Each year it seems that there is one alcohol bill that touches on several subjects.  This year that bill is House Bill 435.  Below is a broad overview of what the bill contains:

  1. Allows family members of TABC employees to obtain server permits to work in liquor-by-the-drink establishments.  This is currently prohibited for spouses, children, in-laws, nieces and nephews related by blood or marriage to a TABC employee.
  2. Allows the TABC to fine a retailer up to $500 and a liquor-by-the-drink establishment up to $1,000 if the licensee or applicant fails to satisfy its debts to a wholesaler or has not demonstrated a financial capacity to operate their business.   The law currently reads that the TABC only has the capacity to refuse to issue or refuse to renew a licensee or applicant under these circumstances.  In this case, while a fine is not ideal for an already struggling business, it’s certainly better than not getting your license renewed.
  3. Allows products that are made from fruits other than grapes and have added ingredients such as high fructose corn syrup, to be sold in grocery stores in the wine section.  This clarifies some ambiguity in the statute that made licensees unsure as to whether these products could be legally sold in grocery stores.  Examples of these products are Arbor Mist and Echo Falls.
  4. Deletes the requirement that wine is derived from ripe grapes.  This will allow wine to be derived from fruit other than grapes. The Federal Tax and Trade Bureau (TTB) has determined that such products are included in the definition of wine.  The TTB even allows for the manufacture of wine composed of honey and wheat with prior approval.
  5. Allows the TABC to issue a fine in lieu of a suspension for two or more sales to a minor over a two year period.  The fine can be up to $10,000.  No one likes a fine, but most licensees would prefer to pay a fine a suspension of a liquor-by-the-drink permit.
  6. Allows product that has been donated to a non-profit to be served by someone other than the employees or volunteers of the 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.
  7. Allows distilleries, wholesalers, retailers, non-resident and liquor-by-the-drink licensees to donate product to non-profits.  Such donations will still need to flow through the three tier system, but in the past, only a supplier or wholesaler was allowed to donate product.
  8. Allows bottles of wine or spirits to be sold or donated in sealed containers for off premise consumption.  The change will allow you to bid on a bottle of wine or spirits at your next charity auction or event.  This is already happening, in a kind of “don’t ask, don’t tell” scenario, but this change makes it legal.
  9. Allows for alcohol to be furnished at a private event.
  10. Allows all restaurants the option of closing seasonally which is defined as November 1st to March 1st. Previously, a licensee either had to be in the Tennessee River Resort District or have special legislation to close seasonally.  This will primarily affect restaurants located on or near waterfronts.  If different dates are needed for seasonal closing or a renovation, the legislation will allow the applicant to file those dates with the Commission for approval.
  11. Allows applicants for server permits or employee permits to get a permit unless they have been convicted of a felony offense involving theft, dishonestly, deceit or intoxication with in the previous eight (8) years.  This change allows more people to be eligible for these types of permits.  It falls in line with the state movement to “ban the box” aimed at persuading employers not to disqualify potential workers based solely on a criminal conviction.
  12. Allows a licensee to surrender a permit and enter into an order with the TABC that classifies the surrender as revocation, which comes with a yearlong bar in re-opening another TABC licensed establishment.
  13. Allows contraband alcohol (alcohol in which the tax has not been paid) and contraband vehicles (vehicles which were used to transport the contraband alcohol) to be sold in a manner other than public auction.   Often times the TABC has to wait long periods (as in years) to have enough contraband to justify the expense of a public auction. This would likely allow the TABC to sell items on a more continuous basis and some items might be sold into state surplus.
  14. Allows the TABC to destroy or dispose of property after a court disposition, that has a nominal value or property that doesn’t sell at public auction.  Currently, the TABC gets stuck paying more for storage than the contraband is actually worth, so this would be helpful.
  15. Takes away the current minimum population requirements for liquor-by-the-drink and retail food stores.  The minimum population is currently set at 1,000.  If this passes and a county-wide referendum was held for either, this would allow any municipality, regardless of population to be eligible to sell wine in grocery stores and/or have liquor-by-the-drink.

We will follow this bill and all other alcohol related bills throughout the Session.  Please check back for updates.

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