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Frequently Asked Questions (as of 07/20/2017)

Managers and Certified Clerks for Retail Package Stores and Retail Food Stores FAQs

This section is intended to serve as guidance to TABC staff and industry members regarding permits for employees and managers of retail package stores, retail food stores, and wineries. This section is the official opinion of the TABC until superseded by a later determination of the Commission, opinion of the Attorney General of Tennessee, a decision by a court of competent jurisdiction, or an act of the General Assembly.

Overview

Q1: What is a manager’s permit and who is required to obtain a manager’s permit?

A: A TABC-issued manager’s permit allows an individual to operate, supervise, or manage the retail sales of alcoholic beverages or wine at a retail package store or serve as a designated manager at a retail food store. Retail package store managers and retail food store designated managers must obtain a manager’s permit from the TABC.

Q2: What is a certified clerk and who is required to become a certified clerk?

A: A certified clerk is an employee of a retail package store or retail food store who sells alcoholic beverages or wine, who has completed responsible vendor training, and is included on a retail package store’s or retail food store’s list of certified clerks submitted to the TABC. Employees who sell alcoholic beverages or wine at these businesses must be certified clerks.

Q3: How much time does an employee have to become a certified clerk?

A: An employee who is required to become a certified clerk must do so within sixty-one days of being hired or otherwise assuming the duties of selling alcoholic beverages.

Q4: If I currently have an unexpired TABC retail package store employee permit (blue card), do I have to obtain a manager’s permit or become a certified clerk?

A: Individuals holding an unexpired TABC employee permit (blue card) may perform the duties of a clerk until the expiration of their current TABC employee permit. The employee should take the steps necessary to become a certified clerk before the expiration of their TABC employee permit. An individual who holds an unexpired TABC employee permit (blue card) and who is performing the duties of a manager (operating, supervising, or managing the retail sales of alcoholic beverages or wine) must obtain a manager’s permit from the TABC.

Q5: What training is required for a manager’s permit?

A: To obtain, maintain, or renew a manager’s permit, an individual is required to annually complete the following required training:

  1. Either a responsible beer vendor or a responsible wine vendor training course approved by the TABC; and
  2. A two (2) hour course covering a review of recent changes in the law, applicable statues, rules, and regulations approved by the TABC.
 

Q6: What training is required to become a certified clerk?

A: To become a certified clerk, an individual must annually attend either a responsible beer vendor or a responsible wine vendor training course approved by the TABC

Q7: What is required to obtain new manager’s permit or to renew a manager’s permit?

A: To obtain a manager’s permit from the TABC, an individual must do the following:

  1. Either a responsible beer vendor or a responsible wine vendor training course approved by the TABC; and
  2. A two (2) hour course covering a review of recent changes in the law, applicable statues, rules, and regulations approved by the TABC.
    1. Submit a manager’s permit application;
    2. Submit a Declaration of Citizenship form;
    3. Submit proof of completed training; and
    4. Pay the $200.00 application fee.

Q8: How do I know where I can take the required manager permit or certified clerk training and what is the cost?

A: The TABC does not set the cost for training programs and trainers are not employed by the TABC. Required training for manager permits and certified clerks is outlined in questions four (4) and five (5). For more information, contact Hayword.Reed@tn.gov or Denise.Black@tn.gov.

Q9: Must an individual licensed as a sole proprietor pursuant to § 57-3-204 or § 57-3-801 seq., obtain a manager’s permit?

A: No. An individual licensed as a sole proprietor is not required to obtain a manager’s permit. For this purpose, a sole proprietorship does not include any member, owner, or shareholder of an LLC, corporation, LLP, general partnership or any entity that is required to be registered with the Secretary of State. While the sole proprietor is not required to obtain a permit, other managers, who are not the sole proprietor owner, of the sole proprietorship must obtain a TABC manager’s permit and employees who sell alcoholic beverages or wine must become certified clerks.

Q10: What if I have a criminal history?

A: Any individual seeking a manager’s permit must demonstrate that the individual has not been convicted of any crime involving the sale or distribution of alcohol over the previous eight (8) years and has not been convicted of any felony within the previous five (5) years.

Q11: Can a manager’s permit be suspended or revoked?

A: Yes. A manager’s permit may be suspended or revoked by the Commission for any violation of Title 57 of Tennessee Code Annotated, and/or the rules and regulations of the TABC, including not attending required annual training, committed by the holder of the manager’s permit or by any person operating under the supervision of the holder of the manager’s permit.

Q12: Can I hold a server permit card to sell alcohol for on-premise consumption, and also hold a manager’s permit card for off-premise consumption?

A: Yes. An individual who holds a manager’s permit may also seek to obtain a server’s permit from the TABC.

Q13: What is a designated manager at a retail food store?

A: A designated manager is an individual associated with a specific retail food store who must conduct all orders and purchases of wine for that particular retail food store location. Wholesalers are specifically prohibited from taking wine orders from anyone other than the retail food store’s designated manager. The designated manager is tied to the location of the retail food store licensee. In other words, ordering or purchasing wine at the corporate level is specifically prohibited under the WIGS law for retail food store licensees. All orders and purchases must be made by a designated manager associated with a specific retail food store licensee, not the corporate retail food store generally. Please note that a preorder of wine may be made by a person with a pending application for a retail food store license.

