Puzzling Changes Proposed to TN Beer Laws

Written by Doug Brumley for fledglingbrewer.com

Posted by Ken Carman for PGA readers

GRANDFATHERED IN: Authorized to brew high-alcohol beer since 2010, Yazoo Brewing Co. is automatically included in a controversial "pilot program" currently proposed by the Tennessee Senate that would cap the state's high-alcohol breweries at three.
A bill designed to limit to three the number of Tennessee breweries manufacturing high-alcohol beer is currently making its way through state Senate committees. Originally drafted to ease the residential requirements for obtaining a retail liquor store license in Tennessee, the bill’s initial language and intent were amended before the proposed legislation picked up a second, oddly worded amendment in the Senate; that latter addition establishes a “pilot program” that licenses only one brewery to produce high-alcohol beer—defined as 5 percent to 20 percent alcohol by weight—in each of Tennessee’s three “Grand Divisions” (East, Middle and West Tennessee).

This Amendment No. 2, added in the Senate after the bill passed by a wide margin in the state House, caught many in the regional craft beer community by surprise and has created quite a stir among Tennessee brewers, distributors and beer enthusiasts. Reactions range from confusion to suspicion as word spreads that a large, out-of-state brewery is lobbying the state legislature for incentives to locate a new facility in East Tennessee.

The incredibly specific yet cryptic language of the amendment gives a foothold to those who believe that legislation is being drafted for a predetermined entity. Indeed, the amendment’s requirements to be a high-alcohol beer licensee in the East Tennessee Grand Division are so narrow as to be humorous, as seen in this excerpt: “[S]uch manufacturer shall be located with a municipality having a population of not less than seventy-seven hundred (7,700) nor more than seventy-eight hundred (7,800) located in a county having a population of not less than one hundred five thousand eight hundred (105,800) nor more than one hundred five thousand nine hundred (105,900), according to the 2000 federal census. …”

The bill’s sponsor in the Senate, Sen. Ken Yager (R-Harriman), shed light on the intended East Tennessee location and the driving forces behind Amendment No. 2 when he brought the proposed legislation up for discussion and a vote during the Monday, May 9 meeting of the State and Local Government Committee.

“I certainly appreciate the patience of the members of the committee as we’ve worked our way through these amendments, which are admittedly very technical and frankly somewhat confusing,” Yager said during the committee session. “That’s probably because we had 20 lawyers and as many lobbyists working on these.

“But let me tell the committee that–let me try to put it in perspective as I ask you for your support on this.”

“We have a very serious industrial prospect with the city of Alcoa in Blount County which brought Senator [Doug] Overbey to me to bring this issue to my attention, which resulted in Amendment 2. But we discovered that there was an unintended consequence that might have an adverse affect on a concern in both Memphis and in Nashville. Hence these amendments to make sure that existing activities in those communities were not in any way harmed. But the thrust of the amendment and the intent originally was to ensure the city of Alcoa’s competitive place in securing a very significant industrial prospect.”

“We are caught up in the drama of two relatively huge out-of-state brewers trying to influence TN law.” —Linus Hall, owner of Yazoo Brewing Company

The Memphis concern Yager mentions is likely City Brewing, which, according to a May 3 story in the Memphis Business Journal, recently completed its purchase of the Hardy Bottling Plant in Memphis. City Brewing plans to be producing beer and other beverages by July at the facility, a onetime Coors Brewing plant.

Putting the evidence together, one can surmise that concessions are being made for the prospective East Tennessee brewery, and two additional slots in the pilot program were provided for an arriving West Tennessee brewery sizable enough to wield political leverage (City Brewing) and a growing Middle Tennessee brewery that was fortunate to have already acquired the license to legally brew high-alcohol beer (Nashville’s Yazoo Brewing Company).

Linus Hall, owner and brewmaster of Yazoo, posted a statement on his brewery’s blog clarifying his position on the matter. “We have had ZERO input on this bill,” he wrote in his public post dated Friday, May 13. “We are caught up in the drama of two relatively huge out-of-state brewers trying to influence TN law.”

For more reaction from the craft beer community, see the editorial written by Sean Smith at his Nashville Beer Geek blog. It includes a letter from an anonymous commercial brewer who would be unable to brew high-alcohol beer if the bill becomes law in its current form. The letter summarizes the argument being made by Middle Tennessee craft breweries like Blackstone, Jackalope, Cool Springs, and Calfkiller, all of whom would be limited to brewing beers containing no more than 5 percent alcohol by weight (about 6.2 percent alcohol by volume). Popular craft beer styles like barleywines, imperial stouts and double India pale ales would be illegal to produce for all but the three Tennessee breweries licensed through the pilot program.

While the proposed legislation provides for the creation of an annual report that documents the progress of the pilot program, it lacks any benchmarks that would reasonably be expected to determine the success or failure of the program in the eyes of the legislature. Yet brewers like Yazoo’s Hall welcome certain aspects of the bill, like a provision that would allow the sale of high alcohol beer in the same facility where it is brewed. Additionally, Hall added in his blog post on the bill, “It would end the silly restrictions against selling growlers to go if you serve high-alcohol beer. It would allow the brewers to operate a restaurant and serve high-[alcohol beer] alongside regular strength beer, and still sell growlers to-go of both types of beer.”

On May 9, the bill—with its amendments—was recommended for passage by the Senate State and Local Government Committee, chaired by Sen. Ken Yager. The bill was referred to the Senate Finance, Ways and Means committee, where it is slated for a hearing on Tuesday, May 17. Additional Information

To read the bill and its amendments, see the bill’s history, and view video clips of legislators discussing the bill, visit Bill Information for SB1224 on the Tennessee General Assembly website.

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