TACIR staff proposes licensing and post-and-hold fixes to ease restaurant openings; no recommendation on drink tax rate

Staff presented a draft report examining the liquor-by-the-drink tax and restaurant licensing barriers in response to legislation (Senate Bill 262 and House Bill 2419). Madison Moffitt said the study identified licensing delays tied to document requirements, server-permit barriers and the state’s post-and-hold wholesale price law.

The draft recommends that the Tennessee Alcoholic Beverage Commission (TABC) clarify that it accepts temporary certificates of occupancy and use for liquor license applications, which would reduce delays when a restaurant obtains a certificate before its license is processed. Staff also recommended that the Strategic Technology Services (STS) continue to explore automation of liquor licensing applications to expedite processing. Regarding wholesale pricing rules, the report says Tennessee’s 360-day post-and-hold requirement is longer than in comparable states and recommends the General Assembly consider repealing it or reducing the hold period to 180 days to align with other states.

Staff assessed the fiscal trade-offs of lowering the liquor-by-the-drink tax (currently 15 percent) and concluded that reducing the tax could raise public health concerns and decrease revenue for local governments and K–12 education; as a result, the draft makes no recommendation to change the drink-tax rate. The draft report will be presented in final form at the commission’s December meeting.

Next steps: staff will collect member comments on the draft and return with a final report for approval in December.