Monthly Archives: April 2014
Renewing a liquor license with the Tennessee Alcoholic Beverage Commission can be a trap for both novices and licensing experts. Reliable sources at the ABC say that the rules for renewals are going to be much stricter beginning July 1, 2014.
Meatloaf captures the pain:And I wanna take you out of the frying pan and into the fire
Out of the frying pan and into the fire
Out of the frying pan and into the fire
The new rule is that if everything is not filed and completed by the expiration date of the liquor license, the ABC will require the licensee to reapply for a brand new liquor license. The ABC will no longer provide a 7-day grace period to tie-up any loose ends. All documents must be filed and all tax issues cleared up.
Previously, the ABC allowed a 7-day grace period on renewals. The 7-day grace was not a law. Consistent with ABC goals of enforcing the law as written, the grace period is toast as of July 1.
What happens if a license holder fails to renew by the license expiration date? We suspect that the business is looking at a prolonged interruption in service until a new application can be completed and approved by the ABC. This typically takes several weeks.
A simple snafu with a renewal can mean the bar is closed for several weeks. This ups the ante for renewals in Tennessee and we advise folks to pay close attention to completing renewals.
Bar, restaurant and hotel owners and managers are going to be shocked to learn that state law will require them to pay liquor wholesalers at delivery. The new law takes effect upon signing by Governor, which is any day now. You can see the new law here. HA1223(1).
No, we are not smoking crack. Within the next few days, you are going to have to pay for your liquor when it is delivered, unless the governor vetoes the legislation.
The new law is almost undoubtedly the work of fabled lobbyist Tom Hensley, known as the Golden Goose or simply the “Goose.” The new law certainly is good for the Goose and his “flock,” the liquor wholesalers.
But the new law is going to require quick scrambling by thousands of Tennessee restaurants and bars. We suspect the phones at payment services like Fintech will be ringing off the hook. Implementing the change in a matter of days is going to be a rude awakening.
The new law limits payment to EFT, credit cards, debit cards or other methods approved by the ABC. Fortunately, the ABC authorized ABC Director Keith Bell to specify acceptable methods of payment. As of now, we understand you may pay by:
3. Credit card (swipe fee can justify a higher fee to the retail account)
4. Debit card (swipe fee can justify a higher fee to the retail account)
5. Certified Funds
7. Fintech system
There is discussion about allowing payment by check. Wholesalers can hold checks and essentially bank unusually large orders for a few days. Think Memphis in May and CMA Fest in Nashville.
Adding insult to injury, retail liquor stores still operate under the 10 day credit rule.
In all fairness, the prevailing practice for beer has been COD for as long as anyone can remember. The change helps equalize the playing field between beer and liquor wholesalers.
Rapper Easy E has today’s music lesson:Hey yo Doctor, here’s another proper track
And it’s phat, watch the sniper, time to pay the piper
Infused cocktails unexpectedly became headline news in Tennessee in the Spring of 2013. The Tennessee Alcoholic Beverage Commission declared infused cocktails illegal. We blogged about it here.
Ozzy gets it:Nobody hears the things I say I guess that nobody cares My head’s so full of things I set my mind free of them I’m breaking the rules
Tennessee Hospitality Association attorney Matt Scanlan made it his mission in life to protect the fundamental right to infuse cocktails at bars and restaurants. Matt’s crusade reached its pinnacle this week with the passage of HB 2240, which officially legalized the long-standing practice of infusing. The full bill is here.
We encourage license holders that infuse to learn and follow the rules in the new law. The TABC has been issuing fines of $300 to $350 per bottle for violations, which can quickly add up.
Huge news for bar, music venue and night club owners in Memphis, Nashville, Knoxville, Chattanooga and other Tennessee cities. A new liquor license allows bar owners to get out of the pesky business of trying to show the ABC that you sell enough food.
The new law is the culmination of years of work to legitimize bars in Tennessee. A decade ago, all Tennessee bars were licensed as restaurants, ostensibly selling 50% food. The ABC essentially looked the other way and issued $1,500 fines each month for bars that were “caught” selling less than 50% food.
