Can a Tennessee grocery store with a wine license also hold a license to deliver alcohol?

Plain-English summary

The Tennessee General Assembly authorizes alcohol sales through a layered licensing scheme: retailers, wholesalers, manufacturers, on-premises sellers, off-premises sellers, and delivery services each have their own permit. Two of those permits are at issue here: § 57-3-803 (retail food store wine license, which lets a grocery store sell wine for off-premises consumption) and § 57-3-224 (alcoholic beverage delivery service license, which lets a delivery operator transport alcohol from a retailer to a customer's residence).

A legislator asked the AG three questions about how those permits interact. The answers, read together, allow significant operational flexibility for grocery stores that want to add a delivery component to their wine business.

First, a single legal entity can hold both licenses. The two licensing statutes do not contain mutual-exclusion language. Second, a single entity that holds both licenses can use its delivery service license to deliver the wine it itself sells under its retail food store license, subject to whatever conditions the Tennessee Alcoholic Beverage Commission has imposed on the delivery license. Third, common ownership between a food store entity and a separate delivery service entity does not prohibit the delivery service from delivering wine sold by the food store; the entities are legally distinct and the licenses regulate the entities, not their owners.

The opinion is structured around the absence of a tied-house violation. Tennessee's tied-house statute (§ 57-3-204) prohibits certain ownership and financial relationships between manufacturers/wholesalers on one side and retailers on the other. The opinion does not interpret the retail-and-delivery combination as triggering that prohibition, because both retail food store wine licenses and delivery licenses are downstream of the wholesale tier.

What this means for you

If you operate a Tennessee grocery store with a wine license

You can add an in-house delivery operation under a § 57-3-224 license without restructuring. Apply directly with the ABC for the delivery service license, comply with its conditions (insurance, age verification, allowable delivery zones), and bring your own customers' wine to their door. The opinion clears the structural concern.

If you run a delivery startup (Drizly, Instacart, etc.) doing alcohol delivery in Tennessee

You can deliver wine sold by retail food stores even when those stores share ownership with you. The licensing structure does not require you to be a wholly arm's-length third party. Get the § 57-3-224 license, comply with its rules, and operate.

If you advise alcohol-licensee clients

The opinion does not rewrite the tied-house rules at § 57-3-204. Your advice still has to clear those. What it does is foreclose the argument that a single owner cannot hold both retail food store wine and delivery licenses, or that common ownership of two separate entities triggers a structural problem outside the tied-house statute.

If you work for the Tennessee Alcoholic Beverage Commission

Treat applications for both licenses by the same entity, or by commonly owned separate entities, as facially permissible. The substantive review still focuses on each license's individual qualifications, but the dual-licensing structure itself is approved.

Common questions

Q: What is § 57-3-803?
A: The retail food store wine license. It lets a grocery store sell wine for off-premises consumption, alongside its food and other retail items. It is one of the post-2014 changes that brought wine into Tennessee grocery stores.

Q: What is § 57-3-224?
A: The alcoholic beverage delivery service license. It authorizes a permitted delivery operator to transport alcohol from a permitted retailer to a customer at a residential address. The licensee is the delivery service entity, not the retailer.

Q: Are there any restrictions the opinion does not eliminate?
A: Yes. Each license has its own conditions: required hours, age verification, geographic limits on delivery, minimum order requirements, prohibited delivery to schools and hospitals, etc. The opinion clears the structural question; it does not exempt anyone from the substantive license conditions.

Q: What about beer? Spirits?
A: The opinion specifically addresses wine sold under the § 57-3-803 retail food store wine license. Beer and spirits are governed by different licensing schemes. The general principle (no statutory prohibition on dual licensing) likely applies, but each scheme has its own provisions that need their own analysis.

Q: Can a delivery service deliver wine from multiple retailers at once?
A: The opinion does not address this directly. The § 57-3-224 license is held by the delivery service and authorizes delivery generally; nothing in the AG's discussion limits the delivery service to a single retailer. ABC rules and the license's conditions would govern.

Background and statutory framework

Tennessee adopted retail food store wine sales in 2014 (the "Wine in Grocery Stores" legislation), creating § 57-3-803 to let grocery stores sell wine for off-premises consumption. The statute imposes its own qualifications (square-footage minimum, percentage of food sales, etc.) on stores that want the license.

Several years later, the legislature created the alcoholic beverage delivery service license at § 57-3-224 to let authorized third-party operators deliver alcohol from licensed retailers to customers' homes. The delivery license has its own conditions on age verification, delivery hours, geographic scope, and operational requirements.

The opinion's analytical method is to read both statutes for prohibitions and to conclude that none exists. The retail food store wine license does not say its holder cannot hold other alcohol licenses. The delivery service license does not say its holder cannot also be a retail seller. The tied-house statute (§ 57-3-204) addresses cross-tier relationships (manufacturer-wholesaler-retailer) and does not reach two retail-tier licenses or a retail-and-delivery combination. With no statutory prohibition, the licenses can coexist in a single entity or in commonly owned separate entities.

