We figured that following passage of Wine in Grocery Store legislation, which we affectionately call WIGS, popular demand among consumers would lead to more changes in Tennessee law.
We blogged about pending legislation to legalize the sale of many wine coolers and niche products like sangria mixes in groceries and other food stores. https://www.lastcalltn.com/tennessee-considers-more-wine-in-grocery-stores-with-legislation/
In our not so humble opinion, one of the biggest changes in Tennessee law is legalizing Sunday sales of wine in Kroger, Publix, Wal-Mart and other food stores. We figure that the vast majority of shoppers would love to be able to buy wine on Sundays.
If Tennessee legalizes Sunday sales of wine in grocery stores, it seems only fair that liquor stores would also be allowed to open on Sunday. Problem is, we think Tennessee liquor stores will oppose Sunday sales.
Based on our unscientific observations, Sunday is a big day for grocery shopping. Grocers probably figure that many Sunday shoppers will put a couple of bottles of wine in their carts, if Sunday sales of wine are legal. Sunday wine at a grocery is essentially an impulse purchase; if I can buy wine when I am Krogering on Sunday, great, if not, I am not going to trek back later in the week to buy wine from a grocery or a liquor store.
Tennessee liquor stores probably see Sunday sales as something they have to do, if food stores can sell wine. But for a liquor store, being open on Sunday is not likely to draw many new sales. Grocers already do huge business on Sunday. Liquor store owners are closed. Opening Sunday increases employee salaries and other liquor store expenses.
Plus, Tennessee restaurants could see a decline in wine sales from folks that cannot buy wine on Sunday, but want a glass with lunch or dinner.
Our buddy Willa reminds us of “Sunday in the South” by Shenandoah:
Mill worker houses lined up in a row,
Another southern Sunday morning blow
Beneath the steeple all the people have begun
Shakin’ hands with the man who grips the gospel gun
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
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
On January 1, 2017, the legal definition of beer in Tennessee changes from 5% to 8% alcohol by weight. Meaning that beers with less than roughly 10% alcohol by volume no longer fall into that crazy category known as high gravity beer.
In Tennessee, beers stronger than 5% by weight or around 6.5% by volume were taxed and distributed as alcoholic beverages. For consumers, it meant higher prices and not being able to buy a high grav beer at a grocery or convenience store.
No longer. Although there are a few serious suds stronger than 8% by weight, the vast majority of high gravity beers will magically become regular “beer” in the New Year. You can Kroger for high grav. You will no longer pay the 15% alcoholic beverage tax at restaurants and bars.
The ancient and odd (at least to us) New Year’s traditional tune Auld Lang Syne comes to mind:
we’ll take a cup of kindness yet,
for auld lang syne.
And surely you’ll buy your pint cup!
and surely I’ll buy mine!
The new law fails to anticipate a number of details, which we expect will confuse industry members for some time. But, please, everyone say thanks to the Tennessee Legislature for fixing the high gravity beer problem.
We often get this question during the holidays? Can my restaurant or bar give a bottle of wine or spirits to a vendor or good customer for Christmas in Tennessee?
We recommend not.
First, we suspect that an ABC agent will presume that the restaurant is giving away alcohol for off-premises consumption, which is a huge no no.
Legally, we think that an owner of a restaurant should be able to purchase alcohol at a liquor store and give it as a gift. The dilemma is that the owner will certainly include a card that indicates that the gift is on behalf of the restaurant. It looks like the restaurant is making the gift.
Although you may be able to contest the citation, the gift of alcohol raises too many problems and we recommend against it.
A Christmas classic cones to mind:
Mom got drunk and Dad got drunk at our Christmas party
We were drinking champagne punch and homemade eggnog
Little sister brought her new boyfriend
He was a Mexican
We didn’t know what to think of him until he sang
Feliz Navidad, Feliz Navidad
We love the transparency of the new Tennessee ABC regime under relatively new Director Clay Byrd. For example, at the regular December ABC meeting, Assistant Director Zach Blair announced the following issues for the 2017 legislative session.
Please keep in mind that this is our take on the announcement and not official positions of the ABC.
· Conflicts of interest at ABC – currently relatives of ABC staff and commissioners cannot hold server permits. The ABC wants to permit this.
· Delinquencies with wholesalers – current law requires an automatic admin hearing if more than two delinquencies occur in a given period of time. The ABC wants to remove the mandatory hearing and be able to issue citations.
· Indirect interests – the ABC wants to define this by statute, probably similar to what the draft proposed rules say.
· Underage sale citations – the ABC wants to expand the civil penalty options.
· Donated alcohol to special occasion licenses – the ABC wants to permit this expressly for auctioning off the bottles.
· Private party – the ABC wants to codify a definition for this; we are not sure what it will be.
· Seasonal closings – the ABC wants to expand the areas where this is permitted; currently only allowed in river resort districts.
· Eligibility for server permits – the ABC wants to codify the felonies that prohibit someone from getting a server permit.
· Revocations – the ABC wants to codify the draft proposed rule that surrendering a license can be treated as a revocation when there is an agreed order signed.
Special thanks to Bone alcoholic beverage team member Rob Pinson for this summary.
Brings to mind the AC/DC classic “Breaking the Rules”
Just keep on breakin’ the rules
C’mon get ready to rule
Just keep on breakin’ the rules
A small but important silver lining for moonshiners in Sevier County. After the tragic fire, we asked the TTB to consider easing the deadlines on reporting and paying excise taxes – to give impacted distilleries time to recover. We blogged about it here.
The announcement from TTB is great news and here is the e-mail:
The Alcohol and Tobacco Tax and Trade Bureau (TTB) recognizes that the devastation caused by wildfires in and around Gatlinburg, Tennessee, may have affected your operations. As a result, you may not be able to timely file returns or timely pay or deposit the excise taxes administered by TTB, as required by the Internal Revenue Code. TTB will consider waiving late filing, payment, or deposit penalties on a case-by case basis. Waivers will be approved based on the statutory standard of reasonable cause and a lack of willful neglect.
To qualify for such a waiver, you must:
1) Demonstrate, to the satisfaction of the appropriate TTB officer, that the wildfires or related events directly affected your ability to timely file tax returns and/or pay or deposit excise taxes; and
2) Contact the TTB National Revenue Center at
One of Willa’s favorites by Alan Jackson comes to mind:
Pop a top again
I think I’ll have another round
Set ’em up my friend
Then I’ll be gone and you can let some other fool sit down.
The new leadership at the Tennessee ABC has been issuing informal guidelines on a variety of subjects. We love the informal rules and hope they keep coming.
At the links are FAQS for wholesalers and liquor-by-the-drink, aka restaurants, bars, hotels, venues and other on-premise license holders.
Made our buddy Willa think about Charlie Daniel’s hit Drinkin’ My Baby Goodbye:
Well I’m a
Sitting on a bar stool
Acting like a dern fool