Legislation brought to help Chattanooga whiskey has become entangled in a Gatlinburg moonshine war.
A prominent Nashville lobbyist is already a casualty – at least in losing Gatlinburg as one of his clients.
The bill in issue (HB102) cleared its first hurdle Wednesday in the House State Government Subcommittee under sponsorship of Rep. Joe Carr, R-Lascassas, over the objections of Joe Baker, who operates Ole Smoky Moonshine Distillery in the Sevier County city. Gatlinburg officials are also opposed to the measure.
Baker, who was on hand for the subcommittee hearing, was roundly criticized by Reps. Ryan Haynes, R-Knoxville, and Kent Williams of Elizabethton, an independent, for newspaper ads saying lobbyists were trying to “sneak” the bill through the Legislature.
Baker said the ads were based on lobbyist David McMahan, who says he is a “minority investor” in Sugarlands, a proposed new distillery that hopes to open near Ole Smoky. McMahan had been signed as a contract lobbyist for Gatlinburg, but he and city officials agreed to terminate the relationship last month after mutually deciding his ties to Sugarlands posed a conflict of interest.
Haynes said the ads were “false;” Williams said they implied “I was trying to do something underhanded.” Baker said he apologized if legislators felt the ads were disrespectful.
The bill revises a law enacted in 2009 that allowed distilleries to be established in Sevier and many other Tennessee counties designated by the Legislature – but not in Hamilton County. The bill would allow cities to authorize distilleries even if the full county does not. This would allow the City of Chattanooga to become home to a distillery making Chattanooga Whiskey, a brand that is now actually made in Indiana.
But the bill also makes other revisions to the distillery law, including a provision that basically says distilleries do not need a retail package store license to sell their product on premises. With the provision’s complicated interaction with other current laws and bill provisions, it allows establishment of a distillery even if it runs afoul of some local laws. That gets Gatlinburg involved.
Gatlinburg is now home to two distilleries, Ole Smoky and The Barrellhouse, which Baker said is owned and operated by his sister and brother-in-law. Both were approved by city officials under applicable ordinances – including one that says liquor operations cannot be located within 1,000 feet of each other. Sugarlands’ application was rejected by city commissioners, according to City Manager Cindy Ogle, because it would be too close to Ole Smoky.
With passage of the bill, the Gatlinburg disapproval would be effectively overridden and Sugarlands could open despite the city ordinances. Critics say that would unfairly undermine local control over alcohol businesses. Supporters said it will promote competition and create jobs.
Haynes said that refusing to allow two distilleries to operate near one another would be comparable torefusing to allow two restaurants to operate new one another because both have liquor-by-the-drink sales. He also contended the bill would allow more local control because another provision lets cities decide to reject distilleries if they choose.
Baker said the bill, if enacted, would allow new distilleries to operate under different rules – including longer opening hours and Sunday sales – than apply to his establishment and other existing distilleries. In an interview, he insisted that the object was not to stifle a potential competitor, just to assure local control and a “level playing field.”
McMahan has registered as a lobbyist for Sugarlands since departing as a Gatlinburg’s lobbyist, though he said that because of his investment interest that is probably not required under state law. The lead investor in Sugarlands is Ned Vickers, who spoke briefly to the subcommittee saying the city attorney had initially indicated the new distillery would comply with city ordinances, then changed his mind.
City attorney Ron Sharp said that the state Alcoholic Beverage Commission had changed its mind about how the current laws worked late last year, after the agency got a new executive director.
“I just want to work under the same rules as anyone else,” said Vickers.