Local referendums expand liquor sales in small Tennessee towns, counties

Staff photo by Matt Hamilton / Server Jackson Umiker pours a beer at El Agave Mexican Restaurant in Walden on Thursday, November 10, 2022.

Voters elected to expand local liquor sales in about a dozen small towns and counties across Tennessee on Tuesday, further reducing the already small list of dry places in the state.

Just one of Tennessee's 95 counties, Hancock, has absolutely no package or on-site liquor sales in the county or any municipality within it. Nine counties have no liquor stores, and seven have no licenses to serve drinks on site, and several others only sell liquor because of limited exceptions in an otherwise dry county.

In Tennessee, dry counties can still sell beer.

"We have fewer and fewer of those," Tennessee Alcoholic Beverage Commission Executive Director Russell Thomas said.

Liquor regulations in Tennessee are localized, Thomas said by phone Wednesday. Voters in cities and counties were given the authority to approve package and by-the-drink liquor by local referendum after Prohibition.

A law passed last year lowered the population threshold that towns must cross to hold a referendum on liquor regulations from 925 to 700, allowing smaller municipalities to vote on either package sales or liquor-by-the-drink.

"Up until this year, we have been too small to put any liquor referendum on the ballot," Lois Preece, mayor of Niota in McMinn County, said by phone Wednesday.

(READ MORE: Lawmakers propose bill to extend to-go alcohol in Tennessee)

Fifty-six percent of the 209 votes cast on the Niota referendum Tuesday were in favor of allowing liquor-by-the-drink in the town.

Niota has nearly 800 residents now, but Preece said a planned housing development and a large new shipping warehouse in nearby Sweetwater should bring more people to and through the town.

A sit-down restaurant, Preece said, could help Niota profit from that growth.

"And restaurants don't come unless they can serve beer and wine," Preece said.

Liquor sales help boost local revenue from visitors but can also improve quality of life for residents, HospitalityTN President and CEO Sara Beth Urban said by phone Thursday.

"It allows the people who live there to be able to get out and have dining experiences on a regular basis," Urban said.

Most places putting liquor referendums on the ballot are reacting to population growth, whether real or anticipated, said Thomas with the state liquor commission. Others hold the vote when stores or restaurants wanting to open and sell alcohol locally run into existing regulations, Thomas said.

In Hamilton County, 84% of voters in the 2,000-person town of Walden on Tuesday chose to allow liquor-by-the-drink, meaning alcoholic beverages can be sold in restaurants.

Mayor Lee Davis said by phone Wednesday that Walden's vote was partly spurred by a local Mexican restaurant that told the town several years ago it couldn't compete with a similar business down the road just outside Walden town limits without selling liquor.

Walden loosened its regulations in 2017, allowing the restaurant to sell beer. That restaurant has since closed, and a new one in its place is also limited to only beer, El Agave 2 manager and owner Nik Roman said.

Tuesday's vote showing overwhelming support for liquor in the town means the restaurant will soon serve margaritas and other drinks, just like its sister location down the mountain. It'll likely take a few months to put the change in place, according to Roman.

(READ MORE: Red Bank hopes loosened alcohol restrictions will attract more restaurants)

"We have customers come in and ask if we have margaritas, and when we say no, they say they'll go somewhere else," Roman said.

At least nine other counties and towns in Tennessee voted Tuesday to allow liquor-by-the-drink or package liquor sales. In Northwest Georgia, voters in Gordon and Murray counties also chose to expand liquor regulations.

The only Tennessee municipality where a liquor referendum failed Tuesday was Byrdstown, a town of around 800 near the Kentucky border where the measure failed by 44 votes.

"Local votes are still pretty important in alcohol laws in Tennessee," Thomas said.

Once a municipality passes a referendum, it usually doesn't take long for liquor stores or restaurants to come take advantage of it, Joyce McDaniel, executive director of the Tennessee Wine & Spirits Retailers Association, said by phone Wednesday.

Tuesday's results still need to be finalized and certified before any changes to liquor regulations go into effect.

Contact Ellen Gerst at egerst@timesfreepress.com or 423-757-6319. Follow her on Twitter @ellengerst.