Citations

• Tenn. Code Ann. § 57-3-803 (retail food store wine license)
• Tenn. Code Ann. § 57-3-224 (alcoholic beverage delivery service license)
• Tenn. Code Ann. § 57-3-204 (tied-house provisions)
• Tenn. Code Ann. § 57-3-101 et seq. (Title 57 alcoholic beverage framework)

Subject

Authority of Retail Food Store Wine Licensee to Hold Delivery Service License

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2021/op21-12.pdf

Original opinion text

August 3, 2021
Opinion No. 21-12
May a retail food store that is licensed to sell wine under Tenn. Code Ann. § 57-3-803 also
be licensed to deliver alcoholic beverages under Tenn. Code Ann. § 57-3-224?
A retail food store licensed to sell wine under Tenn. Code Ann. § 57-3-803 does not appear
to be statutorily prohibited from also holding a license to deliver alcoholic beverages under Tenn.
Code Ann. § 57-3-224.
If the answer to question #1 is yes, may such a retail food store-i.e., a single entity that
holds both licenses-deliver the wine that it itself sells under its retail food store wine license?
likely use its delivery service license to deliver the wine that it itself sells under its retail food store
license, as long as it does so in compliance with the terms and conditions of its delivery service
license.
May an entity licensed to deliver alcoholic beverages deliver wine sold by a legally separate
entity licensed as a retail food store to sell wine even though the two separate entities are under
common ownership or control?
A delivery service licensee may deliver wine sold by a retail food store wine licensee that
is legally a separate entity from the delivery service even though the two separate entities are both
STATE OF TENNESSEE
OFFICE OF THE ATTORNEY GENERAL
August 3, 2021
Opinion No. 21-12
Authority of Retail Food Store Wine Licensee to Hold Delivery Service License
Question 1
May a retail food store that is licensed to sell wine under Tenn. Code Ann. § 57-3-803 also
be licensed to deliver alcoholic beverages under Tenn. Code Ann. § 57-3-224?
Opinion 1
A retail food store licensed to sell wine under Tenn. Code Ann. § 57-3-803 does not appear
to be statutorily prohibited from also holding a license to deliver alcoholic beverages under Tenn.
Code Ann. § 57-3-224.
Question 2
If the answer to question #1 is yes, may such a retail food store—i.e., a single entity that
holds both licenses—deliver the wine that it itself sells under its retail food store wine license?
Opinion 2
A retail food store that holds both a license to sell wine and a delivery service license may
likely use its delivery service license to deliver the wine that it itself sells under its retail food store
license, as long as it does so in compliance with the terms and conditions of its delivery service
license.
Question 3
May an entity licensed to deliver alcoholic beverages deliver wine sold by a legally separate
entity licensed as a retail food store to sell wine even though the two separate entities are under
common ownership or control?
Opinion 3
A delivery service licensee may deliver wine sold by a retail food store wine licensee that
is legally a separate entity from the delivery service even though the two separate entities are both
owned or controlled by the same person or entity.
Tennessee, like many other States, requires alcoholic beverages distributed in the
State to pass through a specified three-tiered system. Acting through the Tennessee
Alcoholic Beverage Commission (TABC), the State issues different types of
licenses to producers, wholesalers, and retailers of alcoholic beverages. See Tenn.
Code Ann. § 57-3-201 (2018). Producers may sell only to licensed wholesalers;
wholesalers may sell only to licensed retailers or other wholesalers; and only
licensed retailers may sell to consumers. § 57-3-404. No person may lawfully
participate in the sale of alcohol without the appropriate license. See, e.g., § 57-3-
Retail liquor stores (i.e., liquor stores and package stores licensed under Tenn. Code Ann.
§ 57-3-204) have been the traditional sellers of wine for off-premises consumption in Tennessee.
Until recently, retail food stores (i.e., grocery stores and convenience stores) were not eligible to
be licensed to sell wine. But in 2014 the General Assembly created "an additional class of licenses
allowing the sale of wine at retail food stores." 2014 Tenn. Pub. Acts, ch. 554, § 1. This new
"retail food store wine license" allows a "retail food store" that meets certain statutory
requirements¹ to "receive, store, possess and sell wine at retail for consumption off the premises
at the licensed retail food store Tenn. Code Ann. § 57-3-803(a).
A retail food store wine licensee is subject to the following "prohibited-interest" limitation:
No holder of a retail food store wine license, nor any person or entity having any
interest in such license greater than ten percent (10%) shall have any interest as
partner or otherwise, either direct or indirect, in a business licensed to engage in the
sale or distribution of alcoholic beverages, including wine and beer licensed under
§ 57-3-202 [i.e., producers], § 57-3-203 [i.e., wholesalers], § 57-3-204 i.e.,
retailers], § 57-3-207 [i.e. wineries], § 57-3-217 [i.e., direct shippers that
manufacture, sell, and ship wine by common carrier] or [title 57, chapter 3] part 6
[i.e., non-resident sellers permitted to operate in Tennessee].
Id. § 57-3-803(b)(2)(A).
1 "Retail food store' means an establishment that is open to the public that derives at least twenty percent (20%) of
its sales [sic] taxable sales from the retail sale of food and food ingredients for human consumption taxed at the rate