Wine In Groceries Stores and Unfair Wine Sales Law FAQs

This section is intended to serve as guidance to TABC staff, retail package stores, retail food stores, and wholesalers on the Wine in Grocery Stores and Unfair Wine Sales laws (Tenn. Code Ann.§§ 57-3-801 et. seq. and 57-3-901 et seq.). This section is the official opinion of the TABC until superseded by a later determination of the Commission, opinion of the Attorney General of Tennessee, a decision by a court of competent jurisdiction, or an act of the General Assembly.

Overview

Q1: How is the twenty percent (20%) markup calculated?

The twenty percent (20%) markup is calculated by multiplying the per bottle price of a particular bottle of wine by one and two tenths (1.2). The per bottle price is located on the latest wholesaler invoice. This is the minimum price that a store may advertise or sell a bottle of wine. Calculation Example: If the per bottle price of a wine on the wholesaler invoice is $10.00, the minimum price the retailer may advertise or sell the bottle of wine is $12.00 ($10.00 x 1.2 = $12.00).

Q2: What must be included on a wholesaler’s invoice?

The invoice must show the per bottle cost for each bottle of wine sold to the retailer and must detail any taxes, fees, or charges applied to an order of wine. The per bottle cost must include all taxes, fees, and charges passed on from the wholesaler to the retailer. These charges include, but are not limited to:

  • The gallonage tax;
  • The enforcement tax;
  • The municipal inspection fee;
  • Any transportation costs or surcharge;
  • Split case fee;
  • Restocking charge; and
  • Other costs.

Q3: What is appropriate advertising for the sale of wine?

A retailer cannot advertise the sale of wine below the required twenty percent (20%) markup. The following terms are prohibited:

  • “Exclusive”
  • “Exclusively”

Due to varying municipal inspection fees and quantity discounts, retailers must not advertise a per bottle price lower than the highest minimum per bottle price in the area the advertisement may reach. The phrase “select varieties” may only be used when advertising a brand, but not a specific type of that brand. If the phrase “select varieties” is used, then each wine type from that brand must be available at the advertised price. The language “select varieties” must not be used if the advertisement identifies a particular brand and type.

Q4: Are there exceptions to the twenty percent (20%) markup requirement?

Yes, the following exceptions are permitted:

  1. During the final liquidation of the business;
  2. Under the direction of a court, such as a bankruptcy court;
  3. Closeouts; and
  4. Case discounts.

Q4a: What is a closeout?

A closeout is a discount offered on a brand of wine which will no longer be sold by a particular retailer. The brand being offered at closeout must have been sold by the retailer at least one hundred twenty (120) days prior to the beginning date of a closeout sale. A closeout sale must not last longer than ninety (90) days. The brand of wine being offered for sale in a closeout cannot be sold by the retailer for at least one (1) year after the closeout sale is concluded.

Q4b: What is a case discount?

A case discount is a discount offered on a case of wine. A case of wine is any of the following groups of wines:

  1. At least twelve (12) bottles of 750 ml wine;
  2. At least six (6) bottles of 1.5 liter wine; or
  3. At least four (4) boxes of 3 liter boxed wine.

A case may consist of various brands chosen by the consumer as long as it meets the above requirements of a case. The per bottle price in an advertisement cannot represent or assume a case discount, unless the requirement of a case purchase is conspicuously shown in the advertisement.

Q5: Can a retailer sell wine below cost?

No. A retailer may not sell wine, or any other alcoholic beverage, below the cost the retailer paid to the wholesaler for the alcoholic beverage. There are no exceptions to this requirement. Even in cases where a retailer sells wine below the 20% minimum markup (e.g. a case discount or a closeout) the retailer may not sell such wine below the per bottle cost paid to the wholesaler for the wine.

Q6: Can discount cards be used to discount wine?

No, discount cards cannot be used for discounts on wine nor advertised for use on wine.

Q7: Is a designated manager* required to accept delivery of wine?

No, this is not required for either retail food stores or retail package stores.

Q8: Is a designated manager* required to be present at all times wine is permitted to be sold?

No, this is not required for either retail food stores or retail package stores. *A designated manager may also be referred to as a certified manager.

Q9: What is a “wine” that may be sold at retail food stores?

The new law defines wine as follows: “Wine” means the product of the normal alcoholic fermentation of the juice of fresh, sound, ripe grapes, with the usual cellar treatment and necessary additions to correct defects due to climatic, saccharine and seasonal conditions, including champagne, sparkling and fortified wine of an alcoholic content not to exceed eighteen percent (18%) by volume. No other product shall be called “wine” unless designated by appropriate prefixes descriptive of the fruit or other product from which the same was predominantly produced, or an artificial or imitation wine. “Wine” does not mean alcohol derived from wine that has had substantial changes to the wine due to the addition of flavorings and additives.

The commission will analyze particular products on a case-by-case basis to determine whether a product may be sold as wine in a retail food store. In determining which products are included in the definition of “wine” at T.C.A. § 57-3-802(2), the following factors, among others, will be considered:

  • Whether the product has had substantial changes due to the addition of flavorings and additives;
  • Whether the product had been sold in grocery, convenience, and similar stores before July 1, 2016;
  • The specific nature of the product and the manufacturing process; and
  • The manner in which the product is marketed and labeled.

The nature of the product and the manufacturing process are critical factors for determining whether a product is included in the definition of “wine” at T.C.A. § 57-3-802(2). The labeling, suffix, or prefix of the product as descriptive of a fruit or other suitable agricultural product, and as descriptive of a wine, is another critical factor for determining whether a product is included in the definition of “wine” at T.C.A. § 57-3-802(2). “Suitable agricultural product” does not include grain, cereal, malt, or molasses. Wine does not include any product that contains caffeine, mood enhancers, or other stimulants. Wine does not include any product that is marketed to appear or bottled to appear as an imitation liquor or cocktail substitute, including any product that appears to contain vodka, whiskey, rum, gin, tequila, applejack, mescal, liqueur, or cordial. Wine is not a product marketed or labeled as “cider,” and nothing in this part should affect the marketing of cider products distributed as beer by wholesalers permitted under § 57-5-103.

