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Sale and Regulation of Beer

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Reviewed Date: June 20, 2017

Original Author: 
Darden, Don
Date of Material: 
Oct 22, 2004

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

Sale and Regulation of Beer

MTAS was asked to prepare a presentation to assist Woodbury in considering the regulation and sale of beer.


BEER: includes all beers, ales, and other malt liquors having an alcoholic content of not more than 5%.

Cities in Tennessee are authorized by the general laws of the State of Tennessee to regulate the sale of beer by ordinance. There is no authorization for a referendum on the question of authorizing beer sales. General laws take precedence over private act charters.

MTAS is not a proponent for or against the sale and regulation of beer in Tennessee cities. Our agency provides technical assistance when asked by cities. We have been asked by the Town of Woodbury to explain various issues relative to beer sales.

State laws relative to city beer sales give cities much flexibility in regulating beer sales:

· The town can limit the number of permits
· The hours of sale, so long as reasonable. The town may prohibit beer sales on Sunday.
· Regulate distance requirements for churches, schools, and other places of public gathering
· The town can authorize off-site or on-site consumption, and in the case of on-site consumption can require a minimum number of meals in order to obtain a permit
· The town can establish zones in which beer may be sold

Here are some of the issues that have been brought to the attention of MTAS over the past 10 years or so:

· May a beer license be transferred upon sale of a business that has a valid permit? No. When a business is sold, the new owner has to apply for a new permit, and has no guarantee that it will be issued.
· May the city board serve as the beer board? Yes. State law provides that the city board is required to establish a beer board. The aldermen are free to establish the city board as the beer board or to appoint a separate board. I recommend that the city board serve as the beer board. The city board is accountable to the public, and decisions that it makes are more likely to be made with benefit of legal counsel. Of the 212 city charters on the MTAS web site, 132 cities have the city board serving as the beer board.
· What is a place of public gathering? It is a school, day care center, church, or other such place (shopping center) where the public frequently gathers.
· May the town establish hours of sale? Yes, however, hours of sale must be reasonable.
· How is the distance requirement measured, and must it be applied uniformly? The distance requirement is measured in a straight line and may be measured from property line to property line, from building to building, or from front door to front door. If a town fails to uniformly enforce the distance requirement established by the town, then the distance requirement will be unenforceable.
· May wine coolers be sold at places where beer is legally sold? No. The definition of “alcoholic beverages” that is subject to regulation only by the ABC includes wine and every liquid containing wine (TCA 57-3-101 (a) (1) (A)). The definition also includes any liquid containing distilled spirits regardless of alcohol content. These provisions keep coolers and other pre-mixed drinks out of beer stores. If the drink has less than 1/2 of 1 percent alcohol, it can be sold anywhere unless it contains wine.
· How many permits may a town issue? The town may authorize one, two, three, four, five, or more permits, or the town may not establish a limit and allow the free market place to determine the number. We have seen problems where a city might have Krogers, Food City, Food Lion, and perhaps other grocery chain stores and the town agrees to allow two or three permits. How do you choose among the major grocery chains and at the same time allow one or more local markets to sell beer?
· How much revenue will the beer tax generate? The best way to determine this is to look at similar sized cities that regulate beer sales. The number one revenue generator in cities of this size is usually the property tax followed by the sales, business, and then wholesale beer tax. In some cities the beer tax generates more revenue than the business tax.
· What are the tax rates on wholesale beer? There is a one time application fee of $250, and the town may levy a privilege tax of $100 annually. The wholesale beer tax rate is 17% on beer sales. These amounts are established by the Tennessee General Assembly and may not be changed by a city or town.
· Does the Town of Woodbury have to regulate the sale of beer as a condition for receiving wholesale beer tax revenue as a part of state shared taxes? No. Each town or city receives such wholesale beer revenue on the basis of population. Woodbury has long been a recipient of wholesale beer taxes in the form of state shared revenue.
· May minors sell beer? A person who is 18 years of age may sell beer. In order for anyone to purchase beer, they must prove that they are at least 21 years of age.
· What are the fines for selling beer to a minor? Fines in city court are limited to $50 per offense. Generally, the Constitution of the State of Tennessee provides that a fine of more than $50 may not be imposed except by a jury of your peers. City courts do not have jurys, and a beer board is not a city court, and is authorized to levy civil penalties of up to $1,500 for violations.
· Is a public hearing required prior to issuance of a beer permit? No. Beer board meetings are open meetings, and such board must give notice of meetings, however, a public hearing is required only for revoking or suspending a license.
· May the beer board prohibit drive-in window beer sales? Yes.
· May the beer board issue temporary beer permits? Yes.
· May the town prohibit Sunday beer sales? Yes.
· May cider be sold at a beer outlet? Cider that has less than 5% alcohol content is considered beer and may be sold at beer outlets. Cider that has more than 5% alcohol content is considered liquor and may not be sold at beer outlets.

Reference Document(s): 


About Our Knowledgebase

Information written by MTAS staff was based on the law at the time and/or a specific sets of facts. The laws referenced may have changed and/or the technical advice provided 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 posted to this website.