Tennessee: Senate approves cap on liquor store owners

Source: The Tennessean

Joel Ebert

February 29, 2016

State senators are moving ahead legislation that would allow grocers to prepare for wine in their stores — including a controversial new cap on liquor store owners in Tennessee — even as lawmakers in the House of Representatives remain at a standstill over the proposal.

The measure would give grocers the opportunity to begin pre-ordering wine sales before the law’s July 1 enactment. Advocates for the legislation say it is necessary because it could take weeks, or even months, for wholesalers to fulfill their deliveries in light of the fact that so many stores are planning to sell wine.

The bill has proven contentious as lawmakers in both the House and Senate have attempted to eliminate a provision that would have placed a two-store limit on liquor retailers. Opponents of the measure argue it is an unfair practice that would not be allowed for any other industry.

Last week, the bill hit a roadblock in a House committee after it was amended to eliminate the caps, which opponents said was an attempt to protect locally owned stores. The bill’s sponsor, Rep. Curry Todd, R-Collierville, disagreed and promptly withdrew the bill from consideration, causing concern that the House might not take action on the issue, which could lead to distribution delays.

Todd’s two-store limit was a reaction to what happened in the aftermath of the initial wine-in-grocery stores legislation becoming law. After the 2014 bill was enacted, big out-of-state liquor retailers began coming to Tennessee, with their sights set on major expansion.

Curry’s bill, as originally drafted, and the one discussed in the Senate on Monday, sought to put a limit on expansion for retailers hoping to open more than two stores in Tennessee.

During Monday’s floor session, Sen. Frank Niceley, R-Strawberry Plains, tried to amend the bill to eliminate the caps. The move is one that advocates of the free market have been making since the bill began being discussed in the legislature. Last week, Gov. Bill Haslam even weighed in on the issue, expressing concern about placing limits on liquor stores.

Niceley said the limitations were being advanced as an effort to specifically prevent Total Wine and More, a Maryland-based company, from expanding its operations in Tennessee. The company sells wines, spirits and beer at 131 stores in 18 states, including Tennessee.

Niceley tried to cut down the argument that allowing large out-of-state companies to sell alcohol in the state could hurt locally owned businesses.

“We didn’t tell CVS and Walgreens that they couldn’t come in to protect the mom-and-pop pharmacies,” he said.

While arguing for his amendment, Niceley even criticized members of his own party, saying anyone who is for “protectionism” is “probably not a Republican and may be more comfortable as a Democrat.”

During the discussion of Niceley’s amendment, Sen. Bill Ketron, R-Murfreesboro, who is sponsoring the Senate version of the bill, fielded a variety of questions, including one from Sen. Lee Harris, D-Memphis, who asked why Wal-Mart should be allowed to sell wine at stores throughout the state, but a company looking to expand into the state, such as Total Wine and More, should not be afforded the same opportunity.

Ketron said the difference is Wal-Mart is the largest grocery store in the state and they don’t sell spirits. Grocery store chains such as Kroger and Wal-Mart would not be affected by the two-store limit included in the bill.

Although Niceley’s amendment to eliminate the two-store cap eventually failed, he summed up his position before the vote by calling the caps “pure, cold-hearted protectionism.”

The Senate eventually voted 21-6 in favor of the bill, which remains stalled in the House.

After the Senate vote, Edward Cooper, vice president, Public Affairs & Community Relations for Total Wine and More, suggested his company, which is planning to open multiple stores in Tennessee, is considering their options, including taking legal action, to halt the two-store cap.