Beer and Taxes – 40 OZ to Freedom

By - January 30, 2013 | Alcoholic Beverage Law | Email Will Cheek

Tennessee breweries are quietly pursuing legislation to make the state beer tax more competitive with other states. Tennessee has the notorious distinction of having the highest beer tax in the U.S.

Sin taxes on alcohol are designed to curb consumption of alcohol by raising the price of beer. Tennessee’s beer tax does a poor job of accomplishing moderation.

Instead of equally raising the tax on all beer, Tennessee’s beer tax is based on the price of beer, making it cheaper to buy cheap beer. The Tennessee tax system actually encourages cost-conscious consumers, like college students, to buy cheap beer, because the tax rate is lower on cheap beer.

Better beer makers pay a higher tax in Tennessee, which for beer aficionados, defies logic. Why should quality beer be taxed at a higher rate than substandard beer that is consumed in mass quantities by binge drinkers for a cheap buzz?

Hand In My Pocket by Alanis Morissette comes to mind:

I feel drunk but I’m sober
I’m young and I’m underpaid
I’m tired but I’m working, yeah
I care but I’m restless

Two More for the Road in Ireland

By - January 28, 2013 | Alcoholic Beverage Law | Email Will Cheek

Irish politicians are considering changes to drunken driving laws that would make it easier to drink a pint or two and drive. In the U.S., the topic would be political suicide.

Reminds us of a classic song performed by blues champion John Lee Hooker and famously covered by George Thorogood:

One bourbon, one scotch, one beer
Well I ain’t seen my baby since I don’t know when,
I’ve been drinking bourbon, whiskey, scotch and gin
Gonna get high man, I’m gonna get loose

Irish drunk driving laws make it a crime to drive with a blood intoxication level of .05%, compared to .08% in the U.S. For an average person, the U.S. limit is 2 or 3 drinks in an hour. In Ireland, two drinks can easily land you in the slammer.

Kerry County Councillor Danny Healy-Rae, who introduced the motion, says he is concerned about older rural residents who are “being isolated now at home, and a lot of them falling into depression.” The lack of public transportation makes it difficult for these people to visit the pub. “In rural parishes, that’s well we have—we don’t have anything else,” says Healy-Rae. “All they want to do [here] is talk to neighbors, talk to friends, play cards, talk about the match and the price of cattle, about such a lady going out with such a fella, and it’s harmless.”

The article is here.

In the U.S, we see even a suggestion of loosening drunk driving laws as political suicide. In Ireland, it may not be a popular political position, but at least it can be discussed in public.

New Rules for Gun Signs in Tennessee Bars and Restaurants

By - January 23, 2013 | Alcoholic Beverage Law | Email Will Cheek

Guns in bars have a colorful history in Tennessee. Guns in bars sparked a lively political debate and legal challenge that lead to a law that allows registered gun-permit holders to carry firearms in bars and restaurants that hold liquor licenses.

Problem was, the gun carry law did not change state law that required all bars and restaurants to post a sign declaring it a crime to carry guns, despite the fact that it was legal to carry a gun, if you had a permit and were not drinking.

Oops.

The Tennessee ABC has recently announced that it will not require posting of the inaccurate sign.

Tennessee ABC to Anoint New Director in February?

By - January 22, 2013 | Alcoholic Beverage Law | Email Will Cheek

Pondering the next leader of the Tennessee Alcoholic Beverage Commission has not been a matter of wondering who, but of when.

The long-time Director of the Tennessee ABC, Danielle Elks, stepped down in October 2012. Before Ms. Elks’ departure, ABC Commissioners hired Keith Bell as Assistant Director.  Insiders expected Mr. Bell to become Director upon Ms. Elks’ retirement.

Three months after Ms. Elks’ retirement, the Directorship remains vacant. Wassup?

At the ABC meeting today, January 22, 2013, the Directorship was publicly discussed. Based on what we heard, Ms. Elks apparently had accumulated vacation time when she retired in October. The way the state works, Ms. Elks was still being paid and her position was not considered vacant, although she was not working and no one was technically leading the agency.

It has to be tough to be a leader in government – burdened by rules that defy business logic.

Looks like the Tennessee ABC will finally name the new Director at the February Commission meeting. Drum roll please – who will it be?

Keith Bell has made it clear to us that he will enforce the liquor laws as written, and if the laws are unfair, he will support changes to the laws. But changing unfair liquor laws in Tennessee is unrealistic for most industry members. Mere mortals are powerless against the Tennessee wholesalers, conservative church leaders and other formidable forces in the state legislature.

ABC enforcement under Mr. Bell has rocked the boat for scores of licensees, including popular music venues that do not meet minimum food service requirements. Mr. Bell’s relatively brief tenure has struck fear into an industry that was accustomed to some leeway from Ms. Elks, based on practicalities.

For example, industry members know that tourists and locals do not flock to downtown Nashville honky tonks and music clubs to eat dinner. Although reducing the minimum food service requirement from 50% to 15% helped, 15% food sales is still is not a realistic requirement for many revered music venues.