Retail Package Store FAQs

This section is intended to serve as guidance to TABC staff and industry members on common violations associated with retail package stores. This document is the official opinion of the TABC until superseded by a later determination of the Commission, an opinion of the Attorney General of Tennessee, a decision by a court of competent jurisdiction, or an act of the General Assembly.

Overview

Q1: Am I required by state law to check the identification of a person purchasing alcoholic beverages?

A: Yes. A retail package store must check identification for any person who does not reasonably appear to be an age of fifty (50) years or older in a face-to-face transaction prior to the sale of alcoholic beverages. The identification checked must be a valid (unexpired), government-issued (state, local, national, or foreign) document that includes the photograph and birth date of the customer. Any identification that meets such requirements may be accepted by the retail package store. The sale of alcoholic beverages or beer to a minor or a failure to check for identification is a Class A misdemeanor under state law.

Q2: Is my retail package store required to post a pregnancy warning or any other documents?

A: Yes. If a licensee sells alcoholic beverages, then the pregnancy warning sign must be posted in a prominent place, easily seen by customers. Failure to post this sign could lead to a warning from TABC staff. After the warning, the establishment can be assessed a twenty-five dollar ($25) fine per day. The required sign may be obtained from a TABC office. A retail package store should also post its TABC license and certificate of occupancy issued by the local jurisdiction.

Q3: How long must a retail package store maintain records?

A: Retail package stores must maintain records for three (3) years. The records must be made available for inspection to the TABC and the Tennessee Department of Revenue. Failure to do so could lead to revocation of the license. For purposes of this requirement, records in electronic format are acceptable if they are readily available and easily accessible.

Q4: How soon must wholesaler invoices be paid and what are the potential consequences for failing to timely pay wholesaler invoices?

A: A wholesaler may set their own terms for the payment of invoices (such as cash on delivery), but a wholesaler may not extend credit to a retail package store for more than ten (10) days on which the wholesaler is open for business. If a wholesaler has not received payment within ten (10) days, the wholesaler is required to report such delinquent payment to the TABC. The TABC posts the number of reported delinquencies on the Public Information and Forms section of our website. If a package store fails to pay its debts when due, a variety of potential consequences exist, including a fine, non-renewal, or revocation of the package store's license.

Q5: May tastings occur at a retail package store?

A: Yes. Complimentary samples are allowed. A retail package store may conduct tastings for free on the premises of the retail package store during the hours the store is open for business. In order to do so, the retail package store must first give the TABC notice of its intent to conduct tastings at the time of license application, renewal, or thereafter, if the store later decides it would like to conduct tastings. Samples may not exceed two ounces (2 oz.) for each wine or high alcohol content beer sample and may not exceed one half ounce (½ oz.) for each liquor sample. A retail licensee or employee of the licensee may participate in the tasting. Employees of a retail package store do not need a server permit to pour such samples.

Q6. When must an employee of a retail package store possess a manager’s permit?

A: A TABC-issued manager’s permit allows an individual to operate, supervise, or manage a retail package store. Employees who perform these functions for a retail package store must obtain a manager’s permit.

Please note an individual licensed as a sole proprietor is not required to obtain a manager’s permit. For this purpose, a sole proprietorship does not include any member, owner, or shareholder of an LLC, corporation, LLP, general partnership, or any entity that is required to be registered with the Secretary of State. While the sole proprietor is not required to obtain a permit, other managers who are not the sole proprietor owner of the sole proprietorship must obtain a TABC manager’s permit.

For more information on manager permits, training requirements, and certified clerks, please see our FAQ page on this issue.

Q7: If I currently have an unexpired TABC retail package store employee permit (blue card), do I have to obtain a manager’s permit or become a certified clerk?

A: Individuals holding an unexpired TABC employee permit (blue card) may perform the duties of a clerk until the expiration of their current TABC employee permit. The employee should take the steps necessary to become a certified clerk before the expiration of their TABC employee permit. An individual who holds an unexpired TABC employee permit (blue card) and who is performing the duties of a manager (operating, supervising, or managing the retail sales of alcoholic beverages or wine) must obtain a manager’s permit from the TABC.

Q8: What items may be sold at a retail package store?

A: A retail package store may sell intoxicating liquors, wine, high alcohol content beer, and beer. A retail package store is also permitted to advertise or sell 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. The list of items a retail licensee may sell, contained in T.C.A. § 57-3-404(e)(4), is illustrative in nature and non-exclusive. If you have questions on whether an item is allowed, please contact our staff. Such authorized items include, but are not limited to:

  • Newspapers, magazines, publications, videos, and other media related to alcoholic beverages or food;
  • Utensils and supplies related or incidental to the use, consumption, dispensing or storage of alcoholic beverages, including, without limitation, corkscrews, beverage strainers, pourers, flasks, jiggers, stirrers, wine racks, wine refrigerators, wine cellars, decanters, carafes, glassware, ice crushers, bottle openers, can openers, and devices to maximize oxidation in uncorked wine bottles and other items used in connection with the consumption, storage or dispensing of alcoholic beverages;
  • Gift cards, packages and baskets that include alcoholic beverages, and nonalcoholic items;
  • Nonalcoholic beverages;
  • Kegs and growlers, whether empty or filled with beer, wine, or alcoholic beverages, on the licensed premises;
  • Concentrates and ingredients used in the preparation of mixed alcoholic beverages;
  • Beer and wine-making kits;
  • Products and supplies related to beer and wine-making;
  • Lemons, limes, cherries, olives, and other food items used in the preparation or garnishment of alcoholic beverages or mixed alcoholic beverages;
  • Peanuts, pretzels, chips, cheese, crackers, appetizers, and other snack foods;
  • Beverage coolers, ice chests, and ice in any form;
  • Party supplies, party decorations, gift bags, greeting cards, and other items for parties and special events;
  • Articles of clothing and accessories imprinted with advertising, logos, slogans, trademarks, or messages related to alcoholic beverages;
  • Combined packages containing multiple alcoholic beverages;
  • Cigarettes, cigars, and lighters and other smoking or tobacco related products; and
  • Lottery tickets, if the retailer's application is approved by the Tennessee education lottery corporation as provided in § 4-51-115(e).

In interpreting this list, the TABC has determined that e-cigarettes and most food items are permitted to be sold. The TABC has also authorized the sale of propane, as it is reasonably related to special events or parties. A retail package store may have an ATM in their store, provided that the store does not permit EBT cards and similar welfare payment cards to be accepted within the store via ATM or otherwise.

Q9: Does the 20% minimum markup on wine in the Unfair Wine Sales Law apply to retail package stores?

A: Yes. Please review the Wine In Groceries Stores and Unfair Wine Sales Law FAQ for more information.

Q10: How many retail package stores may I own?

A: A person may only have interest in two (2) retail package stores. If a municipality does not allow more than three (3) package stores within the municipality, a person may only have interest in one (1) retail package store within that municipality. For the purposes of this restriction, any amount of interest must be taken into account. For example, a person could neither have a one-percent (1%) interest in three (3) stores nor be the sole owner of three (3) stores.

Q11: If I own more than one retail package store, may I order alcohol in bulk for both locations or swap inventory between the two locations?

A: No. Each retail package store must be operated in a completely independent manner from all other retail package stores, and stores cannot combine purchasing power or swap inventory. Doing so could expose the store to regulatory fines, revocation of the store’s license, or criminal prosecution.

Q12: What are the authorized days and hours of sale for my retail package store?

A: A retail package store may only be open Monday through Saturday from 8:00 a.m. to 11:00 p.m. Package stores cannot be open on Sundays. Additionally, retail package stores must be closed for business on Christmas, Thanksgiving, Labor Day, New Year's Day, and the Fourth of July.

Q13: May a retail package store deliver alcoholic beverages to residents of Tennessee?

A: Yes. A retail package store may deliver alcoholic beverages. No additional permit, license, or approval is needed from the TABC in order for a package store to deliver alcoholic beverages, but such delivery is subject to the following restrictions:

  • Before making such deliveries, a package store must inform the TABC of the store’s intent to deliver and must post a $1,000 bond with the TABC (please contact TABC staff for more information);
  • The delivery must occur within one hundred (100) miles of the retail package store and within the State of Tennessee;
  • The order and delivery of alcoholic beverages must occur only during authorized hours of sale;
  • A retail package store may not deliver to licensed liquor-by-the-drink establishments, with the exceptions of hotels;
  • Only the actual employees of a retail package store may deliver on behalf of the package store, and the package store may not contract with any other business or person to make such deliveries on the store’s behalf, except a TABC-licensed delivery service;
  • The retail package store must check the ID of the purchaser before, or at the time of, the delivery of the alcoholic beverages in a face-to-face transaction, unless the purchaser reasonably appears to be over 50 years of age;
  • The identification checked must be a valid (unexpired), government-issued (state, local, national, or foreign) document that includes the photograph and birth date of the customer; and
  • A record of all deliveries must be maintained in writing and must contain all information concerning the recipient, products delivered, the time of delivery, and place of delivery.

Q14: Who is my point of contact for general questions?

A: Questions regarding the application process and other general questions regarding retail package store should be directed to the appropriate local TABC office. Legal questions should be directed to Joshua Stepp at 615-741-8916 or Joshua.Stepp@tn.gov or to Keith Hollingshead-Cook at 615-741-8930 or Keith.Hollingshead-Cook@tn.gov.

Wholesaler FAQs

This section is intended to serve as guidance to TABC staff and industry members on common violations associated with wholesalers. This section is the official opinion of the TABC until superseded by a later determination of the Commission, opinion of the Attorney General of Tennessee, a decision by a court of competent jurisdiction, or an act of the General Assembly.

Overview

Q1: Who is required to have a wholesaler employee permit?

A: Any employee of a wholesaler who is directly involved with the delivery or sale of alcoholic beverages must obtain a wholesaler employee permit from the TABC. Employees involved only in warehousing, administrative, or clerical services for a wholesaler are not required to obtain a wholesaler employee permit.

Q2: Who is required to have a wholesaler representative permit?

A: Any wholesaler employee who solicits orders for alcoholic beverages or beer must obtain a wholesaler representative permit from the TABC. "Solicit" means the exchanging of consideration (value), or the promise to pay, for goods or services.

Q3: How long must wholesalers maintain records?

A: Wholesalers must maintain records such as purchase orders, invoices, and all other records of purchases, donations, and sales of alcoholic beverages for three (3) years. The records must be made available for inspection to the TABC and the Tennessee Department of Revenue. Failure to do so could lead to revocation of the license.

