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SB1327/HB0594 is set for hearing today in the Senate and Wednesday in the House. There have been significant changes since our last update on this proposed legislation. The attached amendment has not yet been filed, but we understand the bill will move forward to apply to the Central Business Improvement District in Metro Nashville, which is roughly the Cumberland River to the east, Lafayette Street to the south, Rosa Parks Avenue to the west, and Charlotte Avenue to the north.

The bill is contradictory and has a number of problems, including a sizable fiscal note. 

The first sentence says the bill applies to businesses that hold on premise beer permits and an ABC on premise license. The second sentence is much broader and grants the ABC "exclusive authority to regulate the sale of beer…within the boundaries of the CBID.” 

As drafted, does the ABC has exclusive jurisdiction over all beer permits – or just on premise permits?  Which is it? The law contradicts itself.

There are a number of issues that have not been considered in the bill, including a significant amount of privilege tax revenue and money from fines. Although no business likes paying money to the government, the bill reeks of being a tax break for the most successful downtown businesses, while the rest of the hard-working people of Nashville and the State have to continue to pay more.

Here is a list of problems we see, in no particular order:

  1. What happens to the thousands of dollars of privilege taxes that these businesses have been paying to the beer board? The new law does not authorize the ABC to collect privilege taxes for beer.
  2. Has anyone compared the number of state inspections in the downtown district to the number of beer board inspections? Based on our experience, it appears the beer board catches more sales to minors than the ABC. We do not fault the ABC – they have a limited number of agents to police the entire state.
  3. The bill is an unfunded mandate to the Tennessee ABC. The ABC receives no additional funds to step up law enforcement in the downtown district.
  4. The Metro Beer Board collects $1500 for each sale to minor citation. This amount is in addition to ABC fines. Using a conservative figure of 50 sales to minors in a year, this means that the state is walking away from at least $75,000 in fines for sales to minors.
  5. Does the bill eliminate mobile beer and mobile BYOB beer permits? Metro Nashville recently passed new beer laws to help reign in alcohol and intoxication on transportainment. Does the new bill mean that party buses and other mobile bars will go back to the unregulated days? The ABC does not have mobile licenses and does not regulate alcohol consumption on transportainment.
  6. Will the ABC ban restaurants and bars from accepting free stuff from breweries? The ABC has strict rules and trained law enforcement that actively enforce tied house laws. The Metro Beer Board does not enforce tied house laws. With beer squarely under its jurisdiction, we suspect the ABC will step up enforcement to prevent restaurant and bar owners from accepting things of value from breweries and beer wholesalers.
  7. The bill also appears to eliminate beer carryout, which a number of downtown businesses have been taking advantage of.

Stay tuned for more updates.

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