13, 2011, the time suddenly becomes 3 am. Closing time. So do you lose an hour of sales?

The Tennessee ABC has informally announced that establishments can stay open the extra hour. Keep pouring until 4 am Daylight Savings Time.

Wine in Tennessee Convenience Stores?

2011-03-02T19:04:00.000-08:00

We hear it all the time - will wine in grocery stores pass this year. We bet our money on "No." At least not this year.

Convenience stores are a big part of the ongoing debate. Many do not know that convenience stores have been lobbying with grocery stores to be able to sell wine.

This has drawn concern from drunk driving organizations as well as inner city legislators fighting the proliferation of alcoholics that grab a cheap buzz at the corner market. In particular, the idea of fortified wines being available alongside grab and go beer - often featured on ice at check out counters - is quite controversial.

A pint of fortified wine is equal to about 5 cans of 12 ounce beer. Its a quick and powerful buzz that puts even a large adult male above the legal intoxication level for driving. Regular wine is about 2.5 times more intoxicating than beer, per ounce.

Convenience stores are well represented in the Tennessee Legislature. Unlike the large grocery store chains, there are Tennessee-based convenience store chains like Mapco that have more of a stake at influencing Tennessee law. With tobacco revenue continuing to drop, adding a new high-profit margin product line has to be appealing.

Waiting with Baited Breath: Who are the New Tennessee ABC Commissioners?

2011-03-01T19:20:00.000-08:00

Governor Bill Haslam will select new Commissioners for the state Alcoholic Beverage Commission. Governor Haslam took the oath of office as Tennessee's 49th governor on January 15, 2011. The alcoholic beverage industry has been awaiting his Commission selection for 45 days, as of March 1. Understandably, this has not been a priority.

Governor Haslam appoints three ABC Commissioners: one from the Eastern, Middle and Western divisions of Tennessee. The Commissioners set important ABC policies and rules on state liquor issues. The makeup of the new ABC could lead to dramatic changes about how the ABC functions and what regulations are enacted. As an owner of a convenience store chain that sells beer, Pilot Oil, Governor Haslam may have first hand experience of how Tennessee liquor laws impact industry.

Since the founding of the ABC in the 1960's, a member of the Jones family from Johnson City has been on the Commission. John Jones currently Chairs the Commission. Commissioner Jones has ties to the Democratic Party. Industry insiders wonder if a Republican Governor will retain a Jones family member.

Stay tuned for more info.

Beware of the Nashville Tax Phantom

2011-03-01T18:34:00.000-08:00

Blame it all on computers.

Metro Nashville is still charging liquor licensees for the liquor-by-the-ounce "permit," but is not sending out invoices. If you conveniently forget to pay the tax, you are still liable.

The Nashville clerk's office reports that a computer glitch has made it impossible for payment notices to go out. There is no projection of when the problem will be fixed.

In the meantime, many businesses may be ignoring the liquor-by-the-ounce tax, which is approximately $1,000, depending on ABC license fees. The tax can add up to a big bill, if not paid for several years.

When the computer glitch is fixed, we expect that the clerk will demand payment for all liquor-by-the-ounce taxes, all at once. Owners that fail to pay the tax for several years may be forced to cough up several thousand dollars. No word on whether penalties and interest will be assessed.

We recommend that you check your books to ensure you have been paying the tax, and plan to pay it going forward. If you have not, get caught up as your cash flow allows. Otherwise, you may be surprised by a huge tax bill one day.

Tennessee ABC Server Permit Alert

2011-02-20T19:11:00.000-08:00

At this month's February 2011 ABC meeting, the Commission decided personal checks for ABC Server Permits will no longer be accepted. The ABC stopped taking cash last year.

Effective immediately, the ABC will only accept money orders, cashiers or certified checks from servers for alcohol permits. We presume this includes retail liquor store clerks and wholesale employees.

Readers will probably not be surprised to learn that servers bounced too many personal checks.

Menu Labeling Headed Your Way

2011-02-13T19:02:00.000-08:00

As part of healthcare reform, the federal government enacted a menu labeling requirement that is set to become effective March 23, 2011. The Food and Drug Administration is in the process of finalizing the rules to implement the new law. The FDA says it is on schedule to issue regulations before March 23, 2011.

Menu labeling is mandatory for restaurants and retail food establishments with twenty or more locations with the same name, regardless of ownership. Menus and menu boards must include a calorie count for each item. The calorie count is required to be in the same type size as prices.

