Wine in Grocery Store legislation, which we affectionately call WIGS, allowed Tennessee grocery stores to sell wine beginning July 1, 2016, with a food store license issued by the Tennessee Alcoholic Beverage Commission.
WIGS was a messy compromise. We expected that WIGS would be revised to fix thorny issues.
A bill pending in the 2017 Tennessee Legislature will change the legal definition of wine and, in our humble opinion, allow food stores to legally sell many wine coolers and wine cocktails that are already on shelves.
Here is the problem. Current law says that wine sold by a grocery store must be:
the product of the normal alcoholic fermentation of the juice of fresh, sound, ripe grapes, with the usual cellar treatment and necessary additions to correct defects due to climatic, saccharine and seasonal conditions, including champagne, sparkling and fortified wine of an alcoholic content not to exceed eighteen percent (18%) by volume. No other product shall be called “wine” unless designated by appropriate prefixes descriptive of the fruit or other product from which the same was predominantly produced, or an artificial or imitation wine.
Are you asleep yet? Seriously, the definition is so hopelessly complicated that in our opinion, it is pretty much unenforceable by the TABC.
Pending legislation expands the definition of wine to eliminate the controversy.
The Tennessee ABC describes the legislative change at Sections 4, 5, and 6 – Definition of Wine SB695-HB435 Legislation Summary
Paralegal extraordinaire Vicki reminds us of a fitting Kenny Chesney song:
Mama told them Jesus loves a sinner
His daddy said that music saved his soul
Between the rockers and the band
It’s a fitting promise land
The Tennessee state legislature is in session again and several changes are proposed for alcoholic beverages. Our friends at Nashville law firm Gullet Sanford have done such a good job summarizing the biggest bill that we link to their post here. http://gsrmalcoholicbeveragelaw.com/alcoholicbeveragecleanupbillfiled/
Here is a copy of the bill, for anyone having problems with insomnia. http://www.capitol.tn.gov/Bills/110/Bill/HB0435.pdf
Our good friend Willa reminds us of the Eric Church classic Drink in My Hand:
To fill it up, or throw it down
I got a forty hour week worth of trouble to drown
No need to complicate it, I’m a simple man
All you got to do is put a drink in my hand
Stay tuned as we continue our coverage of the 2017 legislative session.
As we read it, a bill pending before the Tennessee State Legislature would essentially bypass the Metro Nashville beer application process for restaurants, hotels and other establishments with an on-premise liquor license issued by the Tennessee Alcoholic Beverage Commission. Just file an application, pay the $250 fee and you can serve beer.
The legislation is here HB0351.
The law also seems to eliminate the 100 foot distance requirement from houses, churches, schools and other disqualifying uses. Metro Nashville requirements for beer applicants would not apply, based on our take of the bill.
The classic 1975 “I’m Just a Bill” Schoolhouse Rock Saturday morning cartoon lesson is compelling:
I’m just a bill
Yes I’m only a bill,
And I got as far as Capitol Hill.
Well, now I’m stuck in committee
And I’ll sit here and wait
While a few key Congressmen discuss and debate
Whether they should let me be a law.
How I hope and pray that they will,
But today I am still just a bill.
Frankly, we hope the legislation gets stuck in committee. We are not a fan of state laws that eliminate local laws. Although we would love to see Metro Nashville modernize the beer laws and the beer application process, Metro Nashville can and should do so by passing a city ordinance.
We also see the legislation as yet another step by the state to eliminate local beer boards. For decades, Tennessee law has given cities and counties considerable leeway to decide how and where beer can be sold. Tennessee beer laws and beer boards are often cumbersome for businesses to navigate, but are an important local control over alcoholic beverages.
For example, the 100 foot distance requirement in Metro Nashville has been the subject of considerable debate. Currently, a restaurant that is too close to a house, church or school has to publish a public notice and have their local council member introduce a city law to waive the requirement. In our humble opinion, Nashville should decide the fate of the distance requirement.
We hear lots of questions about tipping. Can I include kitchen staff in tips? Can food runners share tips? What about my sushi chef?
