Ten Day Credit Rule Officially Dead on Tuesday May 27, 2014 for Tennessee Restaurants, Bars and other Liquor Venues

By - May 25, 2014 | Alcoholic Beverage Law | Email Will Cheek

Governor Haslam held his nose and allowed a controversial bill to become law without his signature. Effective immediately, liquor must be paid for upon delivery by liquor-by-the-drink establishments in Tennessee.

With today being Sunday and tomorrow being a state holiday for liquor wholesalers, COD effectively takes place this Tuesday May 27, 2014, when the 10 day credit rule becomes yet another long-standing liquor law turned zombie.

Micheal Cass quotes Governor Haslam of explaining: “I’m just not certain we need to be in the position of dictating what the terms should be between those businesses…So by not signing it, my message is, I think the General Assembly should come back and review that again next year.” Read Cass’ story here.

We first blogged about the new law here, where you can see the list of approved payment terms.

Where is My Wine In Tennessee Grocery Stores?

By - May 18, 2014 | Alcoholic Beverage Law | Email Will Cheek

With much fanfare, Tennessee legalized wine in grocery stores. But the aisles of Kroger, Publix, Harris Teeter, Costco, Walmart, Whole Foods and Trader Joe’s have no wine.

What gives?

Brings to mind Going to California by Led Zeppelin
“Spent my days with a woman unkind,
Smoked my stuff and drank all my wine.”

The wine in grocery law does not allow grocery stores to sell wine until July 1, 2016. More importantly, wine in groceries requires a local option election.

For a town to qualify for a vote on wine in grocery stores, the town must have a petition signed by 10 percent of the city’s registered voters in the last Tennessee gubernatorial election. The petition must be filed at least 75 days before the election.

The petition means that citizens must sign a list asking for a vote on wine in groceries.  The law requires a paper list with legal language and real signatures. This is not a Twitter or Facebook campaign.

The referendum sets up a vote at the next election for wine in groceries. Clarksville is a pioneer in the process, with a petition circulating for a vote on wine in groceries for November 4, 2014. Read more here. Clarksville needs 2,157 valid signatures by August 21 to place wine in groceries on the November ballot.

Nashville and Memphis need about 16,000 voters to sign wine petitions.  For Chattanooga, about 4,400 voters need to sign up.  For Knoxville, wine needs about 4,200 signatures to place the measure on the ballot. These are rough estimates, so please check with local election officials for precise requirements.

Look for local sign up sheets for voters to get wine in groceries on the ballot in other cities. Slowly but surely, wine will be at your local grocer.

Beale Street in Memphis is Pioneer in New Liquor Law Trend for Repealing Ban on Open Container

By - May 14, 2014 | Alcoholic Beverage Law | Email Will Cheek

A famous perk for party-goers in New Orleans is the city’s long-standing “Go Drink” law. Big Easy fans know that you can take your drink out of the bar, wander the streets with your drink, and even go bar to bar.

In the industry, this is know as “open container.” Nearly all cities have laws that prohibit open containers – police will give you a ticket for carrying an open beer can or red Solo cup. New Orleans has been the exception to the open container rule.

Beale Street in Memphis embraced open container as part of its early marketing efforts to draw tourists to the revitalized historic district. Like New Orleans, you can wander around Beale Street with your drink, going from bar to bar, or just hanging out in the street listening to music or checking out the crowd.

Classic Eagles hit “Life’s Been Good” comes to mind:

I go to parties
Sometimes until four
It’s hard to leave
When you can’t find the door

 

Liquor laws are known for being old fashioned and out of touch with consumer demands. Liquor laws are also known for being notoriously difficult to change.

Unless the change is touted as benefiting the buzz words “economic development.”  Many cities, including Nashville, have considered following the Memphis model and repealing open container laws to lure more tourists to downtown destinations. However, Nashville’s effort this legislative session encountered significant opposition.