Various sources indicate that there will be a grace period before enforcement by FDA. For more information, visit.

We do not expect Congress to intervene and roll back this law. One of the primary purposes of the federal law was to eliminate a differing and confusing set of menu labeling laws enacted by various states and cities. The federal law pre-empts the state and local laws, making it much easier for restaurants to comply.

Tennessee Bar License Owners Beware

2011-02-07T19:43:00.000-08:00

A reliable source at the ABC reports that an internal decision has been made to wait a full calendar year from issuance of a limited service license until the license is eligible for an audit for food sales. Because license fees vary by up to $2,000 based upon food service, we suspect that less scrupulous bar keeps will fudge on food sales to save money. This could create serious problems for the license.

The ABC treats false statements on applications as a serious offense. We suspect that stiff fines will be issued if audited food sales significantly vary from the amount set forth in the food sales affidavit.

Every limited service applicant is required to sign an affidavit stating the percentage of food sales. We encourage applicants to ensure that the reported amount of food sales is realistic. The formula for calculating the figure is not complicated, but it is easy to misapply.

Staff Shuffle at the Tennessee ABC

2011-02-07T19:33:00.000-08:00

Melinda R. Arrington has been named Acting Assistant Director of the Tennessee Alcoholic Beverage Commission. Ms. Arrington was formerly ABC Staff Attorney and primarily assisted with hearings and citations. She now assumes the role previously held by Carolyn Smith and directly oversees liquor by the drink.

Ms. Smith departed for the Attorney General last month. Incoming Governor Haslam will appoint three new ABC Commissioners in the near future. We suspect that the official Assistant Director position will remain open for some time.

Tennessee ABC Forcing Conversion to Limited Service Licenses

2011-02-07T18:38:00.000-08:00

If you are a bar owner that honestly discloses that your food sales fall below fifty percent, you may soon receive a letter from the ABC advising that your restaurant license will be revoked if you do not apply for a limited service restaurant license. These notices are currently being sent in advance of license renewals.

The ABC provides a thirty day grace period after the renewal date to complete an application for a limited service license. If the application is not complete within thirty days of the renewal date, the ABC has threatened that it will set the license for revocation.

We strongly encourage any bar owner that receives the notice to act promptly to ensure that its limited service restaurant application is filed and completed within the time allotted by the ABC.

How Much Could a Free Champagne Toast Cost?

2010-12-29T04:42:00.000-08:00

Just before the New Year, many restaurants and bars advertise "free" champagne toast at midnight. Which begs the question: How much could a free champagne toast cost?

If the ABC notices, free champagne can lead to a fine of $250 or more per store. Although the ABC modernized many of its advertising restrictions last year, it is still illegal to give away alcoholic beverages. The prohibition includes offering to give away liquor, even if a cover charge or other expense is included as a requirement to "pay for" the free liquor.

Most experienced owners and managers know that there are simple ways to avoid breaking the law, while still holding a time-honored champagne toast at midnight. For example, it is legal to advertise "$10 per person cover includes champagne toast at midnight."

Clever variations on the word "free" can still lead to a citation. Avoid the trap and never advertise "free," "complimentary" or any other variation on the gratis theme.

Tennessee ABC Assistant Director Steps Down

2010-12-14T14:03:00.000-08:00

What do you want from Santa this holiday season?

The resignation of Tennessee ABC Assistant Director Carolyn Smith?

What? Say it Ain't So!

Yes, Carolyn Smith will part from the ABC on January 10, 2011. She is returning to the Tennessee Attorney General's Office.

In her absence, recently hired staff attorney Melinda Arrington and ABC Director Danielle Elks will cover for the 2,863 liquor-by-the-drink licensees. We expect that there will be delays for an indefinite time, particularly for new licenses.

Carolyn was a top notch regulator. She made fair decisions, stuck to her word, and was always pleasant to work with. She will be greatly missed.

I renewed my liquor license late: How bad could it be?

2010-10-28T11:35:00.000-07:00

Late renewal of an ABC Liquor License is a relatively common occurrence. Renewals can be held up by tax clearance, bond changes or misplaced priorities. The Tennessee ABC charges a fine of a few hundred dollars for late renewals. How bad could a late renewal be?

Ask the owners of Tin Roof II in Franklin. Tin Roof has been sued for ten million dollars, arising out of an alleged bar brawl. Among the allegations against Tin Roof, the plaintiff asserts that Tin Roof did not have a liquor license on the day of the bar brawl. The plaintiff asserts that it was illegal for Tin Roof to be serving alcohol to three patrons that allegedly became drunk and assaulted the plaintiff.