provided in § 67-6-228(a) and has retail floor space of at least one thousand two hundred square feet (1,200 sq. ft.)."
Tenn. Code Ann. § 57-3-802(1). The basic statutory requirements for obtaining a retail food store wine license are
specified in Tenn. Code Ann. § 57-3-803.
2
ANALYSIS
As the United States Supreme Court has explained,
Tennessee, like many other States, requires alcoholic beverages distributed in the
State to pass through a specified three-tiered system. Acting through the Tennessee
Alcoholic Beverage Commission (TABC), the State issues different types of
licenses to producers, wholesalers, and retailers of alcoholic beverages. See Tenn.
Code Ann. § 57–3–201 (2018). Producers may sell only to licensed wholesalers;
wholesalers may sell only to licensed retailers or other wholesalers; and only
licensed retailers may sell to consumers. § 57–3–404. No person may lawfully
participate in the sale of alcohol without the appropriate license. See, e.g., § 57–3–
406.
Tennessee Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2457, 204 L. Ed. 2d 801
(2019) (footnote omitted).
Retail liquor stores (i.e., liquor stores and package stores licensed under Tenn. Code Ann.
§ 57-3-204) have been the traditional sellers of wine for off-premises consumption in Tennessee.
Until recently, retail food stores (i.e., grocery stores and convenience stores) were not eligible to
be licensed to sell wine. But in 2014 the General Assembly created “an additional class of licenses
allowing the sale of wine at retail food stores.” 2014 Tenn. Pub. Acts, ch. 554, § 1. This new
“retail food store wine license” allows a “retail food store” that meets certain statutory
requirements1
to “receive, store, possess and sell wine at retail for consumption off the premises
at the licensed retail food store . . . .” Tenn. Code Ann. § 57-3-803(a).
A retail food store wine licensee is subject to the following “prohibited-interest” limitation:
No holder of a retail food store wine license, nor any person or entity having any
interest in such license greater than ten percent (10%) shall have any interest as
partner or otherwise, either direct or indirect, in a business licensed to engage in the
sale or distribution of alcoholic beverages, including wine and beer licensed under
§ 57-3-202 [i.e., producers], § 57-3-203 [i.e., wholesalers], § 57-3-204 i.e.,
retailers], § 57-3-207 [i.e. wineries], § 57-3-217 [i.e., direct shippers that
manufacture, sell, and ship wine by common carrier] or [title 57, chapter 3] part 6
. . . [i.e., non-resident sellers permitted to operate in Tennessee].
Id. § 57-3-803(b)(2)(A).
1
“‘Retail food store’ means an establishment that is open to the public that derives at least twenty percent (20%) of
its sales [sic] taxable sales from the retail sale of food and food ingredients for human consumption taxed at the rate
provided in § 67-6-228(a) and has retail floor space of at least one thousand two hundred square feet (1,200 sq. ft.).”
Tenn. Code Ann. § 57-3-802(1). The basic statutory requirements for obtaining a retail food store wine license are
specified in Tenn. Code Ann. § 57-3-803.
When the General Assembly created this "additional" wine license for retail food stores in
2014, it granted liquor stores and package stores a new privilege of licensure: simply by virtue of
being licensed to sell alcoholic beverages under § 57-3-204, liquor stores and package stores are
now authorized to "deliver" the products they sell to locations outside their licensed premises and
to charge a fee for this delivery service. See 2014 Tenn. Pub. Acts, ch. 554, § 12 (codified at Tenn.
Code Ann. § 57-3-406(j)(1)). But that delivery privilege was not included in the new class of
license that allows retail food stores to sell wine. Unlike liquor store licensees, retail food store
wine licensees are not authorized to deliver wine simply by virtue of being licensed to sell wine.
In 2015, the General Assembly created yet another type of license-the "delivery service
license." 2015 Tenn. Pub. Acts, ch. 285, § 2. Initially, a delivery service license only authorized
a delivery service to deliver alcoholic beverages sold by a liquor store or package store-not wine
sold by a retail food store. But the General Assembly then amended the law to reflect its legislative
intent to allow delivery service licensees to also deliver wine sold by licensed retail food stores.
See 2018 Tenn. Pub. Acts, ch. 765, § 1.
Thus, under current law, a delivery service license is "to be issued by [the TABC] to any
delivery service that delivers or facilitates delivery of prepared food from restaurants or items from
a retail store to customers as part of [its] business and seeks to deliver sealed packages of alcoholic
beverages or beer sold by any retailers licensed under [title 57, chapter 3] Tenn. Code
Ann. § 57-3-224(a)(1). Because retailers licensed under title 57, chapter 3 include-in addition to
liquor stores and package stores - grocery stores and convenience stores, delivery services may
now deliver wine sold by retail food stores.²
However, the next section of the delivery service license statute, 224(b)(1), which describes
who may apply for a delivery service license, was not amended to reflect the legislative intent
expressed in 224(a)(1) to allow delivery services to deliver wine sold by retail food stores. Because
it was not amended, 224(b)(1) incongruously limits-as relevant here-those who may apply for
a delivery service license to persons and entities "desiring to deliver" alcoholic beverages sold by
a "retailer licensed under § 57-3-204," which includes only liquor stores and package stores, but
does not include retail food stores, which are licensed to sell wine under Tenn. Code Ann. § 57-3-