Q4: May a wholesaler store inventory on the second floor of the premises?

A: A licensee must obtain written permission from the TABC to store alcoholic beverages in any place other than the ground floor.

Q5: May a wholesaler store product for a retailer?

A: No. A wholesaler cannot store product for a retailer. Please note that the delay in delivery beyond the normal and customary delivery practices of the wholesaler constitutes providing improper storage for a retailer.

Q6: Must a wholesaler document breakage or deterioration of product?

A: Yes. If a wholesaler has product in the premises that is broken or deteriorated, it must document the removal of the product from its inventory. A wholesaler must also maintain documentation of removal from a retailer’s inventory due to breakage or deterioration.

Q7: What are the marking requirements for wholesaler vehicles?

A: A wholesaler vehicle must have wholesaler name, permit number and address on each side and rear of the vehicle. The wholesaler name must be no less than four inches (4”) in height, address not less than two and one half inches (2 ½”) in height, and license number not less than one and one half inches (1 ½“) in height. The only abbreviations permitted are “Tenn.,” “Co.,” and “Inc.”

Q8: Should the wholesaler license be posted in my establishment?

A: Yes. The TABC wholesaler license must be posted in a conspicuous location.

Q9: Can a wholesaler donate alcohol?

A: Yes. A wholesaler may donate alcohol to a special occasion licensee or a representative of the special occasion licensee for use at the licensed event. Please note that wholesalers must maintain records of donations for three (3) years.

Q10: What must be included on a wholesaler’s invoice?

All discounts MUST BE CONSPICUOUSLY DISPLAYED on the wholesaler’s invoice. This includes any and all discounts, including, but not limited to, those related to “fill-ins” or “family plans”, as those terms are defined in this FAQ document. The wholesaler MUST also provide the prior invoice number and date that refers back to the originally discounted purchase of product. Please note that TABC agents have the authority to enter your wholesale premises at any time to request and see copies of invoices.

Q11: May a wholesaler provide a discounted price to on- or off-premises retailers?

Subject to the proscriptions detailed in federal and state law as summarized below, wholesalers may provide quantity discounts to on- or off-premise retailers. The same price and the same discount must be made available to all retailers within the same license type (on-premise licensees or off-premise licensees).

Q12: What is a buy back?

A buy back is where a wholesaler buys back, refunds, credits, or in some way compensates a retailer for unused product. Please note that this does not apply to product returned for “ordinary and usual commercial reasons”. A buy back occurs when a retailer pays a wholesaler for a product, with the understanding that if the retailer is unable to sell the product, then the wholesaler will “buy back” the product from the retailer. A “buy back” transaction is a consignment sale (i.e., a “conditional sale” or a “sale with the privilege of return”) and it is prohibited under TABC rules and federal regulations. See Rule 0100-03-.14 and the U.S. Department of the Treasury’s Alcohol and Tobacco Tax and Trade Bureau (TTB) link below. If a wholesaler agrees (either before or after delivery) to reclaim the unsold product of the retailer, then a consignment sale has occurred. A wholesaler may not make any offer to buy back product from a retailer. Federal regulations prohibit consignment sales. See https://www.ttb.gov/trade_practices/consignment_sales.shtml

EXAMPLE: A retailer purchases 25 cases of product from a wholesaler, but some of the product is not selling at a satisfactory rate at the retail level. The wholesaler then picks up 15 cases of the original 25 case deal of the product, and gives the retailer credit (or cash) for the 15 cases. This is a buy back and a consignment sale, both of which are prohibited under TTB regulations.

Q13: What is a swap?

A swap occurs when a retailer purchases product from a wholesaler and, at a later time, the wholesaler exchanges the originally purchased product with another product type. A swap transaction is a consignment sale (i.e., a “conditional sale” or a “sale with the privilege of return”) and is prohibited. If a wholesaler agrees (either before or after delivery) to reclaim the unsold product of a retailer, then a consignment sale has occurred. TABC rules and federal regulations prohibit consignment sales. However, the exchange of a product for equal quantities (case for case) of the same type and same brand of product, in containers of another size, is not prohibited under TABC rules. See TABC Rule 0100-06-.02(10).

EXAMPLE: A retailer purchases 4 cases of Mockingbird Rum and, at a later time, the wholesaler swaps 2 of the delivered cases, in exchange for 2 cases of Iris rum. This is a swap and it is also a consignment sale, which is prohibited.

EXAMPLE: A retailer purchases 4 cases of Mockingbird Rum in 750ml bottles and, at a later time, the wholesaler swaps 2 of the delivered cases, in exchange for 2 cases of Mockingbird Rum in 200ml bottles. This is authorized because it is an exchange of product for equal quantities (case for case) of the same type and of the same brand of product, but just in containers of another size. See TABC Rule 0100-06-.02(10)

Q14: Are there any circumstances where a retailer may return product to a wholesaler?

The general rule is that the purchase of a product is a one-way transaction where the wholesaler delivers the product, and no product may be returned to the wholesaler after the delivery (i.e., a sale occurs where possession/control are relinquished). However, a retailer may return product to a wholesaler in limited circumstances, or where the delivered product is returned for “ordinary and usual commercial reasons”. Authorized “ordinary and usual commercial reasons” for returning products, are outlined at the following TTB link: http://www.ecfr.gov/cgi-bin/text-idx?SID=eddaa2648775eb9b2423247641bf5758&mc=true&node=pt27.1.11&rgn=div5

Please note that the return or exchange of a product because it is overstocked or slow-moving does not constitute a return for “ordinary and usual commercial reasons”. The return or exchange of products for which there is only a limited or seasonal demand also does not constitute a return for “ordinary and usual commercial reasons”. Id.

