Amendments	Fiscal Memos
HA0596	Amendment 1-0 to HB0610
HA0616	Amendment 2-0 to HB0610
HA0628	Amendment 3-0 to HB0610
HA0633	Amendment 4-0 to HB0610
HA0634	Amendment 5-0 to HB0610
HA0641	Amendment 6-0 to HB0610
HA0654	Amendment 7-0 to HB0610
HA0655	Amendment 8-0 to HB0610
HA0683	Amendment 8-1 to HB0610
HA0661	Amendment 9-0 to HB0610
HA0662	Amendment 10-0 to HB0610
HA0664	Amendment 11-0 to HB0610
HA0667	Amendment 12-0 to HB0610
HA0670	Amendment 13-0 to HB0610
HA0671	Amendment 14-0 to HB0610

	Amendments	Fiscal Memos
SA0536	Amendment 1-1 to SB0837
SA0537	Amendment 2-2 to SB0837
SA0538	Amendment 3-3 to SB0837
SA0539	Amendment 4-4 to SB0837
SA0540	Amendment 5-6 to SB0837
SA0541	Amendment 6-7 to SB0837
SA0542	Amendment 7-8 to SB0837
SA0543	Amendment 8-9 to SB0837
SA0573	Amendment 9- to SB0837

NOTE: Each fiscal memorandum applies only to the amendment(s) identified in the memorandum. The fiscal memorandum must be matched to any amendments that have been adopted.

Fiscal Summary

Increase State Revenue - $2,419,000/FY14-15/ABC Fund Exceeds $4,217,500/FY15-16/ABC Fund Exceeds $3,690,000/FY16-17 and Subsequent Years/ABC Fund $1,724,800/FY14-15/General Fund $7,278,200/FY15-16/General Fund Exceeds $7,677,700/FY16-17 and Subsequent Years/General Fund Increase State Expenditures - $1,458,100/FY14-15/ABC Fund $2,115,300/FY15-16/ABC Fund $2,246,100/FY16-17/ABC Fund $1,912,800/FY17-18 and Subsequent Years/ABC Fund Increase Local Revenue - Exceeds $2,260,300/FY14-15/Permissive Exceeds $5,873,600/FY15-16/Permissive Exceeds $6,014,800/FY16-17 and Subsequent Years/Permissive

Bill Summary

Present law regulates the manufacturing and selling, at wholesale and at retail, of alcoholic beverages through the issuance of licenses by the alcohol beverage commission. This bill creates the "wine at retail food store license," which authorizes the sale of wine at retail food stores. Any wine sold by the holder of a wine at retail food store license may not exceed an alcoholic content of 18 percent by volume. Municipalities and counties may not limit the number of wine at retail food store licenses issued within their jurisdictions.

The license would be issued by the alcoholic beverage commission and would only be issued in a county or municipality that has authorized the sale of wine at a retail food store by referendum, pursuant to this bill, provided that the county or municipality has held and passed a referendum authorizing retail package stores or authorizing the sale of alcoholic beverages for consumption on the premises prior to holding a referendum under this bill. Under this bill, the county election commission must include the question of whether to legalize the sale of wine at retail food stores on the ballot, if the commission receives the necessary petition requesting the referendum. This bill details when such a petition must be received by the commission.

Any individual applying for a wine at retail food store license must be at least 21 years of age and, generally, must not have been convicted of a felony involving moral turpitude within the past 10 years. Each applicant for a license must pay to the commission a one-time, nonrefundable fee of $400 when the application is submitted for review. Additionally, a wine at retail food store license may not be issued until the applicant has paid to the commission the annual license fee of $1,100.

Every applicant must submit with the application a certificate signed by the appropriate county or municipal executive or legislative body. The certificate must state:

(1) That the applicant who is to be in actual charge of the business has not been convicted of a felony within a 10-year period immediately preceding the date of application and, if a corporation, that the executive officers or those in control have not been convicted of a felony within a 10-year period immediately preceding the date of the application and that in the official's opinion the applicant will not violate any of the provisions of this bill or present law regarding intoxicating liquors and local options; and
(2) That the applicant has secured a location for the business which complies with all zoning laws adopted by the local jurisdiction, as to the location of the business.

