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Thursday, July 18, 2024 | Back issues
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Whiskey Maker Challenges Tennessee Law

NASHVILLE (CN) - A Tennessee law that requires alcohol manufacturers to store their booze in the county where it was made, or a neighboring county, is unconstitutional, the maker of George Dickel sour mash whiskey claims in court.

Diageo Americas Supply dba George A. Dickel & Co. sued Tennessee Alcoholic Beverage Commission Director Keith Bell in Federal Court, challenging the state's alcohol "storage statute."

The state interprets the law to mean that all alcoholic beverage manufacturers, including the plaintiff, are prohibited "from storing their Tennessee-manufactured distilled spirits anywhere but the Tennessee county in which those products were manufactured or an adjacent county," according to the lawsuit.

Diageo, a giant boozemaker, "owns and operates the George Dickel Distillery, which has manufactured George Dickel Tennessee Whisky products in Tullahoma, Tennessee (Coffee County) for more than 130 years," the complaint states.

Dickel claims that the Tennessee storage statute violations the Constitution's Commerce Clause and the 14th Amendment's Equal Protection Clause.

It seeks injunctive relief "requiring defendant to permit distilled spirit manufactures to store their Tennessee-manufactured products anywhere inside or outside of Tennessee."

Bell emailed Dickel on March 20 under the subject line "Storage of product," stating that it had come to his attention that Dickel was storing product made at its Tullahoma distillery in a warehouse in Louisville. Bell asked Dickel to look into it and respond by March 28 - which is the day Dickel sued Bell.

Dickel claims that "Tennessee has never before sought to enforce the geographic limitations of the storage statute" until Bell's March 20 email.

Complying with the law now would require Dickel "to incur the cost of moving the distilled spirits stored in Kentucky back to Tennessee," and may result in a reduced manufacturing output or having to move production out of state, both of which "would most likely come at the cost of Tennessee jobs," the complaint states.

The storage statute violates the Commerce Clause because it treats interstate transportation of alcohol differently than intra-state transportation, "discriminates against out-of-state facilities and storage services, provides economic protection to in-state storage services, forces manufacturers to store their products in-state, and regulates transactions occurring out of state," according to the complaint.

The law violates the Equal Protection Clause by discriminating against Tennessee alcohol manufacturers who have out-of-state facilities, out-of-state storage providers, and even against storage facilities in Tennessee, "favoring those that are in the same county as or a county adjacent to the site of manufacture," Dickel claims.

The storage statute is section 57-2-104 of Tennessee Code, which states, in relevant part, that "any alcoholic beverages or wine produced at a plant located within this state shall be stored by the licensee only within the county authorizing the operation or in a county adjacent to the county authorizing the manufacturing operation, and such possessions shall be limited to storage facilities of such manufacturer."

It was enacted in 1937, and amended in 2013 to allow storage in adjacent counties.

Dickel seeks a declaration that the storage statute is unconstitutional and an injunction preventing Bell, in his official capacity, from enforcing it. Dickel is represented by Anne Martin, with Bone McAllester Norton in Nashville.

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