Section 57-5-101 - Traffic in alcoholic beverages of less than eight percent (8%) permitted - Brewers' and wholesalers' interests restricted(a)(1) It is lawful in this state to transport, store, sell, distribute, possess, receive, or manufacture beer, as defined in subsection (b), subject to the privilege taxes and regulations set out and provided for in this part.(2) Except as otherwise provided for in this part, no brewer or manufacturer of beer shall have any financial or ownership interest, direct or indirect, in the business of or a building containing a wholesale or retail licensee, including to furnish or loan any fixtures of any kind to a retail licensee, and no such brewer or manufacturer shall hold a wholesale or retail license. For purposes of this section, an indirect interest includes any interest acquired by affiliates, subsidiaries, corporate officials, partners, or employees of the brewer or manufacturer.(3) Except as otherwise provided for in this part, no wholesaler shall hold any financial or ownership interest, direct or indirect, in the business of or a building containing a brewer, manufacturer, or retail licensee, including to furnish or loan any fixtures of any kind to a retail licensee, and no such wholesaler shall hold a manufacturer or retail license.(b) For purposes of this title, "beer" means products made from the normal alcoholic fermentation of malt or other cereal grains, sugar, or fruit ingredients used to make cider, and having an alcoholic content of not more than eight percent (8%) alcohol by weight and that do not contain distilled spirits or wine as defined in § 57-3-101; provided, that at least fifty-one percent (51%) of the overall alcoholic content by weight in the finished product is obtained by the fermentation of malt, other cereal grains, sugar, or fruit ingredients used to make cider, and no more than forty-nine percent (49%) of the overall alcoholic content by weight in the finished product is obtained by the addition of flavorings or other non-beverage ingredients containing alcohol.(c)Upon meeting necessary federal, state and local license requirements, notwithstanding the prohibition of subsection (a), a manufacturer:
(1) May operate as a retailer at the manufacturer's location or a site contiguous thereto for sales of not more than twenty-five thousand (25,000) barrels of beer or high alcohol content beer or both annually for consumption on or off the premises under this chapter as long as the requirements of this chapter concerning the licensing of such retail establishments are met; and(2) May qualify for and hold a license: (A) Under chapter 4 of this title as a "restaurant" or "limited service restaurant"; provided, that notwithstanding chapter 4 of this title related to restrictions or prohibitions on licensees under chapter 4, a restaurant or limited service restaurant may sell for off-premises consumption beer manufactured pursuant to this section at such location or at any other restaurant or limited service restaurant licensed under chapter 4 that is owned by the same person; or(B) As a hotel as defined under § 57-4-102(22)(F)(iii); provided, that the hotel licensee shall only sell beer manufactured pursuant to this section on the premises of the hotel.(d) Notwithstanding the prohibitions and restrictions on a manufacturer's financial and ownership interests imposed in subsection (a), a manufacturer may have a financial or ownership interest in a licensed wholesaler's business; provided, however, that the financial or ownership interest in the licensed wholesaler's business is maintained or held only for a one-time period not to exceed five (5) years, which may not be directly or indirectly extended or renewed, and only under the following circumstances and conditions:(1) When a licensed wholesaler is voluntarily selling its distribution rights, and the manufacturer whose brand distribution rights are being sold seeks to assist the sale by taking a noncontrolling financial interest in the purchasing wholesaler in the form of a loan made contemporaneous with the sale and secured by the inventory and assets, except for the corporate stock, of the purchasing wholesaler; or(2) When, only for reasons permitted under § 57-5-505, § 57-5-506, or § 57-5-507, a distribution agreement between a manufacturer and a wholesaler is not renewed or is otherwise terminated, cancelled, or discontinued, in which event a manufacturer is authorized to appoint a temporary licensed wholesaler to service the manufacturer's brands in the designated sales territory and to take a financial or ownership interest in the temporary licensed wholesaler in connection with the appointment.