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Category: Beer Board, permits, permitting

10.23.18

Today, the Metro Nashville Beer Board makes history, becoming the first Tennessee beer board to officially enter cyberspace.

On Monday, Beer Board Executive Director Benton McDonough and Amanda Webb demonstrated the new online filing system for beer board applications, and now, it's up and running.

Stardate 10.23.2018: The Metro Beer Board filing system is live.  You can now file beer applications online at this link https://epermits.nashville.gov/#/   The beer application is in the list on the left-hand side.

Our own Kimberly Faye Clark filed the very first application online.  Particularly fitting since Kimberly also filed the first RLPS application with the Tennessee ABC.

Gone are the days of yesteryear when you had to schlep downtown to the Howard School Building and present an original application, signed in the presence of a notary.  Also gone are the days where you had to trudge back downtown to pick up an original beer permit, signed in blue ink by the Executive Director.

Although the entire Waller staff will miss seeing the smiling faces of Amanda, Benton, Doug, Jesus and Terrence at the beer board, the convenience and time savings from filing online are greatly appreciated.

In addition to being able to file beer applications, the new system also allows you to file multiple attachments online and specify outdoor seating areas.  You can also schedule your beer inspection online.

Online filing fees must be paid by credit card, with the dreaded 2.3% convenience fee.

Before you file the application, you can print the Beer Board checklist and see a list of items needed to complete the application.  Once filed, the beer board sends an email with a receipt and access code to complete the application.

Currently, temporary permits are issued the old-fashioned way, in person, at the Howard School building. 

Renewals will continue to be simple.  Unlike the intense RLPS renewal process for Tennessee ABC liquor applications, the Metro Beer Board will simply require paying the privilege tax.  No renewal applications are currently planned.

As much as we despise the catchy Timbuk 3 1980s one-hit wonder “The Future’s So Bright, I Gotta Wear Shades,” it seems apropos:

I study nuclear science

I love my classes

I got a crazy teacher, he wears dark glasses

Things are going great, and they're only getting better

I'm doing all right, getting good grades

The future's so bright, I gotta wear shades

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07.31.18

Sunday sales of alcohol at retail liquor stores and grocery stores stole the spotlight in the 2018 Tennessee legislative session. 

For industry insiders, however, the biggest news in 2018 so far has not been legislative.  Ask anyone who has renewed a liquor license renewal in the ABC’s new online system, RLPS. It is a memorable experience, to say the least. (In case you have been living under a rock, all new liquor license applications and renewals in Tennessee must be filed online through RLPS.)

Without further ado, here are the highlights from the 2018 Tennessee legislative session.

Sunday and Holiday Sales.  P.C. 783 legalized the sale of beer, wine and spirits at retail liquor stores starting April 22. Sales of wine at food stores start on Sunday, January 6, 2019. 

In addition, P.C. 783 – available at this link – legalized the sale of beer, wine and spirits on New Year’s Day, Memorial Day, the Fourth of July and Labor Day.  Retail liquor stores must be closed, and food stores cannot sell wine on Easter, Thanksgiving or Christmas.

Some legislators had quite a scare when they discovered that P.C. 783 actually authorized the sale of wine in food stores on Easter, Thanksgiving and Christmas.  Following a plethora of speeches about the evils of alcohol and the virtues of attending church service on religious holidays, they found redemption and banned the sale of wine on Easter, Thanksgiving and Christmas in a late amendment to P.C. 1010.

Vertical Driver’s License.  Tennessee became the 48th state to enact a vertical driver’s license for drivers under the age of 21.

Tennessee started issuing vertical licenses on July 1. 

The vertical license does not expire when the driver turns 21, which continues a long-standing problem with under-21 driver’s licenses in Tennessee.  Read more at our blog.

Open Carry.  We predict that new “open carry” law in P.C. 755 will be the sleeper hit of 2018 among industry insiders. Open carry allows beer and alcoholic beverages to be carried by patrons between different licensed premises, provided they are connected. Open carry also paves the way for multiple restaurants to share a common dining space, such as a food court. The law even allows restaurants to open a free-standing bar in a common area, like a food hall.  Read more here. 

P.C. 755 also gives the Tennessee ABC more discretion concerning barriers in outdoor areas.  For decades, the ABC has consistently required fencing or similar barriers to surround outdoor dining areas. As of press time, the ABC has not issued any guidance concerning what type of barrier will work for “reasonable efforts to ensure that a customer cannot leave the premises with an alcoholic beverage or beer…”  Stay tuned to Last Call for more details.