An applicant may seek review of a denial of a certificate by instituting an action in the chancery court having jurisdiction over the municipality or county within 60 days of the denial. A failure on the part of the issuing authority to grant or deny the certificate within 60 days of the written application would be deemed a granting of the certificate.

The commission must create a responsible vendor training program for wine at retail food store licensees and licensed retailers similar to the responsible vendor training program established under present law regarding beer and alcoholic beverages containing less than 5 percent alcohol. Each wine at retail food store licensee and licensed retailer must participate in such program as a condition to having and maintaining such license. Each wine at retail food store licensee and retailer must pay an annual fee based on the number of certified clerks existing at the time the licensee applies to the commission for certification under the responsible vendor training program. The fee would be as follows:

(1) $150 if there are between 0 and 15 certified clerks;
(2) $200 if there are between 16 and 30 certified clerks;
(3) $250 if there are between 31 and 45 certified clerks;
(4) $300 if there are between 46 and 60 certified clerks;
(5) $350 if there are between 61 and 100 certified clerks;
(6) $400 if there are between 101 and 150 certified clerks;
(7) $450 if there are between 151 and 200 certified clerks; and
(8) $50 for each additional 50 certified clerks over 200.

A retail food store licensed to sell wine under this bill may not sell, or give away, wine between the hours of 3:00 a.m. and 8:00 a.m. on weekdays, or between the hours of 3:00 a.m. and noon on Sundays. The commission may extend the hours of sale to coincide with any extended hours that apply to liquor-by-the-drink. The governing body of any municipality or county which has approved the sale of wine in retail food stores in a referendum may, at any time, opt out of any such extension of hours by passage of a resolution.

A municipality may impose by ordinance an inspection fee upon wine at retail food store licensees located within such municipality.

This bill specifies that the present law provision regulating the location of a licensed retail or wholesale store, such as the requirement that the store be on ground level, would not apply to a retail food store under this bill.

This bill would take effect on January 1, 2014.

ON JANUARY 30, 2014, THE SENATE ADOPTED AMENDMENT #9 AND PASSED SENATE BILL 837, AS AMENDED.

AMENDMENT #9 rewrites this bill and makes various changes to present law concerning the sale of wine and beer.

PRESENT LAW CONCERNING SALE OF WINE FOR OFF PREMISES CONSUMPTION

Under present law, only persons who are licensed to operate a winery, farm winery, nonresident seller or retail package store may sell wine directly to consumers for off premises consumption.

REFERENDUMS TO AUTHORIZE WINE SALES IN RETAIL FOOD STORES

This amendment authorizes any city or county that has held and passed a referendum authorizing either retail package stores or sales of alcoholic beverages for consumption on the premises to hold a referendum that authorizes the sale of wine in retail food stores upon receipt of a petition signed by residents of the county or municipality to a number amounting to 10 percent or more of the votes cast in the county or municipality for governor of the state of Tennessee at the then last preceding gubernatorial election, requesting the holding of such election. A referendum held under this amendment will be conducted in the same manner as are referenda on the question of permitting or forbidding the manufacture, receipt, sale, storage, transportation, distribution or possession of alcoholic or intoxicating beverages in a local jurisdiction under present law.

RETAIL FOOD STORE WINE LICENSES

This amendment creates the retail food store wine licenses, to be issued by the alcoholic beverages commission. A retail food store license will authorize the licensee to sell wine, of an alcoholic content not to exceed 18 percent by volume, for off premises consumption. A retail food store that is licensed to sell beer may also be licensed to sell win under this amendment. The qualifications for issuance of a retail food store wine license will be:

(1) The store must be an establishment that is open to the public and that derives at least 20 percent of its sales taxable sales from retail sales of food and food ingredients other than food and food ingredients sold as prepared food, alcoholic beverages, candy, dietary supplements and tobacco. This requirement must be maintained throughout the period of licensure and failure to maintain this requirement, after receiving a one-year period within which to do so, will result in suspension or revocation the license;
(2) The store must have retail floor space of at least 1,200 square feet;
(3) The store must be located in a county or municipality where the sale of wine in retail food stores has been authorized by a local option election and that have full time law enforcement through a police or sheriff's department;
(4) Individual applicants for licensure must be at least 21 years of age and not have been convicted of a felony that would disqualify the applicant from eligibility for issuance of an alcoholic wholesaler or retailer license under present law;
(5) No licensee, nor any entity having an interest in a license greater than 10 percent, shall have any interest in a business licensed to engage in the sale or distribution of alcoholic beverages, including wine and beer. A retail food store wine licensee will not be prohibited from having more than one such license, however, a retail food store wine licensee will not be permitted to combine its purchasing power with other licensees;
(6) Payment of a $400 application fee and a $850 annual license fee;
(7) Submit a certificate signed by the chief executive of the local government where the store is located, which states that the applicant is not disqualified based on a past criminal conviction and that the applicant is compliant with local zoning ordinances. This requirement will be waived if the certificate is not issued within 60 days of an application being submitted or upon submission of a court order indicating that denial of a certificate was unreasonable; and
(8) The store must not be located in a shopping center where the owner has restricted the sale of alcoholic beverages at the shopping center.

An applicant who is denied a license may appeal the denial to chancery court.

This amendment generally applies the laws that are applicable to the licensure and regulation of package retailers and wholesalers to retail food store wine license holders. This amendment specifically exempts retail food store wine licensees from the following provisions of present law that apply to retail package stores:

(1) The prohibition against selling intoxicating liquors at retail in connection with any wholesale business;
(2) The requirement that retail package stores be located on a ground floor;
(3) The requirement that any person employed in the storage, sale or distribution of alcoholic beverages be a citizen of the United States;
(4) The prohibition against sales for on premises consumption; and
(5) The restrictions against non-resident ownership of interests in retail package stores.

Retail food stores will be prohibited from conducting wine tastings on their premises.

This amendment requires retail food stores that make wine sales to verify that wine purchasers are adults by requiring the presentation of identification prior to making a wine sale. A violation of the identification requirement will be a Class A misdemeanor.

This amendment prohibits retail food store wine licensees from storing wine off their licensed premises and requires that wine deliveries be made by licensed wholesalers. Employees of wholesalers, wineries, manufacturers and nonresident sellers will be prohibited from assisting with the shelving or display of wine in retail food stores. This amendment further requires that retail food store wine licensees designate a manager who has obtained a manager's permit from the commission to oversee the orders and deliveries of wine from the wholesaler.

This amendment prohibits retail food store wine licensees from keeping unsealed bottles of wine on their premises, except for areas that may be licensed to sell for on premises consumption.

Municipal governments will be authorized to impose an inspection fee on retail food store wine licensees to the same extent that municipal governments are authorized to set inspection fees for retail package stores under present law. Local governments will not be permitted to limit the number of retail food store wine licenses issued within their jurisdictions.

The commission will not issue any retail food store wine licenses prior to July 1, 2016, although the commission may begin processing applications prior to that date. Prior to July 1, 2017, no retail food store wine license will be issued to any applicant for a location that is within 500 feet of an existing retail package store licensee, unless the licensee consents to the issuance of the license.

RESPONSIBLE VENDOR TRAINING PROGRAM FOR WINE AND PACKAGE RETAILERS

Under present law, the responsible vendor program is a program whereby retailers who sell beer for off premises consumption may register and have their employees who sell beer directly to consumers trained in how to avoid making sales to minors and intoxicated persons. A retailer who achieves responsible vendor status is not subject to having the retailers beer permit revoked or suspended in the event that a trained clerk makes a sale to a minor, although the retailer may be subject to a civil penalty of $1,000 and have their responsible vendor status removed.