Restaurants, bars, caterers and venues often surprise us with innovative ideas about tipping employees. Unfortunately, tipping has not so clear laws about who can – and more importantly – who cannot share in tips.
Bone McAllester employment guru Anne Martin gives this sage advice.
There are three basic factors to consider when determining if you can share tips with an employee:
- Does the employee meaningfully participate in the customer experience?
- Is the employee part of management, which is undefined but disqualifies tipping?
- Is the position customarily and regularly tipped in the industry?
Whether an employee can be tipped really depends on specific job duties. Servers and bartenders can clearly be tipped. Prep chefs and bus boys generally cannot.
In our humble opinion, the third factor, “is this a position that is normally tipped,” works against innovative entrepreneurs. For example, some of our restaurant clients feature food prep as a key part of the customer experience. Like innumerable cable food shows, watching your food being prepared is entertainment.
The roles of traditional servers and chefs, for example, have blurred in recent years.
In our experience, the law is slow to accept new practices. Sharing tips with chefs and other food prep staff could be risky.
It all boils down to the specific facts.
We encourage folks with good questions to reach out to Anne with specific asks email@example.com. Anne really knows her stuff and is well worth paying for staying out of trouble.
A classic Michelle Shocked tune comes to mind, although wethinks Michelle is celebrating the jam that makes Music City famous, and not so much the sweet stuff you find at Loveless Cafe:
Yeah, we have a little revolution sweeping the land
Now once more everybody’s making homemade jam
So won’t you call your friends up on the telephone
You invite ’em on over, you make some jam of your own
You’ll be making jam
If you want the best jam
You gotta make your own
We recently learned of a new downside for Tennessee retail liquor stores delivering bottles of alcohol to customers. The Tennessee Alcoholic Beverage Commission cited at least one off-premises license holder for delivering hooch to a confidential informant.
The sale to minor citation involved a call to the package store for delivery of a bottle of alcoholic beverages to a nearby hotel. The store took the order, processed a credit card and sent an employee to deliver the booze. We understand that the employee met the “customer” in the hotel lobby and carded the “customer.”
Unfortunately for the retail store, the employee misread the age and completed the sale by delivering the bottle to the underaged informant. The ABC issued a citation for sale to minor. Based on what we know, the informant presented an authentic Tennessee driver’s license with a red box around the photo, indicating that the informant was under 21.
Time and time again, we remind license holders to train employees to focus on under 21 Tennessee IDs. Please, please please. The ABC is doing a great job with underage stings. We recently blogged about 429 ABC sale to minor citations over the past year.
Willa brings up The Police’s 1983 massive hit:
Every move you make, every vow you break
Every smile you fake, every claim you stake, I’ll be watching you
E-mail us if you would like to learn more about our Red Box Carding techniques at firstname.lastname@example.org. The ABC is definitely watching you.
We love that the new Tennessee ABC under Clay Byrd is committed to transparency. A huge new development under Director Byrd’s leadership is compiling and releasing comprehensive reports of all ABC citations against license holders.
The most recent report is here. The 98 page report summarizes citations from January 2016 through the first few days of January 2017.
Our rough count shows 429 sales to minor citations in just over a year. The Tennessee ABC has deployed well-trained agents that, based on our casual observations, are successfully targeting large chains and independent restaurants, hotels and venues.
We strongly encourage license holders to double down on carding of Under 21 Tennessee driver’s licenses, which have a red box around the photo. We have been teaching Red Box Carding to help prevent failing ABC compliance checks and encourage readers to let us know if they want more info about this tested ID technique.
Our friend Willa reminds us of Brad Paisley’s classic song “Alcohol”
I got you in trouble in high school
And college now that was a ball
You had some of the best times
You’ll never remember with me
The report also shows $771,050 collected by the ABC in fines during the past year and a few days. That hits your bottom line.
Be vigilant and please let us know if you want to focus on Red Box Carding.
