[Effective Until 7/1/2024]

(a) This section shall be known and may be cited as the “Grape and Wine Law.” This section shall prevail over any conflicting statutory provision.

Attorney's Note

Under the Tennessee Code, punishments for crimes depend on the classification. In the case of this section:
ClassPrisonFine
class A misdemeanorup to 11 monthsup to $2,500
For details, see Tenn. Code § 40-35-111

Terms Used In Tennessee Code 57-3-207

  • Age of majority: means eighteen (18) years of age or older. See Tennessee Code 1-3-105
  • Agriculture: means :
    (i) The land, buildings and machinery used in the commercial production of farm products and nursery stock. See Tennessee Code 1-3-105
  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • beverage: means and includes alcohol, spirits, liquor, wine, high alcohol content beer, and every liquid containing alcohol, spirits, wine, and high alcohol content beer and capable of being consumed by a human being, other than patent medicine or beer, as defined in §. See Tennessee Code 57-3-101
  • Code: includes the Tennessee Code and all amendments and revisions to the code and all additions and supplements to the code. See Tennessee Code 1-3-105
  • Commission: means the alcoholic beverage commission, except as otherwise provided. See Tennessee Code 57-3-101
  • Contract: A legal written agreement that becomes binding when signed.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • gallons: means a wine gallon or wine gallons, of one hundred and twenty-eight ounces (128 oz. See Tennessee Code 57-3-101
  • Gift: A voluntary transfer or conveyance of property without consideration, or for less than full and adequate consideration based on fair market value.
  • Gift: means and includes the unauthorized distribution of alcoholic beverages by a licensee for which no payment is expected or received. See Tennessee Code 57-3-101
  • Highway: includes public bridges and may be held equivalent to the words "county way" "county road" or "state road". See Tennessee Code 1-3-105
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • License: means the license issued pursuant to this chapter. See Tennessee Code 57-3-101
  • Licensee: means any person to whom such license has been issued pursuant to this chapter. See Tennessee Code 57-3-101
  • Manufacture: means and includes brewing high alcohol content beer, distilling, rectifying and operating a winery. See Tennessee Code 57-3-101
  • Manufacturer: means and includes a brewer of high alcohol content beer, distiller, vintner and rectifier. See Tennessee Code 57-3-101
  • Municipality: means an incorporated town or city having a population of:
    (i) Seven hundred (700) or more, according to the 2010 federal census or a subsequent federal census. See Tennessee Code 57-3-101
  • Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Statute: A law passed by a legislature.
  • Wholesaler: means any person who sells at wholesale any beverage for the sale of which a license is required under this chapter. See Tennessee Code 57-3-101
  • Wine: means the product of the normal alcoholic fermentation of the juice of dried or fresh, sound, ripe grapes, fruit, or other agricultural products, with the usual cellar treatment and necessary additions to correct defects due to climatic, saccharine, and seasonal conditions, including champagne, sparkling, and fortified wine of an alcoholic content not to exceed twenty-one percent (21%) by volume. See Tennessee Code 57-3-101
  • Winery: means and includes any place or premises wherein wines are manufactured from any fruit or brandies distilled as the by-product of wine or other fruit or cordials compounded, and also includes a winery for the manufacture of wine. See Tennessee Code 57-3-101
  • written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(b) A winery license may be issued as provided in this section for the manufacture of wine, and as described in subsection (u), through the normal alcoholic fermentation of grapes and other suitable agricultural products, upon a verified, written application to the commission on the proper form authorized to be prescribed and furnished in this section, and the application may be granted by the commission, subject to the restrictions of this chapter. A winery licensed under this section may also blend wine manufactured by the winery with other wine, fortified wine, distilled wine, or non-alcoholic products; provided, that the winery does not add to the wine distilled spirits, as defined under federal law on the effective date of this act, that were derived from a type of grain or product other than wine. The winery license authorizes the holder of the license to place the wine in containers or bottles. Out-of-state residents may apply for and obtain a winery license issued in accordance with this section.
(c) Each applicant for a winery license issued pursuant to this section shall pay to the commission a one-time, nonrefundable fee in the amount of three hundred dollars ($300) when the application is submitted for review. The license shall not be issued until a license fee of one hundred fifty dollars ($150) is paid to the commission by the winery, but issuance of the license is exempt from the requirements of § 57-3-106. The commission shall deposit collections with the state treasurer to be earmarked for and allocated to the commission for the purpose of the administration and enforcement of the duties, powers and functions of the commission.
(d) No winery license shall be issued except to persons who have not been convicted, and whose officers and principals have not been convicted, within a period of five (5) years preceding application of any felony or any violation of any state or federal laws relating to alcoholic beverages.
(e) Notwithstanding this section, a private individual in that person‘s own home may manufacture wine in an amount not in excess of that amount annually permitted as of March 22, 1973, by federal statute and regulations relative to household manufacture and consumption; provided, that the wine is for personal consumption by members of that person’s household.
(f)

