Restaurateurs and hoteliers are often asked to serve product that has been donated by wholesalers or retailers at events on their premises. For many years this has been a problem for premises with an on-premises consumption license as they were only allowed to serve products owned by the licensee.
During the 2017 session of the Tennessee General Assembly, the Tennessee Alcoholic Beverage Commission (TABC) passed two laws that clarified the service of donated product.
Only official charitable, nonprofit, or political organizations may accept donations of alcoholic beverages or beer. In order to accept donated products the charitable, nonprofit, or political organization must obtain a special event permit from the TABC. The special event permit must be obtained even if the event is being held at a location that already holds an on-premises license. https://www.tn.gov/abc/article/liquor-by-the-drink-special-occasion
The special event permit requires an application to be submitted to the Nashville office of the Tennessee Alcoholic Beverage Commission at least two weeks prior to the event. The application fee is $100.00. Applications submitted less than two (2) calendar weeks prior to the event are subject to a late fee of $100.00. The application also requires a copy of the organization’s IRS tax status verification and a letter of permission from the owner of the property to use the location for the event. All proceeds generated from the sale of alcoholic beverages pursuant to the special occasion permit must be deposited into the special occasion permittee’s monetary account(s).
Any person or entity licensed by the TABC, including restaurants and hotels, may donate alcohol to a special occasion licensee or a representative of the special occasion licensee for use at the licensed special occasion event.
The 2017 law also clarified that an on-premises licensee (restaurant or hotel) may serve the product that has been donated to a non-profit. This is a much-needed fix and has been a confusing, thorn-in-the-side regulation for industry members and non-profit associations who put on special events.
One other type of event that often confuses restauranteurs and hoteliers are private events. Private events, even those held on the premises of an existing licensee are not under the jurisdiction of the TABC. In order for an event to be considered private, the following requirements must be met:
- The event is private and includes a bona fide guest list restricting access to invited guests only;
- The hosts or bona fide guests of the event are providing all of the alcoholic beverages;
- All alcoholic beverages are served without charge;
- There is no admission cost for the event, including ticket price, required donation, or door charge; and
- There is no commercial purpose related to the sale, marketing, or promotion of alcoholic beverages for the private party or event.
If the event is a private event, then the event host can provide whatever alcohol they wish to invitees of the private event. Venue staff can serve product provided by the event host either as paid bartenders or as part of the facility rental.