803, not § 57-3-204.
This incongruity between 57-3-224(a)(1) and (b)(1) is of significance in the analysis of
the questions posed. While the amendment of Tenn. Code Ann. § 57-3-224(a)(1) bespeaks a
legislative intent to change the prior law to now allow delivery service licensees to deliver wine
sold by retail food store wine licensees, the failure similarly to amend 224(b)(1) to include those
delivery services within the scope of permitted applicants for a delivery service license creates a
2 There are no "prohibited-interest" limitations on a delivery service license.
3 That same incongruity exists between Tenn. Code Ann. §§ 57-3-224(a)(1) and 57-3-406(k)(1), which was likewise
not amended to parallel the amendment to Tenn. Code Ann. §§ 57-3-224(a)(1). (Section 406(k)(1) regulates how
delivery services may deliver alcoholic beverages sold by retail liquor stores and package stores and is, therefore, not
relevant to the questions posed here, which concern only retail food stores.)
3
When the General Assembly created this “additional” wine license for retail food stores in
2014, it granted liquor stores and package stores a new privilege of licensure: simply by virtue of
being licensed to sell alcoholic beverages under § 57-3-204, liquor stores and package stores are
now authorized to “deliver” the products they sell to locations outside their licensed premises and
to charge a fee for this delivery service. See 2014 Tenn. Pub. Acts, ch. 554, § 12 (codified at Tenn.
Code Ann. § 57-3-406(j)(1)). But that delivery privilege was not included in the new class of
license that allows retail food stores to sell wine. Unlike liquor store licensees, retail food store
wine licensees are not authorized to deliver wine simply by virtue of being licensed to sell wine.
In 2015, the General Assembly created yet another type of license—the “delivery service
license.” 2015 Tenn. Pub. Acts, ch. 285, § 2. Initially, a delivery service license only authorized
a delivery service to deliver alcoholic beverages sold by a liquor store or package store—not wine
sold by a retail food store. But the General Assembly then amended the law to reflect its legislative
intent to allow delivery service licensees to also deliver wine sold by licensed retail food stores.
See 2018 Tenn. Pub. Acts, ch. 765, § 1.
Thus, under current law, a delivery service license is “to be issued by [the TABC] to any
delivery service that delivers or facilitates delivery of prepared food from restaurants or items from
a retail store to customers as part of [its] business and seeks to deliver sealed packages of alcoholic
beverages or beer . . . sold by any retailers licensed under [title 57, chapter 3] . . .” Tenn. Code
Ann. § 57-3-224(a)(1). Because retailers licensed under title 57, chapter 3 include—in addition to
liquor stores and package stores — grocery stores and convenience stores, delivery services may
now deliver wine sold by retail food stores.2
However, the next section of the delivery service license statute, 224(b)(1), which describes
who may apply for a delivery service license, was not amended to reflect the legislative intent
expressed in 224(a)(1) to allow delivery services to deliver wine sold by retail food stores. Because
it was not amended, 224(b)(1) incongruously limits—as relevant here—those who may apply for
a delivery service license to persons and entities “desiring to deliver” alcoholic beverages sold by
a “retailer licensed under § 57-3-204,” which includes only liquor stores and package stores, but
does not include retail food stores, which are licensed to sell wine under Tenn. Code Ann. § 57-3-
803, not § 57-3-204.
This incongruity between §§ 57-3-224(a)(1) and (b)(1) is of significance in the analysis of
the questions posed. While the amendment of Tenn. Code Ann. § 57-3-224(a)(1) bespeaks a
legislative intent to change the prior law to now allow delivery service licensees to deliver wine
sold by retail food store wine licensees, the failure similarly to amend 224(b)(1) to include those
delivery services within the scope of permitted applicants for a delivery service license creates a
potential conflict and concomitant uncertainty as to the scope of the delivery service license.3
2
There are no “prohibited-interest” limitations on a delivery service license.
3
That same incongruity exists between Tenn. Code Ann. §§ 57-3-224(a)(1) and 57-3-406(k)(1), which was likewise
not amended to parallel the amendment to Tenn. Code Ann. §§ 57-3-224(a)(1). (Section 406(k)(1) regulates how
delivery services may deliver alcoholic beverages sold by retail liquor stores and package stores and is, therefore, not
relevant to the questions posed here, which concern only retail food stores.)
1. A retail food store licensed to sell wine under Tenn. Code Ann. § 57-3-803 does not
appear to be statutorily prohibited from also holding a license to deliver alcoholic
beverages under Tenn. Code Ann. § 57-3-224.
There is nothing on the face of Tenn. Code Ann. § 57-3-224 that would appear to prohibit
a retail food store licensed to sell wine from concurrently holding a delivery service license,
Tennessee Code Annotated § 57-3-204 allows liquor stores and package stores to deliver
their own products without obtaining a delivery service license; that delivery privilege is included
in their retailer license privileges. By contrast, no delivery service privilege is included in the
retail food store wine license granted under § 57-3-803; retail food store wine licensees may not
But retail food stores are not precluded from holding a separate delivery service license
under Tenn. Code § 57-3-224(a)(1). Had the General Assembly intended to prohibit retail food
