THE SALE AND REGULATION 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 premixed 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.