The "Sale of Wine in Retail Food Stores Act" permits grocery stores to sell wine and authorizes package stores to sell a variety of items. This law is codified in Tennessee Code Annotated §§ 57-3-801 through 820.

Cities that have approved sales of alcohol, either package stores or by the drink, may hold a referendum on whether or not to approve the sale of wine in grocery stores. Counties may also conduct county-wide referenda on the issue, and cities within those counties that participate in such referenda will be impacted by approval of the measure, even if the cities do not have liquor sales. T.C.A. § 57-3-805.

The process for getting the question on the ballot is the same as for package store approval, requiring a petition signed by at least 10 percent of the voters in the last preceding gubernatorial election. The petition must be filed with the election commission not less than 75 days prior to the regular election date. The question appearing on the ballot must state the following:

For legal sale of wine at retail food stores in _______________________ city.

Against legal sale of wine at retail food stores in _______________________ city.

If voters approve the sale of wine in grocery stores, the Alcoholic Beverage Commission will issue “retail food store wine licenses.” Applicants must submit a certificate from the city, signed by the mayor, stating that the applicant has not been convicted of a felony in the past ten years and that the applicant has a location for their business inside city limits. Each applicant or officer of the applying entity must submit a local and national criminal history record. The criminal history record must reveal that the applicant or officer has not been convicted of a felony within the preceding ten-year period. T.C.A. § 57-3-806. The law does not enable a city to charge a fee to issue this certificate. If a city fails to issue a certificate to an applicant within 60 days after receiving a written application, the commission will waive the certificate requirement. Store ownership is not required in order to receive a license, as store owners may enter into franchise or management agreements with licensees. Cities may not limit the number of retail food store wine licenses to be issued in their jurisdiction nor require that applicants reside in the city. T.C.A. § 57-3-806.

“Retail food store” is defined in the law as a business that derives at least 20 percent of its sales from the retail sale of food and food ingredients and has floor space of at least 1,200 square feet. The law requires that food sales be those types of sales taxed at the lower state rate, rather than the higher sales tax rate applied to sales of prepared food. T.C.A. § 57-3-802. This definition prevents most convenience stores and gas stations from obtaining licenses to sell wine.

Any grocery store selling wine must have at least one employee who holds a manager’s permit issued by the Alcoholic Beverage Commission. This permit is also required for all package stores and wineries making retail sales. The manager’s permit is issued to the employee and is valid for 5 years. T.C.A. § 57-3-816. Grocery stores may sell wine on Sundays between the hours of 10:00 a.m. and 11:00 p.m.

The "Sale of Wine in Retail Food Stores Act" has other provisions impacting retailers and wholesalers.