Knowledgebase-Sale of Beer by Municipalities


Information Product

Title:Sale of Beer by Municipalities
Summary:MTAS was asked whether the city can itself hold a beer permit.
Original Author:Hemsley, Sid
Co-Author:
Product Create Date:10/14/2005
Last Reviewed on::06/19/2017
Subject:Beer--Licenses and permits; Beer--Laws and regulations; Beer
Type:Legal Opinion
Legal Opinion:

Reference Documents:

Text of Document: MEMORANDUM

FROM: Sid Hemsley, Senior Law Consultant

DATE: October 14, 2005

RE: Sale of beer by municipalities

The Mayor's administrative assistant has the following questions:

1. Does state law permit a city to engage in the retail sale of beer?

The answer is no. Tennessee Code Annotated, ' 57 B 5-103(a) provides that:

(1) It is unlawful to operate any business engaged in the sale....of beer without a permit issued by the county or city where such business is located under the authority herein delegated to counties and cities.
(2) Permits shall be issued to the owner of the business, whether a person, firm or corporation, joint-stock company, syndicate, or association.

Tennessee Code Annotated, ' 57-5-102(f) says that "Every person, firm, corporation, joint-stock company, syndicate or association, before being permitted to....sell....beer shall pay a license, and comply with such regulations and ordinances as may be passed by the county courts of the counties and/or enacted by the property municipal authorities of the cities or towns where such person, firm, corporation, joint-stock company, syndicate or association may do business in the manner hereinafter provided." Similar language appears in other places in the beer statute, found in Tennessee Code Annotated, title 57, chapter 5.

But those two statutes, standing by themselves, make it clear that a municipality is not among the type of entities 'not even of the type of corporations' authorized to sell beer in Tennessee.

Tennessee Code Annotated, ' ' 57-5-106 and 108, and 109, also make it clear that the authority given municipalities in Tennessee with respect to beer is the authority to license and regulate 'not to themselves sell' beer.

The question of whether a municipality could hold a liquor license was asked the Tennessee Attorney General by the Alcoholic Beverage Commission. The answer was no, opined the Tennessee Attorney General in an opinion dated July 23, 1969, for the reason that a "corporation" to whom liquor licenses could be issued under the liquor laws of the state did not include municipalities. In light of the above statutes there is no reason the answer would be different with respect to beer licenses.

It is further said in 12 McQuillin, Municipal Corporations (3rd Ed.), ' 36.02, that:

The object of a creation of a municipal corporation is that it may perform certain local public functions as a subordinate branch of the state government; and while it is invested with full power to do everything necessarily incident to a proper discharge of those public functions, no right to do more can ever be implied. In the absence of express legislative sanction, it has no authority to engage in any independent business enterprise or occupation such as is usually pursued by private individuals....

The same thing is said in Tennessee Attorney General's Opinion 235, dated January 9, 1981. There is no express legislative sanction for Tennessee municipalities to engage in the sale of beer.

2. Question 2 is intercepted by the answer to question 1.

3. Question 3 is intercepted by the answer to question 1.

Please remember that these legal opinions were written based on the facts of a given city at a certain time. The laws referenced in any opinion may have changed or may not be applicable to your city or circumstances.

Always consult with your city attorney or an MTAS consultant before taking any action based on information contained in this database.