This amendment requires all retail food stores that are licensed to sell wine and all package stores to participate in a responsible vendor training program for wine and liquor, which will be similar to the responsible vendor program under present law for employees of businesses that sell beer. A retail food store that participated in the responsible vendor program for beer will not be required to also participate in the responsible vendor program for wine and liquor. The annual fee for participation in the program will vary depending on the number of clerks from a law of $150 for 0-15 clerks to a high of $450 for 151-200 clerks plus $50 for each additional 50 clerks over 200.

Responsible vendor training will not be required for any clerk who holds an alcoholic beverage server's permit.

RETAIL PACKAGE STORES

Present law imposes various requirements on businesses that are licensed to sell liquor and wine for off premises consumption. This amendment changes, modifies and adds to those requirements as follows:

(1) This amendment replaces the present law requirement that retail package stores not sell alcoholic beverages to a known minor with a requirement that retail package store clerks must require customers to present identification before purchasing alcoholic beverages. This is the same requirement as will apply to retail food store wine licensees. A violation of this requirement will be a Class A misdemeanor;
(2) Beginning July 1, 2014, this amendment replaces the present law prohibition against retail package stores selling anything other than wine and liquor with authorization for retail package stores to sell beer and other retail items related to or incidental to the use, consumption, dispensing, or storage of alcoholic beverages, together with merchandise and supplies related to special events or parties. A retail package store licensee will not be required to obtain another permit or license in order to sell beer. This authorization will not apply until July 1, 2017, for any retail package store that objects to extending a license to a retail food store that is located within 500 feet of the package store;
(3) This amendment removes the three percent cap on the service fee that retail package stores may charge customers for check cashing services;
(4) This amendment authorizes retail package stores to provide consulting services related to their products, merchandise and supplies and to supply, deliver and set up such items at locations away from their retail premises;
(5) This amendment adds a requirement that, in order to renew a retail package store license, the licensee must maintain at least 65 percent of their sales from alcoholic beverages, including wine and beer. A licensee who does not meet this requirement will be given one year to comply before the person's retail package store license is suspended or revoked;
(6) This amendment authorizes retail package stores to have two entrances rather than one main entrance;
(7) This amendment modifies the commission's authority to regulate the advertising, signs and displays, posters or designs intended to advertise any alcoholic beverage or the place where the same is sold by limiting such regulatory authority to that which is in accordance with federal regulations only;
(8) This amendment expands on the present law qualifications for a retail package store license. Generally, this bill adds requirements for licensure that ameliorate the opportunity for conflicts of interest amongst various levels of the three tiered system and between licensees and licensing authorities, as well as ensuring that felons, minors and straw men are not licensed; and
(9) This amendment removes the present law prohibition against one person receiving more than one retail package store license, subject to certain conditions. In a municipality or county where two or more retail package store licenses have been issued, no licensee shall hold more than 50 percent of the licenses issued in the jurisdiction. Until January 1, 2019, no retail package store license will be issued for premises that are located within 1,500 feet of an existing licensee's establishment, unless the existing licensee consents to the permit or the applicant is buying-out the existing licensee's business.

This amendment authorizes suppliers to provide, through a licensed wholesaler, products for tasting purposes by a retail licensee.

MANAGER'S PERMIT

This amendment requires the commission to issue permits for persons who will be in actual control of alcohol, wine or beer operations of a retail package store, a retail food store wine licensee, or a winery. Generally, in order to receive a manager's permit, an applicant must be an adult, not have had any recent criminal convictions or administrative discipline that would indicate that the person is unsuited to control a supply of alcoholic beverages, have training and pay a fee of up to $200. A manager's permit will be valid for five years.

ALCOHOLIC BEVERAGES WHOLESALERS

This amendment prohibits wholesalers from providing a discount or other reduction in price to a retailer or retail food store wine licensee by virtue of the sales made to any other licensee. Any discount or pricing made available to a retailer or retail food store wine licensee must be made available on the same terms and conditions to other retailers and retail food store wine licensees within the same jurisdiction. Any quantity discounts provided by wholesalers cannot be cumulative in nature, but can be based only upon products delivered substantially contemporaneously. No retail food store wine licensee may receive any remuneration, by whatever name, at a corporate office located inside or outside the state of Tennessee that affects the profitability of wine or beer sales in the state of Tennessee, that is not made available to all retail licensees or other retail food stores licensed to sell wine or beer in the state of Tennessee

Present law limits the amount of time that wholesalers may extend credit to a retail package store in connection with a sale of alcoholic beverages to 10 days. This amendment clarifies the how the 10-day period may be calculated, the voluntary nature of any credit decision and how information related to any such arrangement may be used.