US Today recognized the trend, crediting Beale Street as an inspiration to other cities:

“Memphis’ Beale Street is the ultimate success story. The hotbed of blues music died in the 1960s as businesses and residents left downtown for the suburbs…But in the 1980s a revitalization plan closed Beale Street to traffic and opened it to alcohol-carrying pedestrians, bringing it back to life as a destination for live music.”

New Tennessee Law Great for Wineries, Distilleries and Liquor Stores – But Offensive to Restaurants, Bars and Hotels

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

We have blogged about HB 2027 and a last minute amendment that requires Tennessee restaurants, bars, hotels and clubs to pay for liquor upon delivery, ending the long-standing 10 day credit rule.  Hospitality leaders have asked the Governor to veto the bill.

The law is not all bad.  HB 2027 was proposed to eliminate burdensome restrictions on wineries, distilleries and retail liquor stores.  The bill:

1. Allows wineries and farm wineries to charge for samples.  Currently, samples must be free.

2 .Gives wineries the right to open up to 2 satellite wineries, to allow patrons to purchase samples, bottles of wine and merchandise.

3. Authorizes a winery or farm winery owner to hold a restaurant liquor license and also sell the bottles of wine for off-premises consumption from the restaurant.

4. Expands rights of wineries to self wholesale, including a new winery wholesale license.

5. Allows distilleries to charge for samples.  Currently, samples must be free.

6. Allows retail liquor stores to charge for tastings.  Currently, tastings must be free.

HB 2027 offers great new profit centers for Tennessee wineries, distilleries and retail stores.  It is good for business and modernizes some antiquated limitations.

Pink Floyd comes to mind:

Money, it’s a gas
Grab that cash with both hands and make a stash
New car, caviar, four star daydream
Think I’ll buy me a football team

 

It is a shame that this positive law was burdened at the last minute with the controversial COD requirement.  For this bill, we hope that the dirty politics does not torpedo an otherwise positive development for Tennessee liquor laws.

The new law has another new concept that greatly troubles us.  For violations of the small winery wholesale law, the ABC can collect fees for agent and staff attorney time spent investigating and prosecuting  alleged violations of the law.  The ABC already has the right to collect fees for an administrative law judge, but the ability to collect fees for ABC agent and attorney time is a big shift of power away from business and in favor of the ABC.

Anyone that has tried to contest an ABC citation knows that the ABC often threatens to ask for revocation or suspension of your license if you press for a hearing.  Although completely unfair, the practice is legal.

If the ABC can collect fees for agent and attorney time, the ABC will have even more leverage against a license holder trying to negotiate settlement of a citation.  We think the balance of power is already tilted in favor of the ABC.  Allowing the ABC to use the threat of collecting significant amounts of money for agent and attorney time as added pressure to settle a citation is harsh.

At present, the fee shifting law only applies to small winery wholesalers.  We see it as dangerous precedent that could be applied to all Tennessee liquor license holders.

When Does Cash on Delivery for Liquor Purchases from Tennessee Wholesalers Become Law?

By - May 07, 2014 | Alcoholic Beverage Law | Email Will Cheek

Updated May 13, 2014.

Restaurant and bar owners from Memphis to Knoxville are talking about the new Tennessee requirement that liquor be paid for when purchased.  Previously, liquor had to be paid for within 10 days.

We blogged in detail about the new law here.

Folks have been asking when the new law will take effect.  Our official answer is we don’t know.  We expected the bill to be signed into law by now.

In an odd quirk, the bill was just signed by the Speaker of the House on May 7.  The bill was sent to the Governor on May 13, 2014.

You can follow the progress of the bill here.

Reminds us of AC/DC:

Said you think you got some balls
But you’re always out to lunch
It’s all screwed up
 

The Governor has 10 days to either sign or veto the bill, excluding Sundays.  Although the state hospitality association has pushed for a veto by the Governor, we think a veto is unlikely.  Read more about the veto effort here.