Amends TCA Title 57, Chapter 5.

Generally under present law: (1) A brewer or manufacturer of beer is prohibited from having any financial or ownership interest, direct or indirect, in the business of or a building containing a wholesale or retail licensee, including furnishing or loaning any fixtures of any kind to a retail licensee, and such a brewer or manufacturer is prohibited from holding a wholesale or retail license; and (2) A manufacturer operating as a retailer is prohibited from selling its beer directly to retailers that are located in a county other than the county in which the manufacturer is located. A transfer or sale by a manufacturer operating as a retailer to an off-site retailer's location constitutes a wholesale sale. This bill provides, notwithstanding the above, that a manufacturer that has a total annual beer production of 50,000 gallons or less may obtain an additional self-distribution permit from the county or city where the manufacturer is located. This bill prohibits a county or city from issuing a self-distribution permit to a manufacturer that has entered into a distribution contract with a beer wholesaler if the terms of that contract include distribution rights for a county that is located, in whole or in part, within 100 miles of the licensed manufacturer where the beer being distributed, has been manufactured, produced, or bottled. Any manufacturer holding a self-distribution permit that enters into such a distribution contract with a wholesaler or whose total output in a calendar year exceeds 50,000 gallons must cease self-distributing its beer under this bill and must promptly surrender the manufacturer's self-distribution permit. This bill limits a manufacturer holding a self-distribution permit to distributing no more than 7,000 gallons of beer manufactured, produced, or bottled on the manufacturer's premises to any individual retail permittee holding a permit, issued under present law for the sale, distribution, manufacture, or storage of beer, located within 100 miles of the manufacturer's premises where the beer has been manufactured, produced, or bottled. This bill requires a manufacturer engaged in self-distribution under this bill to pay all taxes imposed upon a wholesaler that result from any direct sales from self-distribution. This bill prohibits the county or city from imposing an additional fee or charge for the issuance of a self-distribution permit under this bill, but authorizes the city and county to impose separate privilege tax pursuant to present law. A manufacturer engaged in self-distribution under this bill must register separately with the commissioner of revenue as a wholesaler. ON APRIL 7, 2021, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 177, AS AMENDED. AMENDMENT #1 rewrites this bill to delete a present law prohibition against a beer manufacturer that is operating as a retailer selling its beer directly to retailers that are located in a county other than the county in which the manufacturer is located. This amendment authorizes a manufacturer brewing not more than 25,000 barrels of beer or high alcohol content beer, or both, annually and operating as a retailer pursuant to present law to self-distribute the beer that it manufactures directly to retailers: (1) In the county in which the manufacturer is located; and (2) Outside the county in which the manufacturer is located, if the manufacturer self-distributes not more than 1,800 barrels of such manufacturer's beer annually and is not prohibited from self-distribution in the particular county by the manufacturer's contract with a beer wholesaler. This amendment prohibits a manufacturer self-distributing outside the county in which the manufacturer is located from self-distributing more than 1,800 barrels of its beer annually in this state regardless of the number of manufacturing locations. If a manufacturer self-distributes more than 1,800 barrels in a year, this amendment requires the manufacturer to enter into a contract with a wholesaler to distribute the manufacturer's beer within 90 days of exceeding such limitation. This amendment requires a manufacturer that self-distributes pursuant to this amendment to: (1) Certify its total volume of annual self-distribution as a part of the reporting required by present law applicable to wholesalers' sales; (2) Collect and pay the beer tax and wholesale tax; and (3) Register with the commissioner of revenue as a wholesaler pursuant to § 57-5-102 and comply with the requirements for licensing as a wholesaler, including, without limitation, the permitting, reporting, and bonding requirements. This amendment specifies that any self-distribution or sale by a manufacturer of its beer directly to a retail dealer of beer constitutes a wholesale sale for purposes of taxation. The provisions of this amendment take effect October 1, 2021.