Samples.  For decades, Tennessee law has prohibited on-premises retailers such as restaurants and hotels from giving away wine and spirits.  Section 2 of P.C. 755 allows a licensee to serve a sample of wine – up to one ounce. Hotels are authorized to “provision” up to four 750 milliliter-or-smaller sealed bottles of wine or spirits. Although not entirely clear, we believe that the legislation limits hotels to giving away wine or spirits, as part of the room rental. We do not read P.C. 755 as authorizing hotels to sell wine and spirits by the bottle.

New Handgun Sign.  Beginning January 1, 2018, a 2017 amendment to T.C.A. § 39-17-1359 set a new standard for signage required to prohibit patrons from carrying firearms onto a premises that has a liquor license. The universal “no handgun” sign is no longer valid in Tennessee.

In order to prohibit patrons from carrying handguns, restaurants, hotels and other license holders must post new larger signs that state “NO FIREARMS ALLOWED” in letters that are at least 1” high and 8” wide. The new law also requires that the sign state “As authorized by T.C.A. § 39-17-1359.”  And if that’s not enough, the sign also has to include the universal “no handgun” sign, inside a circle at least 4” in diameter.

Here is a sample.

Keep in mind that law enforcement officers may still carry firearms, regardless of sign postings.

We see the new law as either a favor for some legislator’s friend who makes handgun signs, or, more likely, a way to make it more difficult and less appealing to prohibit carrying firearms where alcoholic beverages are consumed on-premises.

Fresh Start Act.  P.C. 793 clears the way for some convicted criminals to own establishments with liquor licenses. Previously, Tennessee law was clear: Persons convicted of a felony or a crime involving the sale, transportation or manufacture of alcoholic beverages could not own an establishment that holds a liquor license, if convicted within eight years of the date of the application.

The Fresh Start Act muddies the waters and sets forth criteria to consider when denying an application or refusing a renewal based on a criminal conviction.  Kudos to Tennessee ABC Director Clay Byrd and staff for promptly issuing guidelines for the Fresh Start Act process.  Here is a copy of the memo. 

LBD Tax Notice

In response to recent legislation, the Tennessee Department of Revenue issued a tax notice in February that clarifies that drink taxes can be included in menu prices or listed on the final bill.  The law now gives restaurants and bars the option to decide whether liquor by the drink sales taxes should be listed on menus, or on the final bill presented to the customer.  Read more at our blog.

Retail Liquor Store Moratorium.  As part of the legislative tradeoff for allowing Sunday and holiday sales of wine in food stores, the Legislature imposed a moratorium on the issuance of new retail off-premises liquor licenses. The Tennessee ABC is no longer issuing new retail liquor licenses. An applicant must either purchase an existing store or wait until the moratorium expires on July 1, 2021.

P.C. 783 sets up a process to transfer liquor licenses if a purchaser would like to move the location of the liquor store. The new location cannot be within 1,500 feet of an existing retail liquor store and must be inside the same city or county.

The moratorium requires that all Certificates of Compliance for a transfer of location contain specific language stating that no other liquor store is located within 1,500 feet.

The moratorium may lead to a secondary market for the value of retail liquor licenses. Because the moratorium is set to expire in less than three years, we do not see licenses building significant value in Tennessee.

10% Markup on Spirits.  P.C. 783 also imposed a 10% minimum markup on the price of spirits. The 10% markup parallels the provisions of the 20% markup, already in place for wine.

We see the 10% markup on spirits as a first step toward legalizing the sale of spirits in food stores. Note to Consumers: don’t hold your breath. You are not going to be Krogering for vodka any time soon.

23-7.  Our favorite legislative development in 2018 was a law that never came to pass. Serving liquor 23-7 stole the show during the 2017 legislative session.  The Diner in downtown Nashville and Scoreboard Bar & Grill in Donelson lobbied for special legislation that allows the restaurants to serve alcohol 23 hours a day, 7 days a week, beginning at 4 a.m. until 3 a.m.

After all the chatter in the industry about the unfairness of allowing two bars to serve late-night drunks, no one seemed interested in pursuing an expansion of the legislation in 2018. Perhaps the industry is wise enough to know that last call at 3 a.m. ain’t so bad.

