Grocers and C Stores Pay the Piper in Memphis

Memphis has always had its share of odd liquor rules. A recent change in the law is different, because it makes doing business in Memphis much more cumbersome and expensive.

For some time, Memphis required beer permit holders to register all employees that touch beer. This mostly affects grocers, drug stores and convenience stores, requiring every sales clerk and stocker to go downtown and obtain the permit. The rule does not apply to restaurants and other businesses with liquor licenses.

We suspect that lots of businesses were clueless and did not comply. Although a pain, however, compliance only involved a $10 fee per employee.
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Beginning July 1, the fee jumped to $50 per employee: $29 for a TBI background check and $21 for an affidavit. For most C stores, drug stores and small groceries, this means every employee must have the $50 card.

Memphis is telling new applicants about the new employee card rule. It remains to be seen how closely the rule is enforced with existing permit holders.

The good news is that the card follows the employee, meaning that it is valid if an employee moves between stores or is hired from a competitor. The card must be renewed every 2 years.

We see this as being quite an expensive requirement for most retailers, from Wal-Mart to mom and pop stores. Given the turnover among clerks, compliance could be costly and difficult.

The big question is how closely Memphis enforces the new law. The Memphis Alcohol Commission does not have enforcement officers and must rely on police or other city officials to enforce the beer laws. It is possible that the new law will be largely ignored without consequence.                             

New Rules for Tastings at Tennessee Liquor Stores

Toward the end of this year's legislative session, retail tastings were legalized for Tennessee package stores. The change surprised many and the law was also wide open about what retail stores could do at tastings. Read more about the law here.

ABC Regs for retail store tastings were inevitable. The ABC was proactive and held its first meeting with industry members last week, on August 17, 2011.

Many legal issues were discussed, including whether store employees had to hold server permits or complete LBD server training, could food be served, and were there limitations on how often and how long tastings could be offered. Retailers want clarification that they may have glassware, ice and mixers to be able to conduct tastings.

One store owner acknowledged the problem with leaving bottles out front for customers to taste at any time of the day, but wanted to be able to allow a potential purchaser of high end scotch to try the product without any time limitation. This issue may be one of the hardest to resolve.

The meeting identified a number of practical issues with retail store tastings, as well as one important political position. When food service was raised as part of tastings, wholesale representatives pointed to wine in grocery stores as a reason not to allow liquor stores to pair food with wine at tastings. This would allow grocers to say that liquor stores can pair wine with food, and why shouldn't we?

The tastings law prohibits wholesale participation in retail tastings, and the wholesaler representatives at the meeting expressed no interest in helping wineries and distilleries to pass free product to retailers for tastings.

This is a huge limitation - retailers have to purchase all product given away at tastings at the wholesale price.

The next step is a draft of regulations from the ABC and a second opportunity for industry to weigh in. We encourage interested retailers to follow this process closely. Tastings are a tremendous opportunity for stores that market to consumers.