(1) A winery licensed under this section may, to the extent permitted under federal law, serve wine, with or without charge, as samples for tasting on the premises at the winery and may sell wine at retail in sealed containers at the winery.
(2) A winery licensed under this section may donate wine without charge to nonprofit religious, educational or charitable institutions or associations.
(3) For purposes of this section, “premises” means any and all of the real property owned or leased by the winery.
(g) A winery licensed under this section may exchange wine in bulk with other wineries and the bulk exchange, whether in return for wine or other consideration, shall not be considered a sale subject to tax.
(h)

(1) In addition to its own wine, a winery or farm winery permit holder is authorized to sell at retail items related to or incidental to the use, consumption, dispensing, or storage of wine on the licensed premises. Such items may include, but are not limited to:

(A) Juices or concentrates derived from juices, or any agricultural products;
(B) Items used in home winemaking;
(C) Gift or tourism related items including baskets or gift cards;
(D) Utensils and supplies related or incidental to the use, consumption, dispensing or storage of wine, including, without limitation, wine glasses, corkscrews, beverage strainers, pourers, flasks, jiggers, stirrers, wine racks, wine refrigerators, wine cellars, pouring aids, coasters, bottle stoppers, decanters, carafes, glassware, ice crushers, bottle openers, can openers, and devices to maximize oxidation in uncorked wine bottles and other items used in connection with the consumption, storage, or dispensing of wine;
(E) Fruit, cheese, appetizers, chips, pretzels, and other snack foods or food items served to pair with wine;
(F) Nonalcoholic beverages;
(G) Ice, beverage coolers, and ice chests;
(H) Articles of clothing, accessories, and souvenir items imprinted with advertising, logos, slogans, trademarks, or messages related to wine or the winery’s name;
(I) Smoking or tobacco related products; and
(J) Wine literature, cookbooks, or periodicals.
(2)

(A) A winery or farm winery permit holder is not authorized to sell at retail:

(i) Alcoholic beverages other than wine, and as described in subsection (u);
(ii) Except as otherwise provided in subsection (v), wine that is not manufactured or bottled on the licensed premises, or in the case of a farm winery permit holder, wine that was not made pursuant to subsection (o); or
(iii) Beer.
(B) Nothing in this subsection (h) shall prohibit a winery or farm winery permit holder from holding a license pursuant to § 57-4-101, as authorized by subsection (s), and engaging in the activities permitted under such license.
(C) Nothing in this subsection (h) shall prohibit a winery or farm winery permit holder from holding a beer license for on-premises consumption and engaging in the activities permitted under such license.
(3)

(A) A winery licensed under this section that satisfies the requirements of subdivision (h)(3)(B) may sell alcoholic beverages on the premises of the winery if the label of the alcoholic beverage product sold contains the name of the winery or is so intrinsically related to the property upon which the winery is located as to be identified as a product of or created for the winery.
(B) A winery exercising the rights conferred by subdivision (h)(3)(A) must satisfy the following requirements:

(i) The winery is located on a tract or tracts of land having at least twenty-four (24) contiguous acres;
(ii) The winery is located on property adjacent to a federal highway;
(iii) The winery is located on property with a commercial railroad track not more than two hundred fifty feet (250′) from the nearest property line;
(iv) The winery is located on property with a structure that was originally constructed prior to 1860 as a private residence;
(v) The winery is located on property that is leased or owned by a not-for-profit corporation exempt from federal income taxation under § 501(c)(3) of the Internal Revenue Code; and
(vi) The winery is located on property located within the jurisdictional limits of a county with a metropolitan form of government having a population of not less than five hundred thousand (500,000), according to the 2010 federal census or any subsequent federal census.
(i) A winery licensed under this section located in this state may sell no more than five (5) cases or sixty (60) liters of wine to any single retail customer in one (1) day. It shall be legal for any purchaser of wine from a winery licensed under this section to transport into and within this state no more than five (5) cases or sixty (60) liters of wine in one (1) day. Any wine transported pursuant to this section must be accompanied by a bill of sale sufficiently identifying the nature, quantity, purchaser, date and place of purchase of the wine. Bills of sale purchased from out-of-state wineries licensed under this section must reflect that the wine was purchased for transport into this state and that Tennessee taxes have been paid. Any person transporting such wine in excess of five gallons (5 gals.) shall have with the shipment a receipt or other documentation demonstrating that the wine was purchased from a winery as licensed in this section.
(j) Any licensee or other person who sells, furnishes, disposes of, gives or causes to be sold, furnished, disposed of or given, any wine in this state or for transport into this state, to any person under the age of majority as established by § 57-4-203(b), commits a Class A misdemeanor.
(k) The commission is empowered and authorized to promulgate such rules and regulations as may be necessary to carry out the duties of the commission as provided in this section, including, but not limited to, procedures governing the production, sale and transportation of wine. The commissioner of revenue shall establish procedures governing the keeping of records for tax purposes and the payment of taxes by a winery licensed under this section; and for any failure to comply with the procedures, the commissioner shall notify the commission, which is authorized to revoke or suspend the license of any winery.
(l) It is the duty of the commissioner of agriculture to disseminate the best information available as to the methods of cultivation of crops that may be utilized in Tennessee for the production of wine and the methods of making such wines. It is also the duty of the commissioner to establish reasonable procedures requiring proper sanitary conditions about the winery and to certify that these conditions have been met before the commission issues any license. The commissioner shall establish reasonable procedures requiring the process of producing wine to be carried on under proper sanitary conditions and in a sanitary manner; and for any failure to comply with the procedures, the commissioner shall notify the commission, which is authorized to revoke or suspend the license of any winery.
(m)

(1) Any nonprofit association organized to encourage and support grape growing and winemaking with ten (10) or more wineries licensed under this section as members shall be allowed to hold not more than twelve (12) wine festivals per calendar year. Each festival shall not exceed a period of seventy-two (72) hours.
(2) Any winery licensed under this section participating in a festival authorized by this subsection (m) shall be allowed to transport, serve and offer complimentary samples of their wines for tasting at the festival. The complimentary sample size shall be restricted to a one ounce (1 oz.) serving with only one (1) sample per person for each type of wine.
(3) Any winery licensed under this section participating in a festival authorized by this subsection (m) shall be allowed to transport wine produced by that winery to sell at the festival for consumption off-premises.
(4)

(A) Any nonprofit association authorized by this subsection (m) to hold a wine festival shall apply for a special occasion license as defined in § 57-4-102, in order for participating wineries licensed under this section to serve complimentary samples as described in subdivision (m)(2) and to sell wine produced by the wineries for consumption off-premises.
(B) Notwithstanding § 57-4-102(34)(A), a special occasion license issued for a wine festival authorized by this subsection (m) shall be for the duration of the festival for which application is made for a period not to exceed seventy-two (72) hours. A special occasion license issued pursuant to this subsection (m) shall only be available upon the payment of the fee as required by law for each separate day of the festival.
(C) A nonprofit association authorized to conduct a wine festival pursuant to this subsection (m) shall be permitted to hold the festival in any municipality or county of the state in the manner provided in subdivision (m)(5).
(5) A nonprofit association, as defined in subdivision (m)(1), is authorized to conduct a wine festival pursuant to this subsection (m) in a municipality or county of this state that has approved the sale of alcoholic beverages or has a licensed winery located in that municipality or county, subject to complying with all permit requirements of the municipality or county, and in all other municipalities or counties upon receiving approval of the legislative body of the municipality or county to hold such a festival at a location and in such manner authorized by such legislative body.
(n) If any provision of this section or application of this section to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of the section that can be given effect without the invalid provision or application, and to that end the provisions of this section are declared to be severable.
(o)

(1) As used in this subsection (o):