(e)(1) Notwithstanding this section to the contrary, a wholesaler that has continuously held a valid wholesale distribution permit, issued pursuant to this section for a period of at least six (6) months prior to March 27, 2015, and has held a direct or indirect interest in a brewer or manufacturer, continuously during that period of time, and holds a trademark or marketing rights to a brand or brands of beer, may continue to hold the interest, and may expand the interest to effect the brewing, bottling, and sales of beer in which the wholesaler holds the trademark or marketing rights.(2) It is the intent of the general assembly that this subsection (e) be prospective only and not be applicable to compel the divestiture of trademark or marketing rights or a direct or indirect interest held by a wholesaler for the six-month period prior to March 27, 2015.(f) For purposes of this section, "manufacturer" means:(1) A holder of a license to manufacture or import beer;(2) An officer, director, agent, or employee of such a license holder; or(3) An affiliate of such a license holder, regardless of whether the affiliation is corporate or by management, direction, or control.(g)(1) Notwithstanding subdivision (a)(2), a manufacturer brewing not more than twenty-five thousand (25,000) barrels of beer or high alcohol content beer, or both, annually and operating as a retailer pursuant to subsection (c) may self-distribute the beer that it manufactures directly to retailers: (A) Inside the county in which the manufacturer is located; or(B) Inside and outside the county in which the manufacturer is located, if the manufacturer:(i) Self-distributes not more than one thousand eight hundred (1,800) barrels of such manufacturer's beer annually; and(ii) Is not prohibited from self-distribution in the particular county by the manufacturer's contract with a beer wholesaler.(2)(A) A manufacturer self-distributing pursuant to subdivision (g)(1)(B) shall not self-distribute more than one thousand eight hundred (1,800) barrels of its beer annually in this state regardless of the number of manufacturing locations.(B) If a manufacturer self-distributing pursuant to subdivision (g)(1)(B) self-distributes more than one thousand eight hundred (1,800) barrels in a year, including in one (1) or more counties outside the county in which the manufacturer is located, the manufacturer shall enter into a contract with a wholesaler to distribute the manufacturer's beer within ninety (90) days of exceeding such limitation.(3) A manufacturer shall certify its total volume of annual self-distribution as a part of the reporting required by § 57-6-105.(4) A manufacturer self-distributing beer pursuant to subdivision (g)(1) shall collect and pay all taxes imposed by §§ 57-5-201 and 57-6-103. Any distribution, sale, or transfer of beer by a manufacturer directly to a beer retailer constitutes a wholesale sale for purposes of taxation.(5) To determine the exact amount of tax owed on sales of beer and to facilitate the collection thereof, a manufacturer self-distributing beer pursuant to subdivision (g)(1) shall register separately with the commissioner of revenue as a wholesaler pursuant to § 57-5-102 and shall comply with the requirements for licensing as a wholesaler, including, without limitation, the permitting, reporting, and bonding requirements imposed by §§ 57-5-103, 57-6-104, 57-6-105, 57-6-107, and 67-6-410. In addition to the information required by § 67-6-410(b), such manufacturers shall report quantities of beer sold for consumption on the manufacturer's premises.Amended by 2023 Tenn. Acts, ch. 236, s 2, eff. 4/25/2023.Amended by 2022 Tenn. Acts, ch. 816, Secs.s 1, s 2, s 3 eff. 4/8/2022.Amended by 2021 Tenn. Acts, ch. 432, s 2, eff. 10/1/2021.Amended by 2021 Tenn. Acts, ch. 432, s 1, eff. 10/1/2021.Amended by 2015 Tenn. Acts, ch. 176, s 1, eff. 4/17/2015.Amended by 2015 Tenn. Acts, ch. 19, s 2, eff. 3/27/2015. Acts 1933, ch. 69, § 1; 1935, ch. 170, § 2; C. Supp. 1950, § 1191.1; T.C.A. (orig. ed.), § 57-201; Acts 1983, ch. 229, § 7; 1990, ch. 906, § 1; 1991, ch. 214, §§ 1, 2; 1992, ch. 800, §§ 1, 2; 1993, ch. 227, § 1; 1993, ch. 297, § 1; 1995, ch. 395, §§ 1-6; 2004, ch. 956, §§ 1, 2; 2005, ch. 298, §§ 2, 3; 2009 , ch. 290, §§ 1, 2; 2013 , ch. 386, §§ 1, 3; 2014 , ch. 861, §§ 2, 17.