Panel of local officials, wholesalers and restaurateurs tell TACIR Tennessee’s 15% liquor‑by‑the‑drink tax strains restaurants

TACIR convened a six‑person panel and heard extensive member questions about Tennessee’s liquor‑by‑the‑drink (LBD) tax, local beer‑permit authority, server permitting, and consumer protection for restaurants.

Staff said the study was directed by Senate Bill 2262 and House Bill 695. Madison Moffett opened the panel and said Tennessee’s 15% LBD tax generated about $187 million for K–12 education in fiscal 2021–22. Panelists included Shauna Billingsley (City Attorney, Franklin), David Connor (Executive Director, Tennessee County Services Association), Rich Fogg (Tennessee Malt Beverage Association), Ryan Haines (Wine and Spirits Wholesalers Association of Tennessee), Brian Struts (restaurant owner, Knoxville) and Russell Thomas (Director, Tennessee Alcoholic Beverage Commission).

City Attorney Shauna Billingsley said municipal enforcement tools (server training, beer‑permit hearings, suspension and revocation authority) are important to address over‑serving and public safety. She described local experience with DUI arrests and the role of beer‑board hearings in disciplining licensees. David Connor and Rich Fogg summarized county and wholesaler perspectives and described county options (hours, distance rules, and the limits of administrative denial where statutory grounds are met).

Restaurateur Brian Struts described narrow profit margins, rising costs and the effect of Tennessee’s combined taxes and fees: a consumer often faces a roughly 25% premium on a glass of wine when sales tax and the LBD tax are combined. He said restaurants have difficulty absorbing the tax and that some franchise operators immediately pass the LBD charge to customers while many independent restaurants absorb it, creating consumer confusion.

Alcoholic Beverage Commission Director Russell Thomas emphasized the ABC’s regulatory role and noted the agency does not receive LBD tax revenue; the commission is funded primarily by license and permit fees and enforces server permitting and inspections. Commissioners asked about renewal of server permits, local revenue sharing and whether the LBD revenue supports education and other local needs; staff and panelists provided statutory and practical context.

Next steps: staff will prepare a draft report with stakeholder input and respond to requests for additional data (profit margins, local revenue splits, and prevalence of passing the tax to customers).