The Legislature adjourning always reminds us of the popular David Bowie tune Modern Love: 

Gets me to the Church on Time

(Church on Time)

Terrifies me

(Church on Time)

Makes me party

(Church on Time)

Puts my trust in God and Man

Delivery.  P.C. 765 paves the way for delivery of beer, wine and spirits by grocery delivery services such as InstaCart, Shipt, Post-Mates and ye olde mom and pop delivery service … Amazon. The new delivery law waters down the requirements for drivers and generally makes licensing for delivery services significantly easier.  Previously, only retail liquor stores and prepared food delivery services could deliver alcoholic beverages. P.C. 765 expands the scope of delivery services to include delivery of alcoholic beverages with groceries.

Instead of some form of responsible alcohol sale and age identification training, delivery service licensees only have to show that drivers are 21 or older, passed a background check indicating no felony convictions in the last 5 years, or any crime involving the sale or distribution of alcohol within the past seven years, and hold a valid driver’s license. The delivery service license fee is based on the number of delivery drivers. 

Perhaps most important is the provision allowing independent contractors to deliver. This allows an Uber-type arrangement, where random drivers respond to Internet delivery services to rush alcohol to someone’s home.

Under prior law, customers could order alcoholic beverages through apps such as Drizy, but delivery was made by employees of retail liquor stores who are trained as certified clerks.

P.C. 933 requires that delivery services only deliver to the physical address placed with the original order. Although delivery can only be made after checking the recipient’s age, there is no requirement that the delivery be made to the person who originally placed the order. All you need is one 21-year-old with an ID to deliver alcohol to a bunch of minors at a party. And with untrained Uber-type drivers delivering orders …oh well, we digress.

Local Option.  Under current law, only cities or towns with populations of more than 925 can authorize manufacturing, storage, distribution and sale of alcoholic beverages by local option.  P.C. 692 and 891 create exceptions to the minimum 925 population, allowing Etheridge and Cedar Hill to hold referendums to allow on and off-premise retail liquor sales. 

Storage.  P.C. 933 specifies that retailers can only store beer on the premises where beer will be sold.  Apparently, someone had the bright idea to self-wholesale beer for multiple stores, which is now prohibited.

Collegiate Sports.  As the dog days of summer drag on, one thing continues to inch closer – football. Fans of Middle Tennessee State University and Tennessee State University should be particularly excited about the 2018 football season. P.C. 1010 clears the path for authorizing the sale of alcohol at MTSU and TSU sporting events.

Sneaking alcohol into school sporting events is a time-honored tradition for co-eds and adults alike. Universities are beginning to capitalize on the lucrative revenue stream available from the sale of alcohol, which was generally prohibited under the guise of student safety. Indeed, seven Power Five Conference Schools – Texas, West Virginia, Minnesota, Maryland, Syracuse, Miami and Louisville, already sell beer at home games.

Because Western Kentucky University, another USA Conference member, also allows alcohol sales at sporting events, MTSU should not have an issue with Conference approval. As of press time, there was insufficient information concerning whether TSU must first obtain approval from the Ohio Valley Conference. For all those Vol fans out there, the Southeastern Conference currently does not allow any school to sell alcohol at school-sponsored sporting events.  P.C. 1010 only applies to facilities in Davidson and Rutherford counties.

Distilleries. P.C. 1027 clarified that samples served and beverages sold for consumption at the distillery are not subject to the 15% privilege tax. The legislation reverses an Attorney General Opinion finding that distiller’s retail sales are subject to the 15% privilege tax. The legislature clarified that aged whiskey barrels are not subject to property taxes, also overturning a Tennessee Attorney General opinion to the contrary.  P.C. 717 expands storage options for distilleries, allowing distilleries to store in adjacent counties, as well as any county that is authorized manufacturing. P.C. 650 allows manufacturing in Lenoir City.

Premier Type Tourist Resorts.  The following premier type tourist resorts were approved, allowing on-premises consumption of alcoholic beverages:

Pine Creek Golf Course in Wilson County Capitol Theatre in Greeneville Gaylord Springs Golf Links in Nashville Whitestone Country Inn in Kingston National Museum of African American Music in Nashville (Opening 2019) The Church @ 117 in Coffee County Drafts and Watercrafts in Franklin County The Caverns in Grundy County South Jackson Civic Center in Tullahoma Tellico Village in Loudon County Wildwood Resort & Marina in Granville 1892 Restaurant in Williamson County Leipers Fork Market in Williamson County Marblegate Farms in Blount County Blue Mountain Mist Country Inn & Spa in Sevier County Amis Mill Eatery in Hawkins County Shelly Belle’s in Claiborne County Oasis Pizza Bar in Claiborne County

Special credit goes to our summer associate and UT law student James Nelson for all his hard work on this project.

