Legislature in Stalemate Over Booze Reg Modernization Efforts

Tennessee Lawmakers considered dozens of bills this year to relax the state’s liquor laws, but like in years before, few of those bills ever gained traction.

Despite apparent public willingness to change some of those laws, there still isn’t the political will at Legislative Plaza to make it happen.

“Our liquor laws are so convoluted, and they have been since 1932,” said Sen. Bill Ketron, a high-ranking leader in the Republican caucus who has repeatedly failed in passing a bill allowing grocery stores to sell wine.

The reasons vary depending on who’s talking: some blame the influential liquor lobby which pours thousands of dollars of liquid courage into many a Tennessee lawmaker’s campaign fuel hold. Others say the state’s political power structures, steeped as they are in rural Bible-belt sensibilities, are much more tuned in to keeping liquor laws tight than loosening regs more to match other consumer-friendly tourist-destination states. Others say reform is coming, albeit slowly — and that current regulations are actually over time becoming more “progressive,” in the words of one retail liquor lobbyist.

Many of Tennessee’s liquor laws date as far back as the immediate wake of Prohibition’s repeal.

The Volunteer State was one of the first to prohibit alcohol back in 1838, more than 80 years before Congress passed the 18th Amendment attempting to ban the manufacture, sale and transportation of alcoholic beverages nationwide. That amendment was nullified in 1933 via the 21st Amendment.

While other states have updated their liquor laws since that time, Tennessee’s governments have instituted strict alcohol regulations, such as restricting liquor store owners to only one store and requiring bars to operate more like restaurants that serve booze.

Case in point is the longstanding effort to allow grocery stores to sell wine, a change that 69 percent of people surveyed in a Middle Tennessee State University poll (pdf) say they favor.

A legislative committee killed the bill for the fifth time this spring, a move Ketron equates to seven politicians dousing the majority will of the people of Tennesseans.

He and other supporters say the expansion of wine sales would have created up to 3,500 jobs as the unemployment now hovers around 9.6 percent. A coalition marching under the flag of Red White and Food says the measure would boost state tax revenues by between $19 million and $38 million annually.

The bill died partially at the hands of Rep. Kent Williams, a former speaker and often a proponent of government-sponsored efforts to create jobs, who successfully moved to delay the bill until long after the Legislature is expected to adjourn in 2012.

Ketron says House Bill 406’s failure has much to do with the liquor lobby pouring thousands of dollars into state-level candidates each year to help solidify enough votes on the State and Local Government committees to quash efforts they see as threatening their control of the market.

According to the National Institute on Money in State Politics, liquor wholesalers gave $476,487 last year and liquor stores dolled out $89,976 in political donations to candidates.

The grocery, convenience store and gas station industries, which could be eligible to to sell wine under Ketron’s proposal, collectively gave $503,079 to candidates this year.

The beer, wine and liquor industry is one the top 10 most generous political donors, and thus one of the most influential. Liquor store owners and wholesalers generally are in favor of the laws as they are, saying a change would put at least a fourth of store owners out of business.

Gov. Bill Haslam often says rolling back cumbersome government regulations is central to the spirit of his pro-business policy cocktail, a key ingredient in creating private-sector jobs. But the governor doesn’t indicate much of a thirst for remixing Tennessee’s retail liquor laws in any wholesale fashion — particularly with regard to wine sales in grocery stores. Haslam suggests he doesn’t want to change the rules on existing business — liquor stores — that fear they’ll fail in a less restrictive, more competitive marketplace.

“The issue to me always has been you have people who have made an investment on their business on one premise, and then you change that premise. Somehow we have to address that on wine in grocery stores,” the governor told TNReport.

Last year, 44.9 million bottles of wine were sold in Tennessee for $344 million in total sales.

The current regulations drive up the price on wine and stiffle competition, according to the Tennessee Center for Policy Research, a free market think tank which released the report, “Drunk with Power,” in 2009 about how politics plays into state liquor laws.

