Although the legislative session of 2017 did not bring any of the high profile changes to the alcoholic beverage code that we have seen in recent years, there were still several important pieces of legislation that passed this session. Below is a summary of all of the bills affecting the alcoholic beverage industry which passed in this session.
Public Chapter 372 – Removal of marijuana jurisdiction from TABC.
For many years, the Tennessee Alcoholic Beverage Commission has had jurisdiction over the eradication of marijuana. This bill removed that authority and placed the responsibility for marijuana eradication in the hands of the Tennessee Bureau of Investigation. The bill will take effect on January 1, 2018.
Public Chapter 373 – Changes to winery festivals.
This bill increases from eight to 12 the number of wine festivals that may be held by a winery. It also removes the requirement that servers at wine festivals hold a server permit and removes the requirement that appropriate individuals at wineries hold a manager’s permit. This bill took effect on May 5.
Public Chapter 338 – Alcoholic beverage administrative changes.
This bill was proposed by the Tennessee Hospitality and Tourism Association to change several administrative hurdles identified with the new administration of the TABC. The bill deletes many of the burdensome requirements that the TABC imposed upon the making of infusions that have not proven to improve safety or otherwise benefit the public. Under these provisions, a licensee that makes infusions must now only keep records on what products are contained in the infusion.
The bill inserts provisions to allow server training programs to be offered online and permits the TABC approve such program if they comply with the standards set by the commission.
The bill inserts provisions to allow restaurants to either include both the 15% LBD tax and sales taxes within the menu price of the wine or alcoholic beverage or include those taxes on the final bill as long as the menu advises the customer that the tax will be added.
The bill inserts provisions to restore some bitters as non-beverage products that can be sold in other places besides liquor stores. Under the provisions of the bill, products that receive a non-beverage product designation from the federal Tax and Trade Bureau (TTB) may be distributed outside the alcoholic beverage distribution channels.
The bill took effect on May 9.
Public Chapter 295 – Manufacturers ability to sell alcoholic beverages at retail.
Under present law, a manufacturer’s or distiller’s license may be issued for the manufacturing of alcoholic spirituous beverages or vintage alcoholic beverages. A manufacturer’s license allows such manufacturer to sell, at retail on the licensed premises of the manufacturer, products that are manufactured on the manufacturer’s premises. It also allows for samples in limited amounts.
This bill adds to the above provision that a distiller’s license authorizes a distillery to sell alcoholic beverages for consumption on the premises of the distillery, other than the bonded premises, where such consumption is also permitted by federal law. This bill requires that distilled spirits sold be manufactured on the premises of the distillery.
Public Chapter 195 – Chattanooga entertainment district.
The bill permits patrons of establishments within the Station Street Entertainment District to carry alcoholic beverages within the district. If past interpretations are used, a person will be able to carry alcoholic beverages out of an establishment and drink on the areas identified in the bill. A person would not be permitted to bring an alcoholic beverage purchased in one licensed establishment into a different licensed establishment. The bill became effective on April 27.
Public Chapter 443 – Wholesaler/Grocer relations.
This bill was a cooperative effort between the liquor wholesalers, the Tennessee Grocers Association, and the beer wholesalers. The bill allows a wholesaler to deliver wine at any time rather than any time the retail food store (grocery store) is open to the public. It also allows a wholesaler greater freedom to deliver wine within the store as directed by the retail food store.
The bill also allows wholesalers to build and stock wholesaler displays within a retail food store. The displays may not be part of the store’s regular shelving. The wholesaler may only stock such displays for a period of one month from the date that the display is placed in the store.
The bill permits a retail food store to place a pre-order with a wholesaler while its application for a license is pending.
The bill ensures that a wholesaler who holds a valid beer wholesale permit is not required to obtain a separate liquor wholesale permit to distribute high alcohol content beer.
The bill exempts certain employees of a wholesaler from obtaining a wholesale employee permit.
The bill clarifies that a wholesaler cannot provide cumulative discounts to any type of retailer.
The bill took effect on May 25.
Public Chapter 346 – Distribution of LBD tax proceeds.
This bill extends the present law distribution method of gross receipts from liquor-by-the-drink tax to local political subdivisions. The current distribution method is scheduled to expire on June 30, 2017. This bill extends this distribution method to cover the period of July 1, 2017, through June 30, 2018.
Present law imposes a tax equal to the rate of 15 percent of the sales price of all alcoholic beverages sold for consumption on the premises, which is distributed as follows: 50 percent to the general fund to be earmarked for education purposes; and 50 percent to be distributed to local political subdivisions.
Under the current distribution method, the proceeds that are directed to the local political subdivision generally must be distributed as follows:
(1) One half to:
(A) The county trustee, if the county school system is the only LEA in the county and the county or any city within the county chooses to levy a liquor-by-the-drink tax;
(B) The city recorder, if a city chooses to levy a liquor-by-the-drink tax and operates a K-12 school system;
(C) The city recorder, if a city chooses to levy a liquor-by-the-drink tax and operates a school system that is not a K-12 school system, with the amount adjusted based on: the average daily attendance of the city schools in proportion to the combined average daily attendance of the city and county schools, with the remaining amount distributed to the county trustee; or if the city lies within two or more counties, the average daily attendance of the city schools in proportion to the combined average daily attendance of the city and county schools, with the remaining amount divided between the counties where the tax was collected and distributed to the appropriate county trustee;
(D) The county trustee, if a city chooses to levy a liquor-by-the-drink tax but does not operate a city school system;
(E) The appropriate official acting for a special school district, if a special district lies, in whole or in part, within a city that chooses to levy a liquor-by-the-drink tax, with the amount adjusted based on the average daily attendance of students residing in the city and attending the special school district in proportion to the average daily attendance of city public school students who attend either the special school district or the county school system, with the remaining amount distributed to the county trustee;
(F) The county trustee, if a county chooses to levy a liquor-by-the-drink tax and one or more city school systems operate within the county, any tax revenues collected outside the boundaries of cities levying a liquor-by-the-drink tax that have city school systems; or
(G) The appropriate county trustees, if a city that lies in two or more counties chooses to levy a liquor-by-the-drink tax but does not operate a city school system; and
(2) One half to the county general fund from proceeds collected in unincorporated areas or to the city or town for proceeds collected in incorporated areas.