Turns out, Tin Roof renewed their liquor license late.

Because you never know what can happen during the gap period, we always advise clients to avoid late renewals. Lesson learned: listen to your lawyer. Renew on time.

ABC Lowers Food Requirements for New Bar Liquor License

2010-10-26T06:51:00.000-07:00

At the Tennessee ABC Meeting Thursday October 21, 2010, the full Commission unanimously voted to exclude beer sales from the calculation of the percentage of food sales required for a limited service liquor license. The law requires that a bar sell at least 15% food. Going forward, the Commission will require that food sales be at least 15% of the total of food and liquor sales - excluding beer, tickets, merchandise and all other revenue. The Commission also ruled to exclude taxes, which eliminates the 15% liquor tax and lowers the amount of liquor sales.

The new rule lowers the amount of food sales required to obtain a new bar license. It also lowers license fees for many applicants. Many applicants will find that with beer and other revenue excluded, food sales are over 20% or 30%, saving $1,000 annually in license fees.

With the new rules in place, we expect that the ABC will be able to approve completed applications. Previously the ABC stopped approving bar applications pending resolution.

Tennessee ABC Puts Hold on Most 15% Liquor Apps

2010-10-06T19:26:00.000-07:00

At the September 2010 ABC meeting, the Commission did not reach a final conclusion about including liquor and sales taxes in the calculation of liquor sales for the new bar license. As a result, it looks like most bars applying for the 15% license are now on indefinite hold, until the Commission resolves the question.

The ABC is trying to decide if the taxes should be included as part of liquor sales. Liquor taxes roughly average 24% of liquor sales, which means that many bars close to the 15% threshold would really benefit from not having taxes included in the calculation of liquor sales.

Legally, we believe that the taxes should not be included. Taxes are not revenue for bars - bars only collect the taxes for the state.

Check back to see how this question is resolved.

Tennessee ABC to do Random Background Checks

2010-09-28T13:28:00.000-07:00

The Tennessee has decided to start conducting random criminal background checks on owners, directors and officers of companies applying for liquor by the drink licenses. The ABC already requires disclosure of crimes on ABC Questionnaires - the two page pink forms.

For years, the ABC has conducted random background checks on server and employee permit applications. Over the years, we have noticed several employees that have had permits rejected because of crimes that were discovered in background checks.

The ABC uses the Tennessee Bureau of Investigations for background checks.

The ABC has not yet expanded the scope of disclosures required for complex corporate transactions, but this may be the first step toward full disclosure up to the ultimate owners of LBD applicants.

New Guide to Gun Free Dining

2010-09-22T09:15:00.000-07:00

Gun Free Dining Tennessee has launched what is destined to be the go to source to find restaurants and bars that prohibit guns. Visit the site often for dining choices. The nonprofit group's effort was recently featured in a top of the first page article in the Tennessean and on News Channel 5.

Visit regularly to see if your favorite place for eats has posted signs prohibiting guns.

Remember, if you can order a drink, it is legal for permit holders to carry a gun, unless the place posts no gun signs.

Nashville Changes Distance for Beer Permits

2010-09-22T08:51:00.000-07:00

Last night, Metro Nashville Council approved a new law that eliminates the Beer PUD and replaces it with a shorter and much less expensive process. A big shout out to Council Members Erik Cole and Jamie Hollin for sponsoring the new law.

Nashville beer laws prohibit any beer permit from being issued to a place that is within 100 feet of a house, church or school. Restaurants with an ABC liquor license could apply for a Beer PUD for an exemption to the 100 foot rule, but the filing fee is $1,975, the process is complicated and takes months to complete.

Under the new law, Restaurants with an ABC liquor license can ask their local city counsel member to introduce a resolution, which can be passed on first reading after a public hearing. There is no filing fee, but the costs to give notice and post signs must be paid by the restaurant.

The law will take effect once signed by the Mayor.

ABC Issues First Bar Liquor License

2010-09-07T10:56:00.000-07:00

This morning, the Tennessee ABC issued the first "limited service license" under the new liquor law passed earlier this year. The law allows bars, clubs and other venues to be legitimately licensed by the ABC as a limited service restaurant.

We believe this marks a momentous occasion. This is the first time since before prohibition that the state has legitimately issued a liquor license to a bar. Previously, bars had to exaggerate (or flat out lie) about food sales being more than 50% of gross revenue.