stores from holding a delivery service license, it could easily have done so. Instead, it provided
that "a delivery service license" can be "issued to any delivery service" that delivers food to
customers as part of its business and that wants to also deliver sealed packages of alcoholic
beverages that are sold by any retailer licensed to sell those beverages under title 57, chapter 3, id.,
which would include retail food stores licensed to sell wine under § 57-3-803.
Although a retail food store licensed to sell wine that desires to deliver wine would-
assuming it satisfies the basic requirements-fit within the statutory definition of a delivery service
that may be issued, and that may therefore hold, a delivery service license, the incongruity between
§§ 57-3-224(a)(1) and (b)(1) raises some question as to whether that entity or person would come
within the statutory definition of who may apply for a delivery service license.
But the problem presented by the incongruity between who may hold a delivery service
license according to § 57-3-224(a)(1) and who may apply for a delivery service license according
to 224(b)(1) can be resolved by application of principles of statutory construction-principles that
are judicially designed to help courts deal with conflicts and incongruities in statutory drafting.
When construing facially conflicting statutes, a court will give effect to the legislative intent
And, as most pertinent here, the rules of statutory construction direct courts not to "apply
Assembly did not intend to enact meaningless or useless legislation." Lind v. Beaman Dodge, Inc.,
4
1. A retail food store licensed to sell wine under Tenn. Code Ann. § 57-3-803 does not
appear to be statutorily prohibited from also holding a license to deliver alcoholic
beverages under Tenn. Code Ann. § 57-3-224.
There is nothing on the face of Tenn. Code Ann. § 57-3-224 that would appear to prohibit
a retail food store licensed to sell wine from concurrently holding a delivery service license,
assuming it meets all the statutory requirements for obtaining a delivery service license.
Tennessee Code Annotated § 57-3-204 allows liquor stores and package stores to deliver
their own products without obtaining a delivery service license; that delivery privilege is included
in their retailer license privileges. By contrast, no delivery service privilege is included in the
retail food store wine license granted under § 57-3-803; retail food store wine licensees may not
deliver wine under that license alone.
But retail food stores are not precluded from holding a separate delivery service license
under Tenn. Code § 57-3-224(a)(1). Had the General Assembly intended to prohibit retail food
stores from holding a delivery service license, it could easily have done so. Instead, it provided
that “a delivery service license” can be “issued to any delivery service” that delivers food to
customers as part of its business and that wants to also deliver sealed packages of alcoholic
beverages that are sold by any retailer licensed to sell those beverages under title 57, chapter 3, id.,
which would include retail food stores licensed to sell wine under § 57-3-803.
Although a retail food store licensed to sell wine that desires to deliver wine would—
assuming it satisfies the basic requirements—fit within the statutory definition of a delivery service
that may be issued, and that may therefore hold, a delivery service license, the incongruity between
§§ 57-3-224(a)(1) and (b)(1) raises some question as to whether that entity or person would come
within the statutory definition of who may apply for a delivery service license.
But the problem presented by the incongruity between who may hold a delivery service
license according to § 57-3-224(a)(1) and who may apply for a delivery service license according
to 224(b)(1) can be resolved by application of principles of statutory construction—principles that
are judicially designed to help courts deal with conflicts and incongruities in statutory drafting.
When construing facially conflicting statutes, a court will give effect to the legislative intent
without unduly restricting or expanding a statute’s intended coverage. State v. Davis, 173 S.W.3d
411, 413–14 (Tenn. 2005) (citing State v. Jennings, 130 S.W.3d 43, 46 (Tenn. 2004)). Component
parts of a statute are to be construed, if possible, consistently, and reasonably. See, e.g., State v.
Alford, 970 S.W.2d 944, 946 (Tenn. 1998). Statutes involving the same subject must be construed
harmoniously, so that they do not conflict. State v. Turner, 193 S.W.3d 522 (Tenn. 2006); In re
Akins, 87 S.W.3d 488, 493 (Tenn. 2002) (citing Parkridge Hosp., Inc. v. Woods, 561 S.W.2d 754,
755 (Tenn. 1978)).
And, as most pertinent here, the rules of statutory construction direct courts not to “apply
a particular interpretation to a statute if that interpretation would yield an absurd result.” State v.
Sims, 45 S.W.3d 1, 11 (Tenn. 2001). Put another way, courts must “presume that the General
Assembly did not intend to enact meaningless or useless legislation.” Lind v. Beaman Dodge, Inc.,
356 S.W.3d 889, 900 (Tenn. 2011) (citing Texas Gas Transmission Corp. v. Atkins, 205 Tenn.
The legislature amended § 57-3-224 to allow delivery services to deliver alcoholic
beverages sold by all retailers licensed under chapter 3, which includes retail food stores that sell
wine. Before that amendment, delivery services could only deliver alcoholic beverages sold by
retail liquor stores and package stores. While it amended § 57-3-224(a)(1) to accomplish that
change with reference to the issuance of a delivery service license, the legislature neglected to