“When you have monopolistic laws like that, it’s going to hurt consumers,” said Justin Owen, TCPR’s executive director and an advocate for making wine available in grocery stores. “It’s a lot easier to fight to protect a monopoly than fight to take it down.”

Rep. Jon Lundberg, who pushed the same bill in the House, agreed.

“It’s amazing how this industry has eliminated competition and maintained the monopoly,” said the Bristol Republican, who wishes liquor stores would embrace competition. On the other hand, trying to protect the status quo probably makes more sense to them, Lundberg said. “If I was in their shoes, I’d do that too.”

But booze bills are a moral issue too, at least to some, which gives other lawmakers pause.

Rep. Bill Dunn, who wants to keep wine out of stores that sell food, says he’s been told 90 percent of serious criminal cases the Tennessee Bureau of Investigation looks in to involve alcohol or drug abuse. Making wine more accessible would likely exacerbate society’s problems with individuals who don’t drink responsibly, argues Dunn, a Knoxville Republican.

The TBI wouldn’t confirm the figure Dunn cited. A spokeswoman said the state’s top law enforcement agency lacks the statistical mapping and tracking capacity to publicly reveal how many of the criminal cases it investigates involve substance abuse.

Dunn furthermore doubts a report by wine-in-grocery-story backers claiming that selling wine in grocery stores would create thousands of new jobs.

“People find studies to support whatever position they have,” said Dunn. “I don’t know how many more jobs are going to be created by adding a product in a grocery store.”

Tennessee is still a largely “rural-thinking” state, which can intimidate lawmakers who fear that voting to loosen liquor laws may lead to them losing votes themselves come election day, asserts Dan Haskell, the former legal counsel and assistant director to the state’s Alcohol Beverage Commission, which enforces the state’s liquor laws.

Haskell, who served on ABC from 1981 to 1985, now lobbies on behalf of advocates for liberalizing statewide liquor regulations, including the Tennessee Grocers & Convenience Store Association and the Tennessee Hotel & Lodging Association.

“The problem is you have a small number of people who are willing to fight to the death in the trenches to keep it the way it is,” Haskell said.

Lawmakers this year also shelved legislation that would have allowed liquor stores to carry items other than alcohol, such as ice, mixers, cork screws and other impulse buys, a move to appease the liquor store owners who would lose sales if wine was widely available, said Henry Hildebrand, general counsel for the Wine and Spirit Wholesalers of Tennessee.

The most significant alcohol bill, HB986, to make it through the legislative process is Chairman Curry Todd’s proposal which — pitched as an economic development bill — allows producers of high-volume beer to sell it on site instead of only through liquor stores. Liquor stores did not oppose the bill, passing 69-15-6 in the House and 27-4 in the Senate.

The plan was meant specifically for Sierra Nevada Brewing, a California-based company eying a location in Eastern Tennessee’s Alcoa, although the new measure would be open for any brewery.

Another bill would allow bars to buy liquor licenses that reflect their food-to-alcohol sales ratio, so they can avoid hefty fines for failing to reach current requirements that at least half their business come from food.

Despite the repeated failure of the wine in grocery stores bill, the state has made serious progress on modernizing liquor laws by allowing more by-the-drink licenses, liquor stores and wineries, says Bard Quillman of the Tennessee Wine and Spirits Retailers Association.

The key to changing those laws is to leave the business structure alone, he said.

“I don’t necessarily think (Tennessee’s alcohol laws are) that arcane,” said Quillman, the treasurer for the TWSR. “It’ll change over time. And it will. There’s new things that will come down the pike and there will be minor adjustments to it.”

Andrea Zelinski is a staff writer for TNReport.com, a not-for-profit news service supported by readers like you. She can be reached at 615-489-7131 or andreazelinski@tnreport.com.

  • Amy Liorate

    Let the liquid loose, end the labyrinthine legislation and liquor lobbyist legacy of languishing libations.

    Customers conclude that convenience and choice concur when the capital clears the way for crafty concoctions and clerks will clean up with cash and county coffers will cascade.