Mr. Bell is enforcing the law as written, placing pressure on venerable music venues and other licensees. We do not fault Mr. Bell, but the net effect threatens the existence of many celebrated venues. Live music venues are a critical part of Music City.

Mr. Bell has undoubtedly garnered some unpopular attention, doing what we suspect he was asked to do by his bosses – clean up the ABC by enforcing the laws on the books. It will be interesting to see if cleaning up the ABC thwarts Mr. Bell from being anointed Director.

In a few short months, Mr. Bell has both pleased and pissed off industry members. Two classic rock songs summarize the difference in opinion about Mr. Bell becoming Director:

Yesterday, all my troubles seemed so far away. Now it looks as though they’re here to stay. Oh, I believe in yesterday”. The Beatles, “Yesterday”

“Don’t stop thinking about tomorrow, don’t stop, it will soon be here.”-Fleetwood Mac, “Don’t Stop”

Tennessee ABC Seeks Last Call for Celebrated Music Venues

By - January 11, 2013 | Alcoholic Beverage Law | Email Will Cheek

The Tennessee ABC has rocked the boat for scores of popular music venues. At issue is a critical asset – the liquor license.

Tennessee liquor laws require that bars sell at least 15% food and have a stocked kitchen. For many concert venues, the requirement is unrealistic. Music fans do not normally flock to concerts to eat dinner. Who goes to Tootsies or Bluebird for dinner?

The law is clear and bars that do not meet the ABC requirements do not qualify for liquor licenses.

We have heard about ABC enforcement against popular music venues from Memphis to Knoxville. The ABC may be duly enforcing the law as written, but the result could be catastrophic to the music scene in Tennessee.

Rumor has it that several Nashville club owners have organized to change state law and solve the problem. Without a change in the law, the future of Tennessee’s iconic music venues is in jeopardy.

1970’s heavy metal champs Deep Purple may see the hand-writing on the wall:

When it all was over,
We had to find another place.
But Swiss time was running out,
It seemed that we would lose the race.

Tennessee Police Set Speed Trap for Wine in Groceries

By - January 09, 2013 | Alcoholic Beverage Law | Email Will Cheek

Uniformed police officers made a well-publicized appearance this Wednesday January 9, 2013 at Tennessee’s Capital Hill to oppose wine in grocery legislation. Law enforcement has voiced opposition in the past, but today’s presentation was particularly dramatic.

The Tennessean reported that: “As evidence that looser restrictions on wine would lead to problems, [Knoxville Police Chief) Rausch pointed to a case last fall in which a University of Tennessee student was hospitalized, purportedly because alcohol had been funneled into his system through his rectum.”

The sensational reference to “rectal chugging” was – predictably – widely reported by media. Despite being completely ludicrous, in our humble opinion.

We do not see wine in Kroger leading to a rash of UT students pouring cheap wine into their nether parts. Wine is not the drink of choice for a quick cheap college buzz, UB40’s popular song notwithstanding:

Red red wine
You make me feel so fine
You keep me rocking
All of the time

The seemingly perennial battle for wine in grocery stores is just warming up and we look forward to more theatrics.

Tax Man’s Take on Cocktails in Tennessee

By - January 02, 2013 | Alcoholic Beverage Law | Email Will Cheek

A recent question from Suzanne in Knoxville inspired us to remind readers of the different taxes on sales of beer, wine and spirits at restaurants and bars.

Suzanne asked: Can you please explain why taxes on beverages vary so widely from one bar or restaurant to another? One establishment in particular charges 24.5% on drinks, and then add an additional sales tax to that total.

Other establishments are charging a 15% sales tax. I’ve not seen any consistency in Knoxville anywhere! What are the laws.

We think the confusion comes from there being two different taxes on wine and spirits at restaurants and bars in Tennessee. There is a 15% liquor tax, plus 9.25% sales tax in Knoxville (sales tax rates vary by city, but the liquor tax is 15% statewide – a sales tax chart is at this link).

The Tax Man’s total tax on your toddy in Knoxville is 24.25%.

Here is the problem. Some menus and receipts show the total taxes for drinks. Others show the 15% tax, but then apply the 9.25% sales tax on the receipt with food. When lumped in with food, the sales tax on drinks is hidden, unless you do the math.

In other words, we suspect that Suzanne is paying 24.25% everywhere in Knoxville, but some restaurants show the total 24.25% tax on drinks, while others separately show the 15% liquor tax and lump the sales tax on drinks with sales tax on food.

To complicate things, there is no liquor tax on beer. You only pay sales tax for suds at restaurants and bars.

Tennessee’s tax on wine and spirits is not only confusing, it is terribly expensive. But don’t look for any changes to the tax rate from the state. Tennessee is not likely to join a 12 step program to end its dependence on liquor taxes – the state is intoxicated by the huge revenue source.