Obscure 2014 Liquor Law Muddies Water for Sweet Treats with Alcohol

Obscure 2014 Liquor Law Muddies Water for Sweet Treats with Alcohol

The 2014 Tennessee legislative session profoundly impacted the alcoholic beverage industry. Although the Wine in Grocery Stores (aka WIGS) debate was prominently featured, there were a number of big changes that passed quietly.

Buried in Section 8 of PC 1001, a law passed to resolve the controversy over infusions, is a new law that specifies that any product containing distilled alcohol  that is capable of being consumed by a human being is an alcoholic beverage.

Previously, it was unclear whether products like Liquor Filled Chocolate Covered Cherries were regulated as liquor.  Mainstream retailers sell a wide variety of treats that contain alcohol. Unlike alcohol used in sauces and other cooking recipes, a small amount of alcohol is in the finished product.

Finer restaurants often feature desserts with liquor, where alcohol is not cooked out.

The new law appears to make it clear that at restaurants and bars, food products containing alcohol are alcoholic beverages. Since most restaurants have liquor licenses, the change is not a problem, for licensing purposes.

The real issue is taxes. Liquor-by-the-drink has an additional 15% tax. If desserts with alcohol are alcoholic beverages, restaurants have to collect the 15% tax, in addition to the 9.25% sales tax.

We suspect that no one rings up desserts with small amounts of alcohol as an alcoholic beverage and pays the 15% tax.

Little Jimmy Dickens sings:

I got a hole in my pocket and my money just runs on through.
Can't seem to save a dollar like my baby dolly wants me to.
We strongly encourage restaurants that serve desserts or other dishes with alcohol to enforce 21 carding for purchases, just like you do for drinks.

Although we read the law as only applying to restaurants and bars, we have heard that the ABC is investigating manufacturers of products that contain alcohol. For example, there are a number of bakeries that produce variations of the Tennessee Whiskey Tipsy Cake featuring Jack Daniels.

As we read it, the new law only applies to restaurants, bars and other LBD establishments.  The ABC appears to be enforcing the new law against food manufacturers that do not hold ABC licenses.

Stay tuned as we sail through unchartered territory.

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