A few years ago, a new liquor license was adopted that allowed bars to sell as little as 15% food, for a larger license fee. Problem was, some bars could not meet 15%. Concert venues, blues bars on Beale Street and Honky Tonks in Nashville are not places where customers seek out food.
Last year, the legislature removed the food service requirement for several music venues. Removing food service was controversial and we wondered if a no food liquor license would move forward this year. We blogged about this last week.
Fat Boy Slim understands the importance of food in the party culture:Like eating, sleeping Rave Repeating
The new liquor license adds a new category to the limited service restaurant license, for establishments that sell 0 to 15% food. The new license fee is $5,000. A copy of the bill is here.
We hear Tennessee Hospitality Association attorney Matt Scanlan really went to bat for bar owners and deserves a big thanks.
The new law does not remove the requirement that “A menu of prepared food is made available to patrons.” The Tennessee ABC has construed this requirement to require that bars have a kitchen on premises to prepare food. The Tennessee ABC is opposed to bars bringing in food prepared off site, from delivered pizzas to BBQ smoked off site.
Eliminating the kitchen requirement would have made it quite a bit more affordable to open a bar in Tennessee. Alas, the new law may reduce the food sales requirement, but it does not seem to eliminate the requirement that bars have a kitchen and offer food for sale.
Strong popular support of wine in grocery stores was a key factor behind passage of the Tennessee wine in grocery store law this year (which we affectionately call WIGS). We have heard that consumers do not like the fact that wine cannot be sold in groceries before July 1, 2016.
Ron Ramsey, the leader of the state Senate, was recently quoted as saying that consumers will be disappointed when they learn how long they will have to wait for wine sales. Two years are an eternity for shoppers.
WIGS was a bloody compromise between competing forces – a battle we presume no one wants to revisit.
Michael Jackson knows it:I’m Gonna Make A Change, For Once In My Life It’s Gonna Feel Real Good, Gonna Make A Difference Gonna Make It Right . . .
Although convenience stores fought hard for WIGS, the 20% food requirement disqualifies nearly every C Store. The definition of food in WIGS excludes prepared foods like grab and go breakfast biscuits, hot dogs, pizzas, chips, sodas and other snacks. C stores do not sell enough flour, pasta and other food items that require cooking.
Pharmacies like Walgreens and CVS were also left high and dry by WIGS, with the 20% food requirement probably disqualifying every pharmacy in Tennessee.
We suspect that many business-friendly legislators will regret requiring an across the board 20% mark up on prices for wine. Pro-business forces have to ask why the state is dictating prices. For example, a 20% mark up on a $10 bottle of wine might be reasonable, but why require that a $100 bottle of champagne be marked up $20?
WIGS also prohibits discounting based on multi-store purchasing power. This was a compromise to protect mom and pop liquor stores from the buying power of goliaths like Wal-Mart and Kroger. Although it may make sense for WIGS, business-friendly legislators will face tough questions about interfering with the free market.
WIGS was a delicate compromise that took years to negotiate. Like any other settlement, no one got what they wanted. We suspect that any changes to WIGS will be difficult, if not impossible.
Tennessee beer lovers are all too familiar with the unusual distinction between regular and high gravity beer. State law defines beer as having an alcoholic content of 5% or less by weight, which translates to roughly 6.5% by volume.
Beer stronger than 5% is an alcoholic beverage. The stricter rules for whiskey apply to “high gravity” beer. High gravity beer cannot be sold at groceries and convenience stores. High gravity beer is only sold at liquor stores.
The new law raises the percentage of regular beer from 5 to 8 percent by weight. This means that most high gravity beers will be sold at groceries and convenience stores, along side of Bud and Miller Lite.
Johnny Cash comes to mind:I hardly ever sing beer drinking songs And when they play them cheating tunes I never sing along I never ever sing the blues I’ve forgotten born to lose And I hardly ever sing beer drinking songs
The hitch? Like wine in grocery stores, high gravity will not be sold at groceries and C Stores until January 1, 2017.
IF you have insomnia, the new law is here.