(A) “Farm” means a farming operation located in Tennessee consisting of commercial vineyards, fruit orchards or fruit gardens or any combination of such farming operations;
(B) “Farm wine producer” means a farm which produces its own locally grown product from a vineyard, fruit orchard or fruit garden or any combination of such farming operations to be used in the making of wine; and
(C) “Wine” means an alcoholic beverage containing a minimum of ninety-five percent (95%) of the product of vineyards, fruit orchards or fruit gardens grown and harvested at a farm as the wine being sold by the farm wine producer.
(2) A farm wine permit may be issued as provided in this subsection (o) to a farm wine producer, upon verified, written application to the commission on the proper form authorized to be prescribed and furnished by the commission, and the application may be granted by the commission, subject to the further restrictions of this chapter, other than § 57-3-106.
(3) Each applicant for a farm wine permit shall pay to the commission a one-time, nonrefundable fee in the amount of three hundred dollars ($300) when the application is submitted for review. The permit shall not be issued until a permit fee of one hundred and fifty dollars ($150) is paid to the commission by the farm wine producer, but issuance of the permit is exempt from the requirements of § 57-3-106. The commission shall deposit collections with the state treasurer to be earmarked for and allocated to the commission for the purpose of the administration and enforcement of the duties, powers and functions of the commission.
(4) The holder of a farm wine permit may:

(A) Transport or have transported produce grown on the farm to a winery licensed pursuant to subsection (b), for the manufacture, bottling and labeling of wine from such produce;
(B) Receive such wine back from the winery manufacturing, bottling and labeling the wine for the farm wine producer;
(C) Offer on the premises of the farm single servings of its wine, with or without charge, as tastings for each wine sample; and
(D) Sell at retail on the premises of the farm sealed containers of wine made from the produce of its vineyard, orchard or fruit garden in a designated building or area.
(5) Subsections (d), (h), (i), (j), (m), (n), and (q) which apply to wineries shall also apply to farm wine permittees.
(p)

(1) A winery licensed under this section is authorized to receive produce from a farm wine producer grown on the farm for the purpose of manufacturing, bottling and labeling of wine for such producer. The wine label shall indicate the name of the farm where the fruit was grown and harvested and the name of the winery manufacturing, bottling and labeling such wine.
(2) Such winery shall be responsible for the payment of the state gallonage tax imposed pursuant to § 57-3-302 and the federal alcoholic beverage excise taxes due and owing on the wine bottled by the winery prior to the bottled wine leaving the winery’s bonded premises.
(3) The winery is authorized to transport the wine from the winery back to the farm wine permit holder, notwithstanding § 57-3-107(b) or any other law to the contrary. It is lawful for common carriers to transport from the winery which manufactured, bottled and labeled such wine to the farm permit holder pursuant to an agreement or contract with a licensed winery.
(q)

(1) A winery licensed under this section that has a total annual wine production of fifty thousand gallons (50,000 gals.) or less shall be authorized to obtain an additional self-distribution permit from the commission subject to the obligations imposed in this subsection (q).
(2) No self-distribution permit shall be issued to or held by a winery that has registered a distribution contract with a wholesaler licensed pursuant to § 57-3-203, if the terms of that contract include distribution rights for a county that is located, in whole or in part, within one hundred (100) miles of the licensed winery where the wine being distributed has been manufactured, produced, or bottled. Any winery holding a self-distribution permit that registers such a distribution contract with a wholesaler or whose total output in a calendar year exceeds fifty thousand gallons (50,000 gals.) shall cease self-distributing its wine under subdivision (q)(3) and shall promptly surrender the winery’s self-distribution permit.
(3) A winery seeking a self-distribution permit under this subsection (q) may distribute not more than three thousand (3,000) cases of wine manufactured, produced, or bottled on the winery’s premises to any licensee holding a license issued pursuant to chapter 4, part 1 of this title, located within one hundred (100) miles of the winery’s premises where such wine has been manufactured, produced, or bottled.
(4) A winery engaged in self-distribution under this section shall be responsible for all taxes and records which are imposed upon a wholesaler under § 57-3-203 which result from any direct sales under this subsection (q).
(5) The commission shall impose no additional fee or charge for the issuance of a self-distribution permit under this section.
(r)

(1) For purposes of this subsection (r), “satellite facility” means any facility or location other than the primary business location of a winery or farm wine producer.
(2) Any winery or any farm wine producer licensed by this section may conduct business at any two (2) satellite facilities in any jurisdiction where it is lawful to manufacture intoxicating liquors or intoxicating drinks pursuant to § 57-2-103(c) and (d). At its satellite facilities, the winery may conduct any business that is authorized at the licensed winery, except for the manufacturing and bottling of wine. At its satellite facilities, a farm wine producer may conduct any business that is authorized at the premises of the farm wine producer.
(3)

(A) Any winery licensed by this section or any farm wine producer shall obtain a satellite permit for each satellite facility utilized by the winery or farm wine producer from the commission in order to:

(i) Serve samples with or without charge;
(ii) Sell wine for consumption on or off the permitted premises; and
(iii) Sell any other products under subsections (h) and (o).
(B) In addition to the permit authorized in subdivision (r)(3)(A), any winery licensed under this section that pays taxes under § 57-3-302(a) at its licensed facility on fifty thousand gallons (50,000 gals.) or less of wine or finished wine product each calendar year or any farm wine producer licensed under this section may qualify for a satellite permit to authorize no more than three (3) such wineries, farm wine producers, or any combination thereof, to conduct business at one (1) satellite facility.
(C) Any violation of any rule or statute by a satellite facility shall be deemed to be a violation by any winery or farm winery producer that participates in a satellite facility.
(D) Any winery or farm winery producer, seeking to establish or operate a satellite facility shall disclose to the commission each winery or farm winery producer participating in the satellite facility. Any participant in a satellite facility shall provide any information requested by the commission prior to participating in the satellite facility.
(4) A satellite permit issued to a winery or farm wine producer pursuant to this subsection (r) shall only be available upon the payment of a one-time application fee to the commission of three hundred dollars ($300) per satellite location and upon the payment of an annual license fee of one hundred fifty dollars ($150).
(5)

(A) Any winery or farm wine producer licensed under this section that has obtained a satellite permit and elects to charge consumers for samples may only sell such samples that are manufactured by the winery or farm wine producer.
(B) [Deleted by 2019 amendment.]
(6)

(A) Wineries and farm wine producers that pay taxes under § 57-3-302(a) at their licensed facility on more than fifty thousand gallons (50,000 gals.) of wine during a calendar year and that operate a satellite facility shall obtain wine provided at their satellite facilities from a wholesaler licensed pursuant to § 57-3-203. The wholesaler may permit the winery or farm wine producer to transport wine or finished wine product from the winery or the farm to its satellite facilities; provided, that the wholesaler includes the amounts delivered in its inventory, reports depletions for purposes of tax collection, and is responsible for the payment of taxes on such depletions.
(B) Wineries and farm wine producers that pay taxes under § 57-3-302(a) at their licensed facility on fifty thousand gallons (50,000 gals.) or less of wine or finished wine product each calendar year are not required to obtain wine provided at their satellite facilities from a wholesaler. Wineries may transport wine or finished wine product from their wineries to their satellite facilities. Wineries may transport wine made from produce from farm wine producers to the producers’ satellite facilities. Farm wine producers may transport wine from their farm to their satellite facilities.
(C) Wine and finished wine product sold for consumption on the premises at the satellite facilities are subject to the same taxation as wine sold for consumption on the premises at the winery or on the premises of the farm wine producer.
(s)

(1) Any winery or farm wine producer licensed pursuant to this section may qualify for and hold a license under chapter 4 of this title as a restaurant or limited service restaurant; provided, that notwithstanding chapter 4 of this title related to restrictions or prohibitions on licensees under chapter 4 of this title, a restaurant or limited service restaurant may sell for off-premises consumption, wine manufactured pursuant to this section at such location or at any other restaurant or limited service restaurant licensed under chapter 4 of this title that is owned by the same person.
(2) Notwithstanding any law, rule, or regulation to the contrary, any winery or farm wine producer licensed under this section may serve wine manufactured by the winery or the farm wine producer for consumption on the premises of the winery or farm wine producer.
(t)

(1) Except as provided in subdivision (t)(2), any sale of wine authorized by this section for consumption on the premises at the winery or on the premises of the farm wine producer shall be subject to taxation pursuant to § 57-4-301(c) in addition to any sales tax which is due. The taxes shall be paid and collected in the manner prescribed by § 57-4-301 and the rules of the department of revenue promulgated under the authority of that section.
(2) Nothing in this section authorizes the collection of taxes pursuant to § 57-4-301(c) for the sale of wine:

(A) As samples for tasting, with or without charge, for consumption on the premises; or
(B) At retail in sealed containers for consumption on the premises to the extent permitted under federal law.
(u) Notwithstanding the term “wine” as defined in §§ 57-3-101, 57-3-802, and 57-4-102, wineries and farm wine producers licensed under this section may label and advertise wine made from apples as cider, apple cider, or hard cider; provided, that nothing in this subsection (u) shall affect the marketing of cider products distributed as beer by wholesalers permitted under § 57-5-103.
(v)

