The Bone McAllester Norton Alcoholic Beverage Group has kindly published a legislative recap to help you stay aware of beer and liquor laws. To read the rest of our newsletter click here.
In The News
Shipment of wine into Tennessee was illegal until the 2009 legislature authorized a new direct shipment license. Many industry observers thought that the direct shipment was a token to placate oenophiles, but result in few sales. Surprisingly, nearly 400 out of state wineries have paid the $300 application fee and $150 yearly license fee, plus registering to pay Tennessee taxes.
This year, the legislature legalized direct shipment to the entire state, including dry areas where wine cannot be purchased at package stores. Wineries no longer have to worry about determining which areas of Tennessee are approved for direct-to-consumer shipping.
Direct shipment was opposed by wholesalers and retail liquor stores, which saw direct shipment as new competition and potentially a method to avoid payment of Tennessee taxes. Opposition to direct shipment touted the dangers of sales to minors, among other concerns that have apparently not materialized. Direct shipment of wine was quite controversial at a national level during the 2000’s, but most states have legalized some form of direct shipment and only a handful still have an absolute prohibition.
Tennessee taxes wine at $1.21 per gallon, plus applicable sales taxes. Despite only being able to ship one case of wine to any individual during a calendar month and an annual limit of 3 cases, the license has proven to be popular.
According to shipcompliantblog.com, “Approximately 35% of wineries that ship wine direct are licensed to ship into Tennessee. The increased market access [to dry areas in Tennessee] is likely to encourage additional wineries to add Tennessee to their direct shipping programs, meaning more consumer choice and increased state revenue.”
This year, the legislature legalized direct shipment to the entire state, including dry areas where wine cannot be purchased at package stores. Wineries no longer have to worry about determining which areas of Tennessee are approved for direct-to-consumer shipping.
Direct shipment was opposed by wholesalers and retail liquor stores, which saw direct shipment as new competition and potentially a method to avoid payment of Tennessee taxes. Opposition to direct shipment touted the dangers of sales to minors, among other concerns that have apparently not materialized. Direct shipment of wine was quite controversial at a national level during the 2000’s, but most states have legalized some form of direct shipment and only a handful still have an absolute prohibition.
Tennessee taxes wine at $1.21 per gallon, plus applicable sales taxes. Despite only being able to ship one case of wine to any individual during a calendar month and an annual limit of 3 cases, the license has proven to be popular.
According to shipcompliantblog.com, “Approximately 35% of wineries that ship wine direct are licensed to ship into Tennessee. The increased market access [to dry areas in Tennessee] is likely to encourage additional wineries to add Tennessee to their direct shipping programs, meaning more consumer choice and increased state revenue.”
2011 has seen several cities voting on whether to expand liquor sales, either on premises or off premises. Below are a few of the 2011 developments.
Undoubtedly, these, and other locations, will continue to vote on the expansion of liquor sales. Stayed tuned for future developments in and around your part of the state.
- In May, voters in the city of Lawrenceburg overwhelmingly approved the sale of liquor, 806 to 597.
- Also in May, Pigeon Forge voters defeated liquor in restaurants for the second time in 2 years, 590 to 482. Establishments in the city were already allowed to sell beer and wine, but not liquor. We see this as unusual since Pigeon Forges’ largest business is tourism, and many tourists expect full liquor service at restaurants. We hear that the town’s biggest attraction, Dollywood, worked against LBD, perhaps to foster aold-fashioned family-oriented appeal.
- Around the same time, voters in Sevierville rejected allowing liquor stores in the city, 785 to 614. Gatlinburg remains the only city in the tourism-dominated county.
- Early this year, the Sparta BOMA unanimously approved liquor-by-the-drink (“LBD”) sales. It appears the measure was approved in order to increase city revenue through the 15% LBD tax (50% of which goes to the city) and through a new annual privilege tax.
Undoubtedly, these, and other locations, will continue to vote on the expansion of liquor sales. Stayed tuned for future developments in and around your part of the state.
In March we saw a change in the composition of the Tennessee Alcoholic Beverage Commission. Governor Haslam appointed two new members, and in an unusual political move, reappointed longtime TABC member John Jones. Given his historical ties to the Democratic party, Jones was likely reappointed to provide continuity and historical perspective to the three person commission and bring consistent application of the complicated and often arcane laws that regulate liquor in Tennessee. Jones’ father served on the original TABC when it was established in the 1960’s, and a Jones family member has always served as a TABC Commissioner. We see the appointment of Jones as being consistent with the Governor’s broad vision of enhancing Tennessee's reputation as a business-friendly state.
The two new Commissioners are Mary McDaniel and Bryan Kaegi.