Q15: What is a fill-in?

A fill-in occurs when a retailer buys product of a certain quantity at a certain price point (discount level) from a wholesaler, and then the same retailer is offered the option of buying a smaller amount of the same product for a window of time after the original purchase at the same discounted price point, even though the fill-in order (the second purchase) is at a lower quantity than the original purchase.

EXAMPLE: A wholesaler offers a deal that if a retailer buys 10 cases or more, then the same retailer may buy up to 4 additional cases (the fill-in order) at the same price/case discount as the original order of 10 cases or more, for a period of 30 days after the original delivery.

EXAMPLE: A wholesaler offers and a retailer purchases a case deal with multiple products in different sizes, flavors, varieties, and of a certain quantity to receive a discount. The wholesaler allows the retailer to purchase a smaller amount of the multiple products for a period of 30 days after the original purchase at the same price/discount level of the original deal in order to adjust the retailer’s sold inventory.

Q16: Under what circumstances is a fill-in order allowed?

One (1) fill-in order is permissible based upon one (1) previous quantity discount; provided, that the fill-in order is exercised within 30 days of the delivery date of the latest invoice showing a quantity discount. Please note that ALL quantity discounts must be offered to ALL retailers within the same license type (i.e. all on-premise licensees or all off-premise licensees).

A wholesaler may offer a retailer the option to fill-in one (1) previous purchase of product for a period not to exceed 30 days; provided that the discounted price(s) in the fill-in order are the same prices contained in the original quantity discount. Please note that this is NOT a buy back scenario. In other words, the wholesaler is not allowed to buy back, refund, credit, or in some way compensate a retailer for unused product. To the contrary, the wholesaler is allowing the retailer to replenish its inventory to account for products already purchased by customers at the retail level. The retailer must not be under any contractual obligation to exercise its option to purchase a fill-in order based upon the original purchase.

EXAMPLE: A wholesaler offers all retailers a 100 case deal of a product for $10,000, and also offers all retailers the one-time option to place a fill-in order on the original 100 case deal purchase for 30 days. The fill in order allows the retailer to purchase any amount of product sold in the original deal on the same terms and conditions of the 100 case deal. Thus, for 30 days after the 100 case discount delivery, the same retailer could also purchase, by means of one (1) fill-in order:

  • 1 case for $100.00; or
  • 20 cases for $2,000; or
  • 50 cases for $5,000; or
  • Any case amount for $100.00 a case.

 

EXAMPLE: A wholesaler offers the following case discounts for 30 days, beginning March 1 through March 31. The wholesaler also allows a one-time fill-in order on the same price terms of the originally selected case discount, for a period of 30 days after the delivery of the original purchase. The wholesaler provides each of the following case discounts:

  • 100-150 cases for $100.00 a case;
  • 151-200 cases for $90.00 a case;
  • 201-250 for $80.00 a case.
    • I. HYPOTHETICAL: A retailer purchases 100 cases on March 2. On March 15, the same retailer is in need of 40 additional cases. Based upon the original case discount, the retailer is authorized to purchase 40 cases for $100.00 a case. The fill in order occurs within the 30 day window, and the fill in order is on the same terms as the original discount.
    • II. HYPOTHETICAL: A retailer purchases 100 cases on March 2. On March 15, the same retailer is in need of 51 additional cases. Based upon the original case discount, the retailer is authorized to purchase 51 cases for $100.00 a case. However, the retailer is not authorized to combine the original purchase (100 cases) and the fill-in order (51 cases) to secure a case discount of $90.00 a case. The fill in order is exercised within the 30 day window; however, the fill-in order must be on the same price terms contained in the original quantity discount, $100.00 a case. In other words, the fill-in purchase must remain within the same discount tier as the original purchase.

 

Q17: Can a retailer’s ability to purchase one product be contingent on the purchase of another product?

No. Under TABC rules, a wholesaler cannot require a retailer to purchase one product in order to purchase another product. See TABC Rule 0100-06-.02(6). However, a wholesaler may offer discounts on combination sales of multiple brands of product.

EXAMPLE: A wholesaler will not allow a retailer to purchase Mockingbird rum because that retailer will also not purchase Tulip Poplar whiskey. Because the purchase of one brand is contingent on the purchase of the other brand, this is prohibited.

EXAMPLE: A wholesaler only makes Mockingbird rum available for purchase, if a retailer purchases Mockingbird rum in combination with one or more other products. This is prohibited.

EXAMPLE: A wholesaler offers a discount on Tulip Poplar whiskey when a retailer also purchases Mockingbird rum. Both Tulip Poplar whiskey and Mockingbird rum may each be purchased individually at the usual price. Because the wholesaler is not requiring the purchase of one brand in order to purchase another brand and is simply offering a combination discount, this is not prohibited.

Q18: What are family plans?

A family plan occurs when a wholesaler offers a retailer the ability to buy multiple products or brands as part of a case deal to reach a certain discount level. The products or brands are usually from the same manufacturer/supplier. Under TABC rules, a wholesaler is authorized to structure deals that combine multiple products or multiple brands in certain circumstances. See TABC Rule 0100-06-.02(6)

Q19: Under what circumstances are family plans allowed?

Under TABC Rule 0100-06-.02(6), a wholesaler is authorized to combine two or more kinds of brands of product; provided, that (1) the retailer still has the option to purchase each product individually at the usual price and (2) the retailer is not required to purchase product that the retailer does not want to purchase.