This amendment prohibits wholesalers from selling wine to retail food store wine licensees on credit.

This amendment specifically authorizes wholesalers of liquor and wine to also obtain a beer wholesaler's license and any person so dually licensed may use the same facility, vehicles and employees for both operations.

Under present law, a license to sell or deal in alcoholic spirituous beverages at wholesale may only be granted for premises situated within a municipality having a population of not less than 100,000. This amendment changes the population requirement to any premises located in a county with a population in excess of 120,000.

SURPLUS PROCEEDS

Beginning in fiscal year 2017-2018, this amendment directs that any amount of the proceeds collected from the retail food store wine license fee in excess of 20 percent of the amount used by the commission to administer such licensure system during the previous fiscal year be deposited in the state general fund without being designated for any specific purpose. Beginning on October 1, 2017, and annually thereafter, the treasurer will report the amount of any such surplus to the commissioner of finance and administration for inclusion in the annual budget document, and such surplus shall be subject to appropriation by the general assembly.

SOLICITATIONS

This bill removes from present law the general prohibition against persons who are licensed to deal in alcoholic beverages employing any canvasser or solicitor for the purpose of receiving an order from a consumer for any alcoholic beverages at the residence or place of business of such consumer, and receiving or accepting any such order which shall have been solicited or received at the residence or place of business of such consumer.

UNFAIR WINE SALES LAW

This amendment makes it a Class C misdemeanor offense for any retailer to advertise, offer to sell, or sell at retail, wine at less than the amount that the wholesaler charged the retailer, minus any discounts, incentives or concessions, plus taxes and delivery fees not included in the wholesale price, plus 20 percent (the "cost to the retailer"). Any contract that would permit the sale of wine at less than the cost to the retailer is void.

This amendment prohibits retail food stores from selling, offering for sale or advertising the sale of two or more combined items, at least one of which is wine, at a combined price. This amendment also makes it a violation of the Unfair Wine Sales Law for any retail food store to sell, offer for sale or advertise the sale of liquor, spirits or high alcohol beer.

This amendment creates a private right of action whereby any person who is injured by a retailer who violates the Unfair Wine Sales Law, or a trade group who represents such person, may sue the retailer for injunctive relief and actual damages.

The alcoholic beverage commission will administer the Unfair Wine Sales Law. Penalties for violations of the Unfair Wine Sales Law will be graduated as follows:

(1) An initial violation or noncompliance will subject the a retailer to a penalty in the amount of up to $1,000.00;
(2) A second violation or noncompliance will subject the a retailer to a penalty in the amount of up to $2,500.00; and
(3) Any subsequent violation or noncompliance will subject the retailer to a penalty in the amount of up to $5,000.00.

This amendment specifies that any person whose license is revoked or suspended under the Unfair Wine Sales Law, and who continues to engage in the unauthorized sale, distribution or handling of wine in this state, either directly or through any agent or third party acting on behalf of such person, will be charged with an additional violation of the Law.

Any person who is adversely affected by a decision of the commission under the Unfair Wine Sales Law may petition the commission for a hearing.

In enforcing the Unfair Wine Sales Law, the commission shall consider the cost and effectiveness of administration and endeavor to administer the Law in the most cost-efficient manner.

The Unfair Wine Sales Law will not apply to sales at retail made where wines are:

(1) Sold upon the complete final liquidation of a business; or
(2) Advertised, offered for sale, or sold by any fiduciary or other officer acting under the order or direction of any court.

