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Municipal Technical Advisory Service (MTAS)

Original Author: Hemsley, Sid
Date of Material: 12/11/1998

Alcoholic beverages
Alcoholic beverages--Laws and regulations
Beer--Laws and regulations
Beer--Licenses and permits

Overriding the Decision of the Beer Board to Grant a Beer -- Permit

Reviewed Date: 07/22/2021
MTAS was asked whether the city's governing body can override the decision of the beer board to grant a beer permit.

Can the city’s governing body override the decision of the beer board to grant a beer permit?

The answer is no.

The authority of counties and cities to regulate the sale of beer is governed by comprehensive state law. Under that state law, municipalities have been granted wide powers in the regulation of the sale of beer. However, the state law prescribes the procedure for the granting and suspension and revocation of beer permits.

Tennessee Code Annotated, section 57-5-106(a), provides that,

All incorporated cities, towns and Class B counties in the state of Tennessee are authorized to pass proper ordinances governing the issuance and revocation or suspension of licenses for the storage, sale, manufacture and/or distribution of beer within the corporate limits of the cities and towns and within the general services district of Class B counties outside the limits of any smaller cities as defined in section 7-1-101(8) and to provide a board of persons before whom such application shall be made....

A beer board must issue a beer permit to any applicant who meets the requirements of the state law, and of the city’s ordinances, governing the sale of beer. [Howard v. Willocks, 525 S.W.2d 132 (Tenn. 1975); Pantry Inc. v. City of Pigeon Forge, 681 S.W.2d 23 (Tenn. 1984); Fritts v. Wallace, 723 S.W.2d 948 (Tenn. 1987).]

With respect to the suspension and revocation of such permits, Tennessee Code Annotated, section 57-5-108, provides that, "Any permits or licenses issued under this chapter by the governmental body of any incorporated city, or by any committee or board created by such governmental body, may be revoked or suspended by such governmental body, committee or board."

The city’s beer board is established under Section 8-201 of your Municipal Code. It consists of three members nominated by the mayor and appointed by the city council. Section 8-205 provides that, "The beer board shall have the power and it is hereby directed to regulate the selling, storing for sale, distributing for sale, and manufacturing of beer within this municipality in accordance with this chapter." Section 8-207 provides that, "It shall be unlawful for any person to sell, store for sale, distribute for sale, or manufacture beer without first making application to and obtaining a permit from the beer board." Finally, Sections 8-214, and 8-215, provide that, "The beer board" has the power, respectively, to revoke and suspend beer permits.

Nothing in neither the state statutes nor your Municipal Code indicate that a person denied a permit, a person challenging the issuance of a permit, or a person challenging the suspension or revocation of a permit by the beer board, has the right of appeal to the city’s governing body. In fact, Tennessee Code Annotated, section 57-5-108(d), provides that:

The action of such agency in connection with the issuance of an order of any kind, including the revocation or suspension of a license or permit, imposition of a civil penalty or the refusal to grant a license or permit under sections 57-5-105, 57-5-106 and this section, may be reviewed by statutory writ of certiorari, with a trial de novo as a substitute for appeal, the petition of certiorari to be addressed to the circuit or chancery court of the county in which any such order was issued.

It was also opined in Tennessee Attorney General’s Opinion 94-064, that:

A beer permit issued by the authority of the appropriate county or city is necessary to operate any business engaging in the sale, distribution, manufacture, or storage of beer in Tennessee. While no one has a right to a beer permit in the first instance, such a permit, once granted, is a valuable property right protected by the state and federal constitutions. Thus once issued a beer permit, like any valuable permit, license or franchise, may not be revoked, or deemed void, without compliance with the constitutional requirements of due process.

In your case, the beer permit was issued by the city’s legally constituted beer board. It cannot be revoked or suspended by the city’s governing body because the power of suspension and revocation that power resides in the city’s beer board, and the city’s governing body is not the beer board. The permit which the permittee holds is a property right and it cannot be taken without due process, including both procedural and substantial due process. The procedural due process to which the permittee is entitled with respect to the body that has the right to suspend or revoke the permit is the beer board.