Click here to learn more about Waller's alcoholic beverage team.

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Category: underage drinking, driver's license, under-21

07.10.18

With much media fanfare, Tennessee introduced a new silver bullet for carding – a vertical driver’s license that is mandatory for anyone under the age of 21. Problem is, the vertical driver’s license does not automatically expire when the driver turns 21.

In our humble opinion, flipping the orientation of the license dodges the real problem. Too many people with under-21 driver’s licenses are old enough to drink. The question has to be asked: why have an under-21 driver’s license if it can legally be used to purchase alcohol?

The Good News

Effective July 1, 2018, every person under the age of 21 that obtains a driver’s license will be issued a vertical ID: 

A copy of a sample vertical driver’s license is attached Vertical Driver License Example.jpg.

A copy of the new law, P.C. 388, is here. vertical license act.pdf

We have to admit that the vertical driver’s license is hard to miss.  It screams at you – “I am under 21.”

We also applaud the state for continuing to include Red Box ID technology, which allows a server or bartender to instantly determine when a person turns 21 by simply reading the date in red under the photo.  We have previously extolled the virtues of Red Box ID, which requires no math. 

The Problem

Just like the previous under-21 driver’s license, the vertical ID is not required to expire when the person turns 21. In the example ID, “Nick Sample” turns 21 on February 11, 2021, but his under-21 driver’s license does not expire until July 2, 2025.

For nearly 3-and-a-half years, Nick Sample will be able to present his under 21 driver’s license and legally be served an alcoholic beverage.

Using Nick’s under-21 ID.

To drink.

How hard would it have been for the state to require that alcohol cannot be served to a person with an under-21 driver’s license, regardless of the expiration date?

This would require Nick Sample to go get a new driver’s license when he turns 21, but that becomes his choice. Nick decides whether he wants to spend eight bucks to get a new driver’s license and be able to drink. If Nick doesn’t want to drink, he can continue to use the under-21 driver’s license to drive his car.

That would be too logical.

All this flipping around of driver’s licenses brings to mind the Diana Ross hit, “Upside Down.”

Upside down

Boy, you turn me

Inside out

And round and round

We thank our Summer Associate extraordinaire James Nelson for cleverly obtaining a copy of the sample driver’s license and his assistance researching this post.

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Category: beer

05.18.18

Among the many liquor laws passed this legislative session by the Tennessee General Assembly, one of the biggest changes, in our humble opinion, is the new Open Carry law.  P.C. 755 allows restaurants, hotels and other liquor-by-the-drink establishments to serve alcohol into common areas and allow adjacent restaurant patrons to bring alcoholic beverages into their restaurant.  You can now walk between restaurants with your cocktail, glass of wine or mug of suds. 

READ:  P.C. 755 Open Carry Legislation in Tennessee

How does it work?  First, the restaurants must be "contiguous," our fancy lawyerly term for connected.  For example, a common outdoor patio or interior dining space may connect two restaurants, making them “contiguous.” 

In order to take advantage of the new open carry law, the ABC advises that establishments must first file an application to expand the licensed premises to include the adjacent restaurant.  If additional space, such as a common patio or courtyard are added in order to connect the two restaurants, the application must also include the new common space.  Applications must be accompanied by a $300 filing fee and permission to use any additional space. 

The law requires that restaurants use branded cups, so ABC agents can determine where folks purchased their alcoholic beverages.  We see this as primarily a means to track sales to minors and intoxicated persons. 

The open carry law does not work if there is any sort of gap between the two restaurants, such as a public street.  The restaurants must be connected in order to enjoy the open carry privileges. 

We see the new law working especially well for multiple restaurants that share a common space, such as a food court in a mall or several restaurants that connect to a common patio. 

Normal rules about fencing patios to prevent guests from leaving with an alcoholic beverage still apply.  Restaurants will also be responsible to ensure that patrons do not leave common spaces with an alcoholic beverage.

The new law specifically includes beer.  We suspect that most beer boards will want some sort of notice or new application before allowing beer to be carried between two establishments.  In addition to applying with the ABC, we encourage restaurants to seek approval from their local beer board. 

All this walking around with a beer makes us think of a line from our favorite Hank Williams, Jr. tune, There’s a Tear in My Beer:

"I’m gonna keep drinkin’

Till I can’t move a toe

And then maybe, my heart won’t hurt me so."