Commissioner Kaegi, the Middle Tennessee representative, has a long history of support for prominent Republican campaigns. He currently works with Persuasion Partners, a high-profile political campaign service. Commissioner Kaegi served on the 2010 Tennessee Victory Leadership Team that led and funded the successful TNGOP get out the vote campaign, was Finance Director for Senator Lamar Alexander and also the former Finance Director for the Tennessee Republican Party. He served as Finance Director for the Tennessee Victory program for President Bush in 2000 and 2004. His sister, Kim Kaegi, was Governor Haslam’s finance director.
Commissioner McDaniel, the West Tennessee representative, is recently retired FedEx Vice President of Aircraft Materiel. Her career with FedEx spanned 30 years and she managed aircraft parts inventory and technical support for the FedEx global fleet. She is President of the Board of Trustees for Southwest Tennessee Community College, her alma mater, and leads fundraising efforts for the college.
We say farewell to Senator Harlan Matthews and Cynthia Bond, who served the state as Commissioners for the past eight years, and welcome Commissioners Kaegi and McDaniel to our insane little world. We are glad to see the return of Commissioner Jones for another term.
At the conclusion of April's regular TABC meeting, Commissioner Jones announced that he was stepping down as chair. Commissioner Jones has chaired the Tennessee ABC for longer than we recall. Commissioner McDaniel was appointed the new Chair and promised to spend a lot of time with the staff helping out with TABC functions. For example, Commissioner McDaniel attended the National Conference of State Liquor Administrators and spoke to the group.
Commissioner McDaniel’s assistance could not come at a better time. The staff at the TABC is pretty thin and seems to be getting thinner all the time. There are numerous high level vacancies. Acting Assistant Director Melinda Arrington departed in May. Former Assistant Director Carolyn Smith departed late last year. Senior ABC agents Mike Cawthon and Al Watson have retired. Hiring freezes have left a number of key positions vacant.
The ABC was already a thinly staffed agency charged with overseeing several thousand licenses. Director Danielle Elks is now filling the role of three staff attorneys and also leading the agency. ABC agents are sparse. Although licensees do not look forward to stings, ABC agents are vital to conducting inspections necessary for issuance of licenses to new businesses and changes of ownership. In addition, the General Assembly is passing laws that create more classes of licenses and opening up the number of eligible locations and entities that can obtain licenses; thus, further increasing the workload of a diminished staff.
So far, the ABC has done an admirable job of working through this tough time. We hope that help is on the way, as backlogs are certain to build up and morale can easily suffer.
The two new Commissioners are Mary McDaniel and Bryan Kaegi.
Commissioner Kaegi, the Middle Tennessee representative, has a long history of support for prominent Republican campaigns. He currently works with Persuasion Partners, a high-profile political campaign service. Commissioner Kaegi served on the 2010 Tennessee Victory Leadership Team that led and funded the successful TNGOP get out the vote campaign, was Finance Director for Senator Lamar Alexander and also the former Finance Director for the Tennessee Republican Party. He served as Finance Director for the Tennessee Victory program for President Bush in 2000 and 2004. His sister, Kim Kaegi, was Governor Haslam’s finance director.
Commissioner McDaniel, the West Tennessee representative, is recently retired FedEx Vice President of Aircraft Materiel. Her career with FedEx spanned 30 years and she managed aircraft parts inventory and technical support for the FedEx global fleet. She is President of the Board of Trustees for Southwest Tennessee Community College, her alma mater, and leads fundraising efforts for the college.
We say farewell to Senator Harlan Matthews and Cynthia Bond, who served the state as Commissioners for the past eight years, and welcome Commissioners Kaegi and McDaniel to our insane little world. We are glad to see the return of Commissioner Jones for another term.
At the conclusion of April's regular TABC meeting, Commissioner Jones announced that he was stepping down as chair. Commissioner Jones has chaired the Tennessee ABC for longer than we recall. Commissioner McDaniel was appointed the new Chair and promised to spend a lot of time with the staff helping out with TABC functions. For example, Commissioner McDaniel attended the National Conference of State Liquor Administrators and spoke to the group.
Commissioner McDaniel’s assistance could not come at a better time. The staff at the TABC is pretty thin and seems to be getting thinner all the time. There are numerous high level vacancies. Acting Assistant Director Melinda Arrington departed in May. Former Assistant Director Carolyn Smith departed late last year. Senior ABC agents Mike Cawthon and Al Watson have retired. Hiring freezes have left a number of key positions vacant.
The ABC was already a thinly staffed agency charged with overseeing several thousand licenses. Director Danielle Elks is now filling the role of three staff attorneys and also leading the agency. ABC agents are sparse. Although licensees do not look forward to stings, ABC agents are vital to conducting inspections necessary for issuance of licenses to new businesses and changes of ownership. In addition, the General Assembly is passing laws that create more classes of licenses and opening up the number of eligible locations and entities that can obtain licenses; thus, further increasing the workload of a diminished staff.
So far, the ABC has done an admirable job of working through this tough time. We hope that help is on the way, as backlogs are certain to build up and morale can easily suffer.