similarly amend 224(b)(1) with reference to the submission of an application for a delivery service
license. Section 224(b)(1) still says that a delivery service may submit an application only for a
license to deliver beverages sold by retail liquor/package stores-not for a license to deliver wine
sold by retail food stores.
In light of the applicable principles of statutory construction set out above, it is highly likely
that a court would harmonize the two statutory provisions by construing them together to mean
that any person or entity that may be issued a delivery service license may ipso facto be permitted
to apply for such a license. Such a construction would comport with the legislative intent behind
the amendment to (a)(1)-to allow delivery services to deliver wine sold by retail food stores, not
just wine sold by retail liquor stores. Any other reading would render the amendment to (a)(1)
essentially useless or meaningless; it would yield the absurd result that one may not apply for a
license which one is qualified to hold. Because the problematic incongruity-most likely the result
of a drafting oversight-may be thus resolved, it should not operate to prevent a retail food store
Nor does the prohibited-interest limitation in Tenn. Code Ann. § 57-3-803(b)(2)(a) prevent
a retail food store from holding a delivery service license under Tenn. Code Ann. § 57-3-224. That
limitation precludes a retail food store wine licensee from having "any interest," whether direct or
indirect, in "a business licensed to engage in the sale or distribution of alcoholic beverages,
including wine and beer licensed under § 57-3-202, § 57-3-203, § 57-3-204, § 57-3-207, § 57-3-
217 or part 6 of this chapter." Tenn. Code Ann. § 57-3-803(b)(2)(A) (emphasis added).
That "prohibited-interest" limitation does not prohibit a retail food store wine licensee from
having an interest in a delivery service. The prohibition applies only to interests in producers
(§ 57-3-202), wholesalers (§ 57-3-203), retailers (§ 57-3-204), wineries (§ 57-3-207), direct
shippers that manufacture, sell, and ship wine by common carrier (§ 57-3-217), and non-resident
To begin with, a delivery service is licensed under Tenn. Code Ann. § 57-3-224, which is
not one of the specified businesses in which a retail food store may not have an interest. Moreover,
a delivery service is not a business "engage[d] in the sale or distribution" of alcoholic beverages.
A licensed delivery service is not engaged in the sale of the alcoholic beverages it delivers.
A delivery service licensee is simply permitted to "deliver sealed packages of alcoholic beverages
or beer" that are sold by licensed retailers. Tenn. Ann. Code § 57-3-224(a)(1) (emphasis added).
In fact, the statute makes clear that the charging of a fee for the delivery service "must not be
construed as the delivery service reselling alcoholic beverages or having a direct or indirect interest
5
356 S.W.3d 889, 900 (Tenn. 2011) (citing Texas Gas Transmission Corp. v. Atkins, 205 Tenn.
495, 327 S.W.2d 305, 307 (1959)).
The legislature amended § 57-3-224 to allow delivery services to deliver alcoholic
beverages sold by all retailers licensed under chapter 3, which includes retail food stores that sell
wine. Before that amendment, delivery services could only deliver alcoholic beverages sold by
retail liquor stores and package stores. While it amended § 57-3-224(a)(1) to accomplish that
change with reference to the issuance of a delivery service license, the legislature neglected to
similarly amend 224(b)(1) with reference to the submission of an application for a delivery service
license. Section 224(b)(1) still says that a delivery service may submit an application only for a
license to deliver beverages sold by retail liquor/package stores—not for a license to deliver wine
sold by retail food stores.
In light of the applicable principles of statutory construction set out above, it is highly likely
that a court would harmonize the two statutory provisions by construing them together to mean
that any person or entity that may be issued a delivery service license may ipso facto be permitted
to apply for such a license. Such a construction would comport with the legislative intent behind
the amendment to (a)(1)—to allow delivery services to deliver wine sold by retail food stores, not
just wine sold by retail liquor stores. Any other reading would render the amendment to (a)(1)
essentially useless or meaningless; it would yield the absurd result that one may not apply for a
license which one is qualified to hold. Because the problematic incongruity—most likely the result
of a drafting oversight—may be thus resolved, it should not operate to prevent a retail food store
licensed to sell wine from also applying for and being issued a delivery service license.
Nor does the prohibited-interest limitation in Tenn. Code Ann. § 57-3-803(b)(2)(a) prevent
a retail food store from holding a delivery service license under Tenn. Code Ann. § 57-3-224. That
limitation precludes a retail food store wine licensee from having “any interest,” whether direct or
indirect, in “a business licensed to engage in the sale or distribution of alcoholic beverages,
including wine and beer licensed under § 57-3-202, § 57-3-203, § 57-3-204, § 57-3-207, § 57-3-
217 or part 6 of this chapter.” Tenn. Code Ann. § 57-3-803(b)(2)(A) (emphasis added).
That “prohibited-interest” limitation does not prohibit a retail food store wine licensee from
having an interest in a delivery service. The prohibition applies only to interests in producers
(§ 57-3-202), wholesalers (§ 57-3-203), retailers (§ 57-3-204), wineries (§ 57-3-207), direct