Public Chapter __ – Common Carriers reports on imported alcoholic beverages.
This bill requires that common carriers that deliver wine directly to customers from direct shippers must provide monthly reports to the Department of Revenue on each shipment of wine. The bill is meant to provide a mechanism to ensure that the correct amount of taxes is being collected on each sale of wine to Tennessee consumers. The bill will take effect on July 1 of 2018.
Public Chapter 269 – Winery Operations.
The bill permits tastings to occur on the bonded area of a winery. The bill also expands the definition of finished wine product to include product purchased from another winery in the state. The bill caps the amount of finished wine product from another winery that can be purchased at 50,000 gallons per year. This bill took effect on May 4.
Public Chapter 357 – Applicants for retail food store licenses.
This bill simplifies the requirement for an applicant for a retail food store license to provide background checks to local governments. Up until this bill, the law allowed each local government to determine what sort of background check needed to be provided. This bill stipulates that a commercial background check is adequate for the purpose of the local government background check. This bill will be effective on July 1, 2017.
Public Chapter 411 – Belle Meade Winery.
This bill to authorize the Belle Meade Winery in Davidson County to sell alcoholic beverages on the premises of the winery if the label of the alcoholic beverage product sold contains the name of the winery or is so intrinsically related to the property upon which the winery is located as to be identified as a product of or created for the winery. The bill will allow Belle Meade Bourbon to be sold at the winery. The bill took effect on May 18.
Public Chapter 371 – Expansion of sales to 23 hours a day and interests in a manufacturer.
This bill permits two locations (Avenue Diner and Scoreboard Bar and Grill) to sell alcoholic beverages and beer 23 hours a day. The establishments must stop sales between the hours of 3:00 a.m. and 4:00 a.m. The bill will permit sales of alcoholic beverages and beer on Sunday before 10:00 a.m., which is the set time for all other restaurants.
This bill also creates a narrow exemption to the general three tier prohibition against owning both a manufacturer and a retailer of alcoholic beverages. The bill permits a manufacturer to hold an interest in a retailer as long as the interest is held in an irrevocable trust by an independent trustee.
Public Chapter 160 – Historic Performing Arts Centers.
This bill revises the current statute governing when alcoholic beverages can be sold in a historic performing arts center. The bill allows service to occur before, during, and after any performances. The bill was effective on April 24.
Public Chapter 136 – Names April as Tennessee Craft Beer and Cider Month.
Public Chapter 119 – Swann’s Marina.
This bill designates Swann’s Marina in Jefferson County as a premier tourist resort to sell alcoholic beverages for on-premises consumption. This bill was effective on April 12.
Public Chapter 214 – Sewanee Inn.
This bill designates the Sewanee Inn in Franklin County as a premier tourist resort to sell alcoholic beverages for on-premises consumption. This bill was effective on April 28.
Public Chapter 394 – Hideaway of Arrington, the Barn at Sycamore Farms, and SouthCreek.
This bill designates the Hideaway of Arrington, the Barn at Sycamore Farms, and SouthCreek, all in Williamson County, as a premier tourist resorts to sell alcoholic beverages for on-premises consumption. This bill was effective on May 18.
Public Chapter 337 – The Plaza.
This bill designates Plaza Mariachi in Davidson County as a premier tourist resort for purposes of selling alcoholic beverages on the premises. The bill further allows multiple licensees to operate within the same facility. This bill was effective on May 9.
Public Chapter 273 – Fresh Hospitality.
This bill designates the Hunters Automotive campus in Davidson County as an Urban Park Center for purposes of selling alcoholic beverages on the premises. The bill further allows multiple licensees to operate within the same facility. The bill was effective on May 4.
Public Chapter 223 – Davidson County agritourism facility.
This bill designates an agritourism facility in Davidson County as a premier tourist resort for purposes of selling alcoholic beverages on the premises. The bill was effective on April 28.
Public Chapter 142 – Finley Stadium.
This bill designated Finley Stadium in Chattanooga as a sports authority facility for purposes of selling alcoholic beverages for on-premises consumption. The bill was effective on April 17.
Public Chapter 173 – Ballet Memphis.
This bill authorizes Ballet Memphis to sell alcoholic beverages on the premises as an Urban Park Center.
Public Chapter 141 – Chattanooga Theater Center.
This bill permits the Chattanooga Theater Center to sell and serve alcoholic beverages for consumption on the premises as a community theater. The bill was effective on April 17.
Public Chapter 428 – Blackthorn Club.
This bill allows the Blackthorn Club in Washington County to obtain a club license for the purpose of selling alcoholic beverages for on-premises consumption. The bill was effective on May 18.
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