Folks remember Bone McAllester paralegal extraordinaire Vicki Schmidt was almost at the finish line at the Boston Marathon last year when disaster struck. Vicki’s longtime beaux Phil Kirkpatrick was within feet of one of the explosions.
Equine experts know that you always get right back on your horse after being thrown. Vicki and Phil will both be running the marathon on Monday, April 21, 2014.
Vicki is an avid and seasoned runner.
Local news media have been covering the story. We wish them well.
Curiosity killed the cat, so the old fable goes. If the Tennessee Alcoholic Beverage Commission is checking references, what in the world is the ABC asking?
Allow us to briefly explain. For as long as anyone can remember, ABC questionnaires have asked for three personal and one bank reference. ABC Questionnaires are required for all managers, officers and owners of liquor license holders. Industry veterans know them as pink forms, because of their color.
Although the ABC has broad authority to investigate applicants, we do not know of any law or regulation that specifically addresses checking references. Historically, we don’t recall the ABC checking any references. Never.
We do know the ABC has conducted at least one independent criminal background check of a restaurant owner, which was a first for us. Read here for more info.
Today, April 14, 2014, we were asked to provide complete addresses for a couple of ABC Questionnaires. Was the request just part of wanting complete forms, or an indication that the ABC needs the information to be able to check references.
And if the ABC is checking references, what is the ABC asking of your preacher, banker or trusted advisor? Whether they know of any crimes you may have committed? Do you drink too much? With no guidelines, who knows what the ABC might ask.
Coldplay has a classic on the topic:And the spies came out of the water But you’re feeling so bad cos you know But the spies hide out in every corner But you can’t touch them no Cos they’re all spies They’re all spies
Like all government agencies, the ABC budget is very tight. Agents and staff are not looking for things to do. We do not expect a barrage of reference checking.
But the prospect of a reference receiving a call from the ABC is troubling.
As always, we will keep you posted.
Strange things often happen in the wee hours of the night, often things you are not proud of in the light of day. Same can be said of the final days of the Tennessee Legislature.
Advancing in the House and Senate is a bill to remove the food sales requirement for bars. A nonstop nuisance to bar owners and ABC agents, the food service requirement has been debated and revised over the past few years.
There are a lot of good reasons to have food at bars. There are also a lot of good reasons to recognize that folks don’t swing by Memphis blues bars and Nashville honky tonks for dinner.
If passed, bar owners will not have to serve any food to hold a liquor license. No strings attached. Tom Humphreys has the scoop.
Legislative insiders probably recall Senator Doug Henry standing up in opposition to similar legislation a few years back, saying that folks need food to “sop up all that alcohol.”
If the law passes, it remains to be seen whether folks will be proud of taking food out of the mix at bars. Once it is done, we think there will be no turning back.
Tennessee is notorious for its obscure liquor laws. Every restaurant, bar and hotel must get a beer permit from the city or county, in addition to a liquor license from the state. The rules and process for obtaining a beer permit are different in each city and county.
Memphis is particularly rigorous.
Paul Simon’s huge hit “Graceland” captures the moment:In Graceland, in Graceland I’m going to Graceland For reasons I cannot explain There’s some part of me wants to see Graceland
The upside is that Memphis has Yolanda Fullilove to help you with obtaining a beer permit. Yolanda is on our short list of beer board favorites.
Obtaining a beer permit in Memphis begins with a trip down to the Memphis Alcohol Commission at 125 N. Main St., Suite 700, Memphis. After completing the application and paying the fees, you must publish a newspaper ad and obtain 10 signatures in support of your application.
Posting of the notice sign is a task that invites trouble. The location of the posting does not always make sense, and you do not find out about a posting problem until the beer board meeting. If your sign is posted in the wrong place, you automatically get deferred to the next meeting and have to post a new sign.
New locations have to obtain a survey for distances from churches and other disqualifying factors. The distance rules are quite complicated.
Hotels have to obtain a waiver that they are not an hourly sex brothel, which applies equally to Marriott and independent operators.
Enjoy your beer in Graceland.