shippers that manufacture, sell, and ship wine by common carrier (§ 57-3-217), and non-resident
sellers permitted to operate in Tennessee under title 57, chapter 6.
To begin with, a delivery service is licensed under Tenn. Code Ann. § 57-3-224, which is
not one of the specified businesses in which a retail food store may not have an interest. Moreover,
a delivery service is not a business “engage[d] in the sale or distribution” of alcoholic beverages.
A licensed delivery service is not engaged in the sale of the alcoholic beverages it delivers.
A delivery service licensee is simply permitted to “deliver sealed packages of alcoholic beverages
or beer” that are sold by licensed retailers. Tenn. Ann. Code § 57-3-224(a)(1) (emphasis added).
In fact, the statute makes clear that the charging of a fee for the delivery service “must not be
construed as the delivery service reselling alcoholic beverages or having a direct or indirect interest
in the retailer." Id. § 57-3-224(a)(3). Thus, a delivery service licensee is not a business engaged
in "the sale of alcoholic beverages."
A delivery service is likewise not a business engaged in the "distribution of alcoholic
beverages" as that phrase must be understood here. In the context in which it is used here,
"distribution" can only refer to the alcoholic-beverage-distribution system allowed under
Tennessee law-the three-tier distribution system that includes only producers, wholesalers, and
retailers of alcoholic beverages. A delivery service is none of those. It is neither a producer, a
wholesaler, nor a retailer of alcoholic beverages, which indeed explains why it is not among the
"prohibited-interest" businesses listed in Tenn. Code Ann. § 57-3-803(b)(2)(A), all of which are
part of the three-tier "distribution" system.⁴
While "distribution" might mean "delivery" in some contexts, it does not have that
meaning in the present context. The terms "distribution," "distributor," and "distribute" are
repeatedly used throughout title 57 in connection with producers, wholesalers, and retailers-the
traditional members of Tennessee's three-tiered system. A delivery service does not perform the
functions of any of these participants in that system; it operates outside the system when it simply
delivers alcoholic beverages that have already been distributed-from producer to wholesaler to
retailer-through the three-tiered system.
Further, those engaged in the business of selling and distributing alcoholic beverages are
subject to certain taxes⁵ that delivery service licensees are not obligated to pay. 6 That strongly
reinforces that the General Assembly does not view delivery service businesses as sellers or
distributors of alcoholic beverages.
In sum, the "prohibited-interest" limitation in Tenn. Code Ann. § 57-3-803(b)(2)(A) does
not appear to preclude a retail food store from having an interest in a delivery service because a
delivery service is not a business licensed to engage in the sale or distribution of alcoholic
Therefore, a retail food store that is licensed to sell wine under Tenn. Code Ann. § 57-3-
⁴The first four businesses-§ 57-3-202 (producers); § 57-3-203 (wholesalers); § 57-3-204 (retailers); and § 57-3-207
(wineries)— have been included in Tennessee's three-tiered system for the sale and distribution of wine and other
alcoholic beverages within this State since the system's inception in 1939. All "sell" and/or "distribute" alcoholic
beverages under the express language of their respective licensure statutes. Similarly, the other two businesses-
direct shippers that manufacture, sell, and ship wine by common carrier under § 57-3-217 and non-resident sellers that
are permitted to operate in this State-also "sell" and/or "distribute" alcoholic beverages under their respective
5 "It is lawful to manufacture, store, sell, distribute and purchase alcoholic beverages or wine subject to proper
licensing, [and] payment of taxes, Tenn. Code Ann. § 57-3-102(a); see Tenn. Code Ann. §§ 57-3-301 to -304.
6 "The delivery service licensee is not responsible for remitting applicable taxes on alcoholic beverages or beer
delivered by the licensee." Tenn. Code Ann. § 57-3-224(a)(3).
6
in the retailer.” Id. § 57-3-224(a)(3). Thus, a delivery service licensee is not a business engaged
in “the sale . . . of alcoholic beverages.”
A delivery service is likewise not a business engaged in the “distribution of alcoholic
beverages” as that phrase must be understood here. In the context in which it is used here,
“distribution” can only refer to the alcoholic-beverage-distribution system allowed under
Tennessee law—the three-tier distribution system that includes only producers, wholesalers, and
retailers of alcoholic beverages. A delivery service is none of those. It is neither a producer, a
wholesaler, nor a retailer of alcoholic beverages, which indeed explains why it is not among the
“prohibited-interest” businesses listed in Tenn. Code Ann. § 57-3-803(b)(2)(A), all of which are
part of the three-tier “distribution” system.4
While “distribution” might mean “delivery” in some contexts, it does not have that
meaning in the present context. The terms “distribution,” “distributor,” and “distribute” are
repeatedly used throughout title 57 in connection with producers, wholesalers, and retailers—the
traditional members of Tennessee’s three-tiered system. A delivery service does not perform the
functions of any of these participants in that system; it operates outside the system when it simply
delivers alcoholic beverages that have already been distributed—from producer to wholesaler to
retailer—through the three-tiered system.
Further, those engaged in the business of selling and distributing alcoholic beverages are
subject to certain taxes5