In other words, the ability to PURCHASE cannot be dependent on the retailer’s purchase of another product; however, DISCOUNTS may be dependent on the retailer’s purchase of one product in order to receive another product, if each product is individually available at the usual price.

EXAMPLES:

  • A wholesaler may offer deals based upon the combined purchase of multiple sizes of one (1) brand;
  • A wholesaler may offer deals based upon the combined purchase of multiple varieties/types of one (1) brand;
  • A wholesaler may offer deals based upon the combined purchase of multiple sizes and multiple varieties/types of the one (1) brand;
  • A wholesaler may offer deals based upon the combined purchase of multiple brands from one (1) supplier/manufacturer;
  • A wholesaler may offer deals based upon the combined purchase of multiple brands from multiple suppliers/manufacturers;
  • A wholesaler may offer deals on certain brands in exchange for an on premise retailer using other brands as “well” or “house brands”.

Please note, however, that a wholesaler may not structure any of the above family plan deals, as the sole means of purchasing one particular product at the usual price. Each product must always be available individually.

Q20: May cumulative discounts be offered to retailers?

State law specifically prohibits wholesalers from offering cumulative discounts. This prohibition applies to all licensed retailers, including retail food stores, retail package stores, and liquor by the drink licensees.

Q21: May a wholesaler provide any service for the benefit of a retail food store?

No. A wholesaler generally may not provide any "service" for the benefit of a retail food store. This prohibition of services to retail food stores includes many activities that a wholesaler may do at a retail package store. However, despite this general prohibition on "services" at retail food stores, a wholesaler may provide items like product displays, shelves, and signs under certain circumstances. These may only be provided to a retail food store’s designated manager. The wholesaler may not provide any service or action regarding such item aside from providing the item to the designated manager, except that a wholesaler may build and stock wholesaler displays of wine and may restock such displays for up to one month after the display was installed. Such displays may not be a part of the food store’s regular shelving. Additionally, any product display that a wholesaler provides to a retail food store must bear advertising matter about the product or the industry member providing the product display. As a result, a wholesaler’s actions to ensure that the display bears the appropriate advertising matter do not constitute a prohibited “service” for the benefit of a retail food store. See Tenn. Code Ann. § 57-3-815; TABC Rules 0100-06-.03(2)(b)(3) and 0100-11-.07.

Q22: If a wholesaler sells both wine and beer to a retail food store, may the wholesaler provide services related to beer for the benefit of the retail food store?

Yes. Even though state law prohibits a wholesaler from providing services related to wine to a retail food store, state law does not prohibit a wholesaler from providing services related to beer to a retail food store. This means that a wholesaler could, for example, stock beer at a retail food store to which the same wholesaler also delivers wine, subject to local ordinances or federal law. The wholesaler could not do the same with the wine that it delivers to the retail food store. See TABC Rule 0100-11-.07(2), (3).

Restaurants and Limited Service Restaurants FAQs

This section is intended to serve as guidance to TABC staff and industry members on common violations found at restaurants and limited service restaurants. This section is the official opinion of the TABC until superseded by a later determination of the Commission, opinion of the Attorney General of Tennessee, a decision by a court of competent jurisdiction, or an act of the General Assembly.

Overview

Q1: Is my restaurant or limited service restaurant required to post a pregnancy warning?

A: Yes. If the establishment sells alcoholic beverages, the pregnancy warning sign must be posted in a prominent place, easily seen by customers. Failure to post this sign could lead to a warning from TABC staff. After the warning, the establishment can be assessed a twenty-five dollar ($25) per day fine. The required sign may be obtained from a TABC office.

Q2: What else should be posted in my establishment?

A: A restaurant or limited service restaurant should also post its TABC license, health inspection report, and certificate of occupancy issued by the local jurisdiction.

Q3: When must a server obtain a permit from the TABC?

A: A server has sixty-one (61) days from the time he or she begins serving at any establishment to obtain a server permit from the TABC. A server permit expires after five (5) years and must be renewed before expiration. An individual who held a server permit in the past does not get a grace period if he or she has allowed the server permit to expire.

Q4: Are restaurants or limited service restaurants required to have copies of server permits for each server?

A: Yes. Licensees are required to maintain copies of server permits for all employees. For purposes of this requirement, server permits in electronic format are acceptable if they are readily available and easily accessible.

Q5: Is my restaurant or limited service restaurant required to submit a manager questionnaire to the TABC for each manager?

A: Yes. A manager questionnaire must be filed with the TABC within seven (7) days after hire. The questionnaire form can be found HERE.

Q6: What is the minimum seating requirement for a restaurant or limited restaurant?

A: Restaurant and limited service restaurants are required to maintain minimum seating for forty (40) people.

  • The license fee for a restaurant is determined by the number of seats in the establishment as determined by the TABC inspection.
  • The license fee for a limited service restaurant is determined by the percentage of food sold at the establishment.

 

Q7: Are restaurant and limited service restaurants required to maintain records?

A: Licensees are required to make records available, on request, to TABC staff. The TABC recommends maintaining records for three (3) years. For this purpose, electronic records are acceptable if they are readily available and easily accessible.

Q8: May my establishment advertise?

A: Yes, a restaurant and limited service licensee may advertise. However, the following is prohibited:

  1. A licensee shall not advertise free alcoholic beverages;
  2. A licensee shall not advertise an alcoholic beverage sold below cost; and
  3. A licensee shall not have its advertising cost reimbursed by a supplier.

Q9: Can my establishment give away free drinks?