(1) Notwithstanding any other law to the contrary, a winery or farm wine permit holder may purchase or import finished wine product from another winery in this state or another state in an amount not to exceed, in the aggregate, fifty thousand gallons (50,000 gals.) per year. A winery or farm wine permit holder that purchases or imports finished wine product under this subdivision (v)(1) may sell, distribute, serve for the purposes of samples or tastings, or otherwise use or dispose of such product in any manner that the winery or farm wine permit holder is authorized to use or dispose of wine under this section that is manufactured, bottled, or produced by the winery or farm wine permit holder.
(2) [Deleted by 2019 amendment.]
(w) As used in this section, “finished wine product” means any wine product that is ready for use by an end user and that bears the label of the winery or farm wine permit holder that purchased or imported the finished wine product under subsection (v).
(x) Wholesalers utilized by wineries or farm wine producers may permit wineries and farm wine producers to transport their products for sale, which are sold on the premises of the winery, the farm wine producer, or the satellite facility; provided, that the wholesaler permitting such direct shipment shall include the amounts delivered in its inventory, report depletions for purposes of tax collection, and be responsible for the payment of taxes on such depletions.
(y)

(1) A winery licensed under this section may enter into an alternating proprietorship agreement with one (1) or more wineries, subject to the restrictions of this subsection (y).
(2) Parties to an alternating proprietorship agreement may alternate the use of a bonded or general premises, or both, or part of a bonded or general premises, or both, for the purpose of manufacturing and warehousing wine.
(3) A winery that is a party to an alternating proprietorship agreement shall maintain a room or separate area of the general premises that is exclusively occupied by that winery and that does not alternate with another winery. There is no size requirement for this exclusive premises.
(4) Each winery that is a party to an alternating proprietorship agreement shall individually receive approval of the agreement from the commission and shall receive any required approvals from the Alcohol and Tobacco Tax and Trade Bureau (TTB), prior to commencing operations at the general premises.
(5) A winery seeking approval for an alternating proprietorship agreement shall submit to the commission:

(A) A description of the areas, equipment, resources, rooms, or buildings, or combination of areas, equipment, resources, rooms, or buildings, that will alternate between wineries;
(B) Diagrams of the parts of the general premises that will and will not alternate between wineries;
(C) A copy of the written alternating proprietorship agreement between wineries; and
(D) An acknowledgement from each winery that they will maintain adequate records that track the premises that alternate between wineries. Such records are subject to inspection by the commission upon request.
(6) The commission may require additional information under this subsection (y) that is necessary for the commission to verify compliance with this chapter 3 and other applicable laws.
(7) Only the winery participating in an alternating proprietorship agreement that is the property owner or primary lessee of the general premises may exercise retail rights and privileges under this subsection (y). If there are two (2) or more wineries that are property owners or are primary lessees, only one (1) winery may exercise the retail rights and privileges under this subsection (y).
(8)

(A) The wineries that are parties to an alternating proprietorship agreement must not be owned by the same individual or entity or by substantially similar ownership.
(B) As used in this subdivision (y)(8), “substantially similar ownership” includes, but is not limited to:

(i) An individual who owns more than a forty percent (40%) interest in each of the two (2) or more wineries that are parties to the alternating proprietorship agreement;
(ii) An individual who owns a winery that is a party to the alternating proprietorship agreement whose spouse is the owner of another winery that is a party to the agreement; or
(iii) A winery that is a party to the alternating proprietorship agreement that is owned by a trust that is for the benefit of an owner of another winery that is a party to the agreement, or the owner’s spouse or children.
(z) Wineries and farm wine producers may have their wine distilled, blended, or fortified with distilled wine spirits made from their wine by manufacturers and may receive from manufacturers the wine created by such distilling, blending, or fortifying, and such distilled, blended, or fortified wine is the sole property of the winery or farm wine producer; provided, that no distilled spirits, as defined under federal law on the effective date of this act, that were derived from a type of grain or product other than wine, were added to the wine. Wineries and farm wine producers may also sell wine to manufacturers licensed pursuant to § 57-3-202, and such wine, and a product that may result from the blending, distilling, or fortifying of such wine by the manufacturer, is the sole property of the manufacturer. The manufacturer, winery, or farm wine producer may transport the wine from the winery or farm wine producer and may transport the distilled, blended, or fortified wine owned by the winery or farm wine producer back to the winery or farm wine producer; provided, that no distilled spirits, as defined under federal law on the effective date of this act, that were derived from a type of grain or product other than wine, were added to the wine. The transactions are not subject to taxation.
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