that delivery service licensees are not obligated to pay.6
That strongly
reinforces that the General Assembly does not view delivery service businesses as sellers or
distributors of alcoholic beverages.
In sum, the “prohibited-interest” limitation in Tenn. Code Ann. § 57-3-803(b)(2)(A) does
not appear to preclude a retail food store from having an interest in a delivery service because a
delivery service is not a business licensed to engage in the sale or distribution of alcoholic
beverages.
Therefore, a retail food store that is licensed to sell wine under Tenn. Code Ann. § 57-3-
803 is likely not statutorily precluded from also holding a license to deliver alcoholic beverages.
4
The first four businesses—§ 57-3-202 (producers); § 57-3-203 (wholesalers); § 57-3-204 (retailers); and § 57-3-207
(wineries)— have been included in Tennessee’s three-tiered system for the sale and distribution of wine and other
alcoholic beverages within this State since the system’s inception in 1939. All “sell” and/or “distribute” alcoholic
beverages under the express language of their respective licensure statutes. Similarly, the other two businesses—
direct shippers that manufacture, sell, and ship wine by common carrier under § 57-3-217 and non-resident sellers that
are permitted to operate in this State—also “sell” and/or “distribute” alcoholic beverages under their respective
licensure statutes.
5
“It is lawful to manufacture, store, sell, distribute and purchase alcoholic beverages or wine subject to proper
licensing, [and] payment of taxes, . . . .” Tenn. Code Ann. § 57-3-102(a); see Tenn. Code Ann. §§ 57-3-301 to -304.
6
“The delivery service licensee is not responsible for remitting applicable taxes on alcoholic beverages or beer
delivered by the licensee.” Tenn. Code Ann. § 57-3-224(a)(3).
2. & 3. A retail food store that holds both a license to sell wine and a delivery service license
may likely use its delivery service license to deliver the wine that it itself sells under
its retail food store license, and a delivery service licensee may deliver wine sold by a
retail food store wine licensee that is legally a separate entity from the delivery service
Clearly, under the statutory licensing scheme, a delivery service licensee that is an entity
or person legally separate and distinct from a retail food store wine licensee may deliver wine sold
by the retail food store wine licensee, assuming it does so in compliance with the terms and
conditions of its delivery license. That the two legally separate entities may share common
ownership or control does not appear to be contrary to the statutory licensing scheme. That is,
there does not appear to be any applicable statutory provision that would prevent two separate
business entities that are under common ownership or control and that obtain, respectively, a retail
food store wine license and a delivery service license, from engaging in the same business activities
that legally separate entities not under common ownership or control may engage in with one
another. Thus, there does not appear to be any statutory provision that would prevent the delivery
service licensee from delivering the wine sold by the retail food store wine licensee with which it
Nor does there appear to be any applicable statutory provision that would prohibit a retail
food store that holds both a license to sell wine and a delivery service license from delivering the
wine that the retail food store is licensed to sell, assuming that it does so in compliance with the
7
2. & 3. A retail food store that holds both a license to sell wine and a delivery service license
may likely use its delivery service license to deliver the wine that it itself sells under
its retail food store license, and a delivery service licensee may deliver wine sold by a
retail food store wine licensee that is legally a separate entity from the delivery service
even though the two entities are commonly owned or controlled.
Clearly, under the statutory licensing scheme, a delivery service licensee that is an entity
or person legally separate and distinct from a retail food store wine licensee may deliver wine sold
by the retail food store wine licensee, assuming it does so in compliance with the terms and
conditions of its delivery license. That the two legally separate entities may share common
ownership or control does not appear to be contrary to the statutory licensing scheme. That is,
there does not appear to be any applicable statutory provision that would prevent two separate
business entities that are under common ownership or control and that obtain, respectively, a retail
food store wine license and a delivery service license, from engaging in the same business activities
that legally separate entities not under common ownership or control may engage in with one
another. Thus, there does not appear to be any statutory provision that would prevent the delivery
service licensee from delivering the wine sold by the retail food store wine licensee with which it
shares ownership or control.
Nor does there appear to be any applicable statutory provision that would prohibit a retail
food store that holds both a license to sell wine and a delivery service license from delivering the
wine that the retail food store is licensed to sell, assuming that it does so in compliance with the
terms and conditions of its delivery service license.
HERBERT H. SLATERY III
Attorney General and Reporter
ANDRÉE SOPHIA BLUMSTEIN
Solicitor General
LAURA T. KIDWELL
Assistant Solicitor General
Requested by:
The Honorable Jeremy Faison
State Representative
425 Rep. John Lewis Way N.
Suite 604 Cordell Hull Building
Nashville, Tennessee 37243