ON FEBRUARY 20, 2014, THE HOUSE ADOPTED AMENDMENTS #2, 7, AND 8, AND PASSED HOUSE BILL 610, AS AMENDED.

AMENDMENT #2 revises the required square footage to qualify as a retail food store from 1,200 square feet to 2,000 square feet. This amendment also increases the annual license fee for a retail food store wine license from $850 to $2,000.

This amendment authorizes a retail food store to enter into a franchise or management agreement with a person or entity to make wine sales at the premises of the retail food store. This bill specifies that it does not prohibit a retail food store that owns its premises from either holding a retail food store wine license or from entering into a franchise or management agreement. This amendment also specifies that the issuance of the certificate required by this bill will not be conditioned on the residency of the applicant, including, but not limited to, requiring the applicant to live within the county or municipality, or additional conditions not required by the bill.

This bill, as amended, provides that all deliveries of wine to a retail food store must be made on trucks owned and driven by a licensed wholesaler employee. This amendment revises this provision to instead require that such deliveries be made by a licensed wholesaler through a common carrier, a contract carrier or on vehicles owned by the wholesaler.

Under the bill as amended, a retail food store that has a retail food store wine license may also hold a license to sell alcoholic beverages for consumption on premises, but each license must be operated as a separate and distinct business and may not be at the same location. This amendment revises this provision to specify that if a retail food store holds both licenses, the premises of the on-premises consumption licensee must be separate and distinct from the premises of the retail food store and the business of the on-premises licensee must be operate separately and distinctly from the operation of the business of the retail food store wine licensee.

In regard to the responsible vendor provisions, the bill as amended provides that responsible vendor training will not be required for any clerk who holds an alcoholic beverage server's permit. This amendment revises this provision to instead provide that the responsible vendor training provisions will not apply to such clerks until July 1, 2016, and that an employee of a retailer who has a valid server's permit on July 1, 2016, will not be required to be certified pursuant to the responsible vendor provisions until that permit expires.

This amendment removes the provisions in the bill as amended regarding surplus proceeds collected by the alcoholic beverage commission. This amendment clarifies that the present law provision whereby no retailer may sell any alcoholic beverages to any person who is visibly intoxicated, or sell to any person accompanied by a person who is visibly intoxicated also applies to the sale of beer.

Under this bill as amended, until January 1, 2019, no retail package store license will be issued for premises that are located within 1,500 feet of an existing licensee's establishment, unless the existing licensee consents to the permit or the applicant is buying-out the existing licensee's business. This bill revises this provision to instead provide that until January 1, 2019, no retail license will be issued to any applicant for a new location that is within 1,500 feet of an existing operating establishment holding a retail license as of the effective date of this bill (an "existing licensed premises") if the applicant for such new retail license already holds one or more retail licenses, unless the commission receives the written consent from each retail licensee owning an existing licensed premises within 1,500 feet of such new location. The holder of one or more retail licenses may purchase the business or assets of an existing licensed premises and obtain a retail license to operate such existing licensed premises. This amendment specifies that it does not prohibit a licensed retailer from obtaining a new or replacement license in connection with the relocation of an existing licensed premises, as long as the new location is within the jurisdiction of the municipality or county issuing the required certificate for such existing licensed premises.

This amendment clarifies that any retailer who is assessed a civil penalty (instead of whose license is revoked or suspended) and who continues to engage in the unauthorized sale, distribution or handling of wine in this state will be charged with an additional violation.

In regard to the unfair wine sale provisions in the bill as amended, this amendment adds that those provisions will not apply to sales at retail made where wines are closeouts and case discounts or such other discounts as defined by the commission.

AMENDMENT #7 revises the square footage requirement under the definition of retail food store from 2,000 square feet to 1,200 square feet and revises the retail food store wine license fee from $2,000 to $1,250. This amendment also clarifies that the unfair wine sales provisions will take effect July 1, 2016.

AMENDMENT #8, AS AMENDED, allows wholesale licenses to be granted in counties in which the voters of a municipality or other jurisdiction within that county have approved retail package sales or consumption of alcoholic beverages on premises by referendum.