P.C. 755 also contains a provision that could be interpreted as allowing restaurants to expand into additional areas, such as parking lots or adjacent fields. We believe the language does not create any new rights for restaurants to expand. It merely states an unwritten policy that has been in effect for years. A restaurant can have an exterior patio, provided it is properly fenced, for example.

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Category: retail sales, wine in grocery stores, liquor stores

04.11.18

It appears we are just days away from the Sunday sale of wine and liquor in stores across Tennessee.

With everyone eagerly inquiring, “When can I buy wine on Sunday?," folks aren't really talking about the new restrictions imposed on retail stores.  We will break down the details for you.

Retail liquor stores can now start selling wine on Sundays at 10 a.m. The first day of sales begins on Sunday, April 22. 

However, grocery stores cannot start selling wine until 10 a.m. on January 6, 2019.  The legislation gives a decided advantage to retail liquor stores by giving liquor stores a head start on Sunday sales.

In addition to Sunday sales of wine, retail liquor stores will be able to sell spirits, beer and any other item allowed to be sold by a retail liquor store.  On Sundays.  

Sunday sales brings to mind Joan Osborne’s classic One of Us:

What if God was one of us?

Just a slob like one of us

Just a stranger on the bus

Tryin’ to make his way home?

The scriptures tell us that God can make wine out of water, so we know at least one person — or deity in this case — that was not waiting for the new law to pass to buy wine on Sunday.

We see Sunday sales of spirits and the ability to immediately sell wine on Sundays as part of the compromise offered by grocery stores for selling wine on Sundays.  Folks that followed the initial passage of the wine in grocery store law, which we affectionately call WIGS, remember that the final bill was an ugly compromise, where all parties sacrificed.

Holiday Sales

The legislation also changes days when wine and spirits cannot be sold at liquor stores and eliminates holidays for grocery stores. Prohibiting sales on holidays has been particularly confusing to consumers and grocers. The bill ends the confusion by allowing wine to be sold by grocery stores on every holiday, including Christmas. Three years ago when WIGS passed, who would have imagined Tennesseans Krogering for wine on Christmas Day, 2018.

You can now buy beer, wine and spirits on Labor Day, New Year’s Day and the Fourth of July at your favorite liquor store. You still cannot buy beer, wine or spirits at liquor stores on Thanksgiving and Christmas. The legislation adds Easter to the list of holidays when liquor stores must be closed.

Minimum Markup on Spirits

The Sunday sales legislation also introduces a 10 percent minimum markup on the price of spirits.  With the exception of the amount, the minimum markup on spirits mirrors the existing WIGS law imposing a 20 percent minimum markup on wine, including the amounts of fines, criminal penalties and injunctive relief.

We see the minimum markup on spirits as laying the foundation for legalizing the sale of spirits in grocery stores, too.  Imposing a minimum markup was critical to the original WIGS deal.

Moratorium on New Liquor Stores

The Sunday sales compromise also imposes a moratorium on issuance of new licenses to retail liquor stores.  There is an exception that allows new licenses to be issued for jurisdictions that approve of retail liquor stores by local option, or for any applicant with a pending application as of April 20, 2018.

The legislation sets up a process for transferring existing licenses.  We wonder if imposing a moratorium on new licenses and setting up a process for transferring licenses will create value in a retail liquor license.  In many states, limiting the number of licenses creates a market for purchasing liquor licenses.  Licenses are worth hundreds of thousands of dollars, or more, depending on the limitations and demands for licenses in a particular city or state.

Industry members generally agree that WIGS significantly reduced the value of retail liquor stores.  Many owners have seen a dramatic drop in the valuation of their businesses.  Given the decrease in valuation, will the moratorium on new licenses create any additional value in existing licenses?

The moratorium on new licenses and the transfer process expires on January 1, 2021.  At that time, new licenses can be issued and the ordinary transfer process kicks back in.

Inventory Liquidation

The legislation also provides some relief to retail liquor stores that close their doors.  Under current law, a retail liquor store can only sell its inventory back to wholesalers.  Wholesalers are required to repurchase “saleable” inventory and can impose restocking fees.  In practice, retail liquor store owners that close can be forced to accept devastating losses, particularly since wine inventory is often deemed not saleable by wholesalers.

The new law allows a closing store to hold a 30-day going out of business sale.  The store can price inventory as low as 10 percent below wholesale cost.  The law specifically authorizes a licensee to keep any product that is not sold, for personal consumption.  This has been the practice for years, although it has not been specifically authorized by any law.