Turnover among Tennessee Alcoholic Beverage Commissioners is inevitable. Although the alcoholic beverage industry is relatively glamorous, as compared with morticians and auditors, for example, serving as a Commissioner is no walk in the park. Believe it or not, we are a demanding group of constituents that often have vastly conflicting agendas.
It comes as no surprise that West Tennessee Commissioner Mary McDaniel announced her resignation at this month’s January 24, 2017 ABC meeting. Commissioner McDaniel has served approximately six years. And the verb “served” sums it up nicely. Through wine in groceries, five legislative sessions and three ABC Directors. Can someone toll the Bell for Commissioner McDaniel – well, maybe not…
In all seriousness, we thank Commissioner McDaniel for all she has done for the Tennessee alcoholic beverage industry. Run DMC seems appropriate:
I’m the king of rock, there is none higher
Sucker MC’s should call me sire
To burn my kingdom, you must use fire
I won’t stop rockin’ till I retire
Commissioner McDaniel hasn’t let retirement slow her down. The ABC is only one of many social endeavors blessed by Ms. McDaniel’s hard work. Keep on rocking!
We have been remiss in not posting photos from liquor conferences. Sorry.
Reminds us of Nirvana’s All Apologies:
What else should I write
I don’t have the right
What else should I be
Last but not least, from the Tenth Anniversary Hawaii Meeting of the Alliance of Alcohol Industry Attorneys and Consultants.
The Department of Revenue recently announced major changes to liquor bonds for Tennessee restaurants, bars, venues and other liquor license holders. Read more here.
We expect some chaos, which at least keeps it interesting for us jaded old fools.
Speaking of old folks, chaos reminds us of this classic Cold War parody from Get Smart:
For those that hold more than one license in Tennessee, the proposed changes are fantastic. You will only need one bond, if you file the proper election. We will let you know when the election becomes available, probably late this year.
As we read the announcement, Revenue also says it will not change bond amounts until after September 30, 2017. No more dreaded LBD bond audit and worrying about increasing the amount of your bond at renewal, at least for a few months.
In the meantime, we strongly encourage licensees to renew bonds, CDs and cash deposits in lieu of bonds.
We follow up our Tennessee high gravity beer news with minutia that only a serious industry member like a Brewery could appreciate. The info in this post is compliments of Bone McAllester Alcoholic Beverage team member Rob Pinson, after consulting with reliable sources. This is all subject to change, as the “law” is being interpreted. We applaud Revenue for the guidance.
$100 Brand Fee
Revenue will not require this. Whether it is for new brands, existing brands, or renewals of beer between 5-8%, Revenue will not require the $100 fee (and we do not believe that the ABC has the authority to collect it either).
For beer at or below 5% ABW
Proceed as usual. Submit territorial designation form to Revenue. No renewals.
If introducing a new beer between 5% and 8% ABW
The brewery should send in the beer territorial designation form, the ABW % for the product, a copy of the COLA (if required by TTB), a copy of the label, the wholesaler contract (which is still required under the law, even though it is technically beer), and the brand registration form (ALC119). There is no fee with this registration. Revenue will register the beer brand in both the liquor brand list and the beer brand list.
If you have an existing brand that is between 5% and 8% ABW
The brewery should send Revenue a list of their brands and the ABW % for each brand. The beer brand will remain on the liquor brand list (minus wholesaler and counties) and get added to the beer brand list. Revenue is working on a letter to go out about this and we will share this when it becomes available.
Revenue will send out renewal forms for the 5/31 renewal deadline for the liquor brand list. Breweries should follow the above guidelines to make sure they receive this in the mail. There are no renewals for beer brands at or below 5% ABW.
Beer Barrelage Tax
I have also confirmed that Revenue expects wholesalers to pay the $4.29 beer barrelage tax and not manufacturers. Although we disagree with this interpretation of the law, we are not the Tax Man. Tax on beer self-distributed by the brewery or sold on site is still subject to the tax and paid by the brewery.
We think of the classic tax song Fortunate Son by Creedence Clearwater Revival:
Some folks are born silver spoon in hand
Lord, don’t they help themselves, oh
But when the taxman comes to the door
Lord, the house looks like a rummage sale, yes