Moonshine is a well-known part of Tennessee’s heritage, originating from Appalachian traditions and now commonly found in stores. While often associated with illegal production, making and selling moonshine legally in Tennessee involves a detailed set of state and federal laws. These regulations determine who can produce spirits, how they can be sold, and the penalties for breaking these rules. This guide explains how Tennessee law addresses moonshine.
Distilling Permit Requirements
To legally produce spirits like moonshine for commercial sale in Tennessee, a manufacturer or distillery license is required from the Tennessee Alcoholic Beverage Commission (TABC).1Tennessee Alcoholic Beverage Commission. Manufacturer License Information This license allows the holder to make alcoholic beverages with an alcohol content of eight percent or more by weight.
Prospective distillers must submit an application to the TABC, which includes a $300 non-refundable application fee and a $1,000 annual license fee.2Tennessee Alcoholic Beverage Commission. License and Permit Fees State licenses expire on December 31st each year and must be renewed. Applicants also need a Federal Basic Permit from the Alcohol and Tobacco Tax and Trade Bureau (TTB); there is no federal fee for this permit.3Alcohol and Tobacco Tax and Trade Bureau. TTB F 5100.24 – Application for Basic Permit Under the Federal Alcohol Administration Act
Applicants must be United States citizens.4Justia Law. Tennessee Code § 57-3-202 (2024) – Manufacturer’s or Distiller’s Licenses – Qualifications of Applicants This applies to everyone involved, including all stockholders in a corporate licensee. They cannot have an interest in other alcohol-related businesses like manufacturing, wholesale, retail, or wineries.
The proposed distillery location must comply with local zoning laws. Spirit manufacturing is allowed in areas that have approved retail package sales and on-premises alcohol consumption through local referendums. This also includes certain tourist areas where on-premises consumption is allowed, unless a local government has specifically banned alcohol manufacturing.
A completed distillery license application needs approval from the TABC. Full disclosure of all ownership and financial interests in the distillery is required.
Penalties for Unlicensed Production
Producing moonshine or other alcoholic spirits in Tennessee without the required state and federal licenses has serious legal consequences. Those operating illegally face fines, potential imprisonment, and forfeiture of property related to these activities.
Manufacturing alcoholic beverages without a license is a Class E felony in Tennessee.5Justia Law. Tennessee Code § 57-3-412 (2024) – Criminal Offenses – Penalties A conviction can lead to imprisonment for one to six years and a fine of up to $3,000. The exact sentence and fine depend on the specifics of the case and any prior criminal record.
Beyond imprisonment and fines, individuals convicted of unlicensed spirit production can have property seized and forfeited. This includes distilling equipment, raw materials, ingredients, finished products, and vehicles used for transport. These forfeitures are intended to remove the tools for committing the crime and can result in substantial financial loss.
Retail Sale Restrictions
The retail sale of legally produced moonshine and other spirits in Tennessee is regulated separately from production. State law specifies how these spirits can reach consumers, ensuring sales are controlled. Licensed distilleries can sell directly to consumers, with some limits.
Licensed manufacturers, including distilleries, can sell spirits they produce directly to consumers for off-premises consumption. This means visitors can buy spirits at the distillery, where tasting rooms may also operate.
Besides direct distillery sales, spirits are mainly sold through licensed retail package stores, often called liquor stores. These stores are authorized to sell alcoholic beverages for off-premises consumption and must be licensed by the TABC. They are the main places for consumers to buy spirits.
The operation of retail package stores depends on local option, meaning voters in a specific city or county must approve off-premises alcohol sales. Without this approval, liquor stores cannot operate in that area.
State law also limits where retail liquor stores can be located, often restricting them near schools, churches, and public parks. The TABC regulates the hours and days for spirit sales, including bans on certain holidays and specific rules for Sunday sales.6Tennessee Secretary of State – Publications. Rules of the Tennessee Alcoholic Beverage Commission, Chapter 0100-01 Retail Operations
Transport and Distribution Rules
The movement of legally produced spirits from distilleries in Tennessee is tightly regulated, mainly through a required three-tier system. This system means alcoholic beverages usually go from the manufacturer to a licensed wholesaler, then to a licensed retailer or an establishment approved for on-premises consumption.
To distribute products beyond direct sales at their facility, distillers work with licensed wholesalers. These wholesalers buy spirits from manufacturers and distribute them to retailers and other approved parties.
Wholesalers play a role in the state’s alcohol control system by keeping records of purchases and sales, which the TABC can inspect. The annual wholesaler or importer license fee is $1,500, and licenses expire on December 31st.7Justia Law. Tennessee Code § 57-3-203 (2021) – Wholesaler’s Licenses, Fees, and Expiration
Transporting alcoholic spirits also has specific rules. Vehicles carrying alcoholic beverages for sale in Tennessee often need a TABC permit. Common carriers moving spirits must have a TABC permit and deliver to a licensed dealer.
Vehicles used by licensed wholesalers or manufacturers for transport must be properly identified and carry documents like invoices. These documents detail the shipment’s contents, quantity, origin, and destination. The TABC can inspect shipments and vehicles, and improperly transported beverages may be seized. Manufacturers can transport their own products under certain conditions, such as moving spirits to their storage facilities or to a licensed wholesaler.
Federal Compliance Obligations
Beyond Tennessee’s state rules, legal manufacturers of moonshine or other distilled spirits must also follow extensive federal regulations. The Alcohol and Tobacco Tax and Trade Bureau (TTB), a part of the U.S. Department of the Treasury, oversees these obligations.
Obtaining a Federal Basic Permit from the TTB is necessary for legal distilling operations before a business can produce or bottle distilled spirits. The TTB’s application process requires detailed information about the planned business, including ownership, location, and equipment.
There is no federal fee for this permit application. The TTB reviews applications to ensure applicants are eligible and that operations will follow federal law, including protecting tax revenue from federal excise taxes on spirits.
Once a Federal Basic Permit is issued, distilleries must adhere to TTB operational requirements. This includes keeping detailed records of spirit production, storage, and removal.8Electronic Code of Federal Regulations. 27 CFR Part 19 Subpart V – Records and Reports These records are subject to TTB inspection.
Federal law also sets specific labeling requirements for distilled spirits, enforced by the TTB.9Electronic Code of Federal Regulations. 27 CFR Part 5 – Labeling and Advertising of Distilled Spirits Labels must provide accurate information, including:
- The brand name of the spirit
- Its class and type
- The alcohol content
- The net contents of the container
- Details of the producer or bottler
For products like moonshine, labeling must not mislead consumers about its qualities.
Paying federal excise taxes on distilled spirits is a major part of federal compliance. A federal tax is applied to all distilled spirits produced in or imported into the U.S. The standard TTB tax rate is $13.50 per proof gallon (a U.S. gallon of 50% alcohol by volume at 60°F).10Legal Information Institute (Cornell Law School). 26 U.S. Code § 5001 – Imposition, Rate, and Attachment of Tax Distillers must accurately calculate and pay taxes on spirits. Failure to comply can lead to significant penalties, including large fines and criminal charges.