By Will Cheek
The most common question we hear is how do you get a liquor license to sell alcoholic beverages in Tennessee? Here is a short summary of how to navigate alcoholic beverage laws and obtain liquor permits for a restaurant or bar.
Tennessee requires two liquor permits to serve alcohol: One is from the state – for wine and spirits. The other is from the city – for beer. You have to file separate applications for liquor and beer permits, and the process is different for each.
The good news is that there is no limit on the number of restaurant and bar licenses, and you do not need to purchase a license in Tennessee.
The bad news is that both liquor and beer permits generally are not issued until local building codes officials have issued a certificate of occupancy. This puts considerable pressure near the end of the construction process, at a time when the restaurant or bar owner is trying to train staff, finalize menus and manage the completion of construction.
Tennessee Liquor License
The state ABC application process requires basic disclosure from individual or corporate owners and officers, as well as managers. The application requires a lease or other proof or legal right to sell alcohol at the premises, copies of corporate charter, a sales tax certificate and a copy of the TTB registration.
The fee to apply for the state alcoholic beverage permit is $300, and annual liquor license fees range from a few hundred dollars for a wine-only permit to $4,000 for a bar that sells very little food. Cities impose an annual tax that is slightly less than the license fee.
Food service is required for most liquor licenses in Tennessee. The basic bar license requires 15% food sales, as compared to liquor sales. The ABC will inspect before issuing a license and requires at least a minimal kitchen and a food menu.
The ABC staff approves LBD licenses and applications do not come before the full Alcoholic Beverage Commission.
Applicants must obtain a $10,000 bond for full bar service, and the state is very particular about the form of the bond. Do not be surprised if your bond is rejected by Revenue. Revenue also accepts CDs in lieu of the bond.
All servers must be trained and hold ABC-issued server permit cards. The ABC regularly fines restaurants and bars for servers that do not have current server permit cards.
The ABC recently implemented a requirement that all corporate officers and owners, as well as servers, must file a declaration of citizenship. The declaration must be by proof of citizenship or rights to work in the U.S.
The application process takes several weeks, and with the recent move of the Tennessee ABC in Nashville, approvals may take longer.
Tennessee Beer Permit
The beer board process varies depending on the city. Nashville, Johnson City and Memphis have more complicated rules for beer, and obtaining a permit requires attention to detail.
Many cities have a fairly simple process for obtaining a beer permit.
The application fee for a beer permit is $250, and the annual beer permit tax is $100.
Most beer boards have distance requirements from churches, schools, residences and other places. Site selection should definitely examine distance requirements.
Oddly, there is no distance requirement for a Tennessee liquor license. There are restaurants that have a license to sell wine and spirits but cannot sell beer because they are too close to a house, church or school.
Almost every Tennessee Beer Board hears applications at a public meeting, and many require a representative to be present at the meeting. Beer boards generally do not grill applicants at the meeting but may ask questions about sales to minors and intoxicated persons.
The application process for beer takes three weeks for many beer boards and as long as three months for cities like Johnson City. The timing of beer board approval should be carefully considered for new applicants.
Bone McAllester Norton PLLC is a full-service law firm with 33 attorneys and offices in Nashville and Sumner County, Tennessee. Our attorneys focus on 16 distinct practice areas, providing the wide range of legal services ordinarily required by established and growing businesses and entrepreneurs. Among our practices, we represent clients in business and capital formation, mergers and acquisitions, securities matters, commercial lending and creditors’ rights, commercial real estate and development, governmental regulatory matters, commercial litigation and dispute resolution, intellectual property strategy and enforcement, entertainment and environmental matters. Our client base reflects the firm’s deep understanding and coverage of today’s leading industry and business segments. For more information, visit www.bonelaw.com.