A: No. Providing free alcoholic beverages is not permitted. An establishment also may not sell alcoholic beverages below cost.

Q10: Can my establishment conduct “Happy Hour” specials?

A: Yes. Licensees may conduct “Happy Hour” specials until 10:00 p.m. local time. After 10 p.m. the following is prohibited:

  1. Serving two or more drinks or containers of alcoholic beverages to a consumer at one time; and
  2. Increasing the volume of alcohol contained in a drink without proportionately increasing the price charged for the drink.

General discounts on alcoholic beverages that do not fit into one of the above categories, like $1 off, and do not cause the alcoholic beverages to be sold below cost are allowed at any time, including after 10 p.m.

Q11: Who should I contact if I have questions regarding my taxes or bond?

A: Contact the Tennessee Department of Revenue for questions about taxes and bonds. It is the responsibility of the licensee to ensure taxes and bonds are current in order to timely receive or renew a TABC license. You may contact the Department of Revenue at (615) 253-0680 or (844) 430-7678.

Wineries FAQs

This section is intended to serve as guidance to TABC staff and industry members on common violations associated with wineries. This section is the official opinion of the TABC until superseded by a later determination of the Commission, opinion of the Attorney General of Tennessee, a decision by a court of competent jurisdiction, or an act of the General Assembly.

Overview

Q1: Is my winery required to post a pregnancy warning?

A: Yes. If a licensee sells alcoholic beverages, then the pregnancy warning sign must be posted in a prominent place, easily seen by customers. Failure to post this sign could lead to a warning from TABC staff. After the warning, the establishment can be assessed a twenty-five dollar ($25) fine per day. The required sign may be obtained from a TABC office.

Q2: What else should be posted in my winery?

A: A winery should also post its TABC license, health inspection report, and certificate of occupancy issued by the local jurisdiction.

Q3: How long must a winery maintain records?

A: Wineries must maintain records for three (3) years. The records must be made available for inspection to the TABC and the Tennessee Department of Revenue. Failure to do so could lead to revocation of the license. For purposes of this requirement, records in electronic format are acceptable if they are readily available and easily accessible.

Q4: May tastings occur at a winery and is consumption on the premises allowed generally?

A: Yes. A winery may conduct tastings for free or for a cost on the premises of the winery. Samples may not exceed two (2) ounces per variety for one (1) person on the same day. A winery may also sell glasses of wine made at the winery for consumption on the premises.

Q5: Do employees of a winery need to possess an ABC server permit in order to conduct tastings or to serve wine for consumption on the premises?

A: No. Employees of a winery do not need a server permit for either activity.

Q6: Does an employee of a winery or a manager of a winery need a managers permit?

A: No.

Q7: What items may be sold at a winery?

A: A winery may sell its own wine in sealed bottles for consumption off the premises. A winery may also sell its own wine for consumption on the premises. Finally, a winery is authorized to sell items “related to or incidental to the use, consumption, dispensing, or storage of wine on the licensed premises.” A non-exclusive and illustrative list of such related items may be located at Tennessee Code Annotated section 57-3-204(h)(1).

Q8: What items may not be sold at a winery?

A: A winery is prohibited from selling distilled spirits, wine that is not made on the premises, or beer. A winery is also prohibited from selling more than five (5) cases or sixty (60) liters of bottled wine to any single retail customer in one (1) day.

Q9: May a winery operate a restaurant within their winery?

A: Yes, a winery may operate a restaurant within their winery or otherwise serve food for on premise consumption that compliments the serving, sampling, or consumption of wine. Such food may include prepared food or unprepared snack food. If the winery is only serving the winery’s own wine at such restaurant, then the winery does not need any other TABC license.

However, if the winery wishes to also sell or serve wines manufactured from other wineries or other alcoholic beverages, such as spirits or high gravity beer, then the winery must obtain a separate and distinct restaurant license. Any winery that applies for a restaurant license must meet all eligibility requirements for such a license.

Q10: Where must sales, tastings, or the consumption of wine on the premises occur?

A: The sale or consumption of wine generally must occur on the “premises” of the winery, which means “all contiguous property owned or leased by the winery.” Contiguous property where such sales and consumption may occur includes contiguous fields outside of the winery building, provided such field or other outside area is owned or leased by the winery.

Q11. Where can a winery serve tastings off of its licensed premises?

A: A winery may serve tastings at any retail package store performing tastings, or at any licensed special occasion event (e.g. a charitable event or winery festival licensed as a special occasion event). These are the only instances where the winery may serve tastings off of its licensed premises.

Q12: What are the authorized hours of sale for my winery?

A: A winery may not be open between the hours of 12:00 midnight and 8:00 a.m. on any day of the week.

Q13: Can a winery be open for business on a Sunday?

A: Yes, a winery may be open on Sunday.

Q14: May a winery ship its wine to residents of Tennessee?

A: Yes, if the winery applies for and obtains a direct shipper’s license.

Q15. May a winery self-distribute its wine?

A: Yes, if it applies for and obtains a self-distribution permit. A winery needs to satisfy the requirements for such a permit.

Q16: Where may a winery self-distribute if properly permitted?

A: A winery may self distribute only within 100 miles of the winery and only to licensed on premise establishments.

Q17: Who is my point of contact for general questions?

A: Questions regarding the application process and other general questions regarding wineries should be directed to the appropriate local TABC post, but legal questions should be directed to Joshua Stepp at 615-741-8916 or Joshua.Stepp@tn.gov or to Keith Hollingshead-Cook at 615-741-8930 or Keith.Hollingshead-Cook@tn.gov.