In a sign of how much things have changed in Tennessee, it is also interesting to note that the first legitimate bar is not a honky tonk or country music hot spot. The first legitimate bar in Tennessee is an upscale gay bar and fashionable restaurant located on Church Street.

If you would like to learn more about the new bar law, and how the Alcoholic Beverage Team at Bone McAllester Norton can help, email me.

Metro Nashville Bill to Restrict Restaurant Locations

2010-09-02T08:30:00.000-07:00

Metro Nashville Council Member Vivian Wilhoite has introduced legislation that would prevent restaurants, nightclubs and bars from being within one hundred feet of a “religious institution,” a “community education facility,” playground, daycare, a single or two family residence or a park. The restriction would apply regardless of whether the restaurant sells beer, wine or spirits. It applies to McDonald’s and Shoney’s, for example.

Ironically, another bill is moving forward that simplifies the process for obtaining a beer permit where a restaurant is less than one hundred feet away from a house, school, church, park or daycare center. If passed, Wilhoite’s legislation would limit the exemption to existing restaurants.

Political insiders indicate that Wilhoite is considering a run for at-large council. She is term limited in her District 29 seat, which includes neighborhoods around southern Percy Priest Lake. Wilhoite finished a distant second in the Democratic Party primary race for Juvenile Court Clerk, grabbing about 15% of the vote in a crowded field where winner David Smith captured just over 50% of the votes. However, Wilhoite polled higher than a number of well known opponents.

The legislation may be an attempt to gain public attention for her at-large bid.

As currently drafted, the legislation is flawed in a number of ways. It does not specifically allow a restaurant to be sold, where a restaurant is within the one hundred foot boundary. It also does not prohibit the sale of a restaurant located in the 100 foot boundary. Although the bill specifies how the distance measurement is made, no government agency is charged with making the measurement or enforcing the law. There is also no grandfather provision. Terms like “religious institution” and “community education facility” are not defined.

The bill is scheduled for a second reading at the September 7 meeting of Council. Check back for updates.

Bredesen: 'Guns in Bars' Law 'Still a Stupid Idea'

2010-09-01T14:41:00.000-07:00

Knoxville News Sentinel Reporter Tom Humphrey has Governor Bredesen's response to the new Guns in Bars suit filed by a Jackson's waitress on his blog.

Humphrey reports that Bredesen said he agrees that the guns in bars law endangers workers. "I think it's a workplace safety issue..."

We suspect this quote will appear in the litigation.

We Have Moved

2010-08-26T13:48:00.000-07:00

Welcome to our new home for Last Call. You can read older posts of Last Call at the former blog location at lastcall.blog.com

More Red Tape for ABC Liquor License Renewal

2010-08-26T13:26:00.000-07:00

It is a familiar story for restaurant and bar owners across Tennessee. While hustling to complete your renewal of the liquor license – usually right before the license expires - the ABC delivers the dreaded news: you failed to obtain “tax clearance” from the Department of Revenue. This year, the number of businesses failing to meet tax clearances has dramatically increased.

Revenue began collecting city and county business taxes earlier this year. Some legislators believed that cities and counties were doing a poor job of collecting business taxes and assigned this task to Revenue.

This time, the skeptics were correct. When asked for tax clearance, Revenue is identifying a number of businesses that have failed to file business tax returns or to pay business taxes. To make matters worse, often Revenue does not have accurate information about what taxes and returns are due.

Business taxes are holding up a number of liquor license renewals at the ABC.

We advise that restaurants and bars begin the renewal process earlier this year, in case tax clearance becomes an issue. Keep in mind that tax clearance is required for all locations licensed under a single company. We regularly see renewals in one city held up by tax issues in another city.

ABC Gets Two Years

2010-08-26T13:10:00.001-07:00

ABC staff appeared before the State and Local Subcommittee of Government Operations Committee Thursday, August 19, 2010 to review termination of the ABC as a separate agency. The ABC is currently scheduled to “sunset” next summer.

During the recent legislative session, there was discussion of merging the ABC into another agency, like the Department of Revenue. Consideration of the potential merger was deferred near the very end of the legislative session, with a bill that extended the duration of the ABC for another year.

According to ABC Director Danielle Elks, “I think it was a very good meeting.” Based on comments made at the meeting, it appears that the subcommittee will recommend extension of the ABC for two years. The two year extension should take some pressure off ABC staff members that could easily be worried about trying to find a new job during a recession.

*Last Call*