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Dickel sues state over liquor storage requirement

Posted on Tuesday, April 1, 2014 at 1:06 pm

Barrels of whiskey are stored at the George Dickel Distillery near Tullahoma. (File Photo)

Barrels of whiskey are stored at the George Dickel Distillery near Tullahoma. (File Photo)

Whiskey maker George Dickel is suing to overturn a Tennessee law that requires liquor to be stored in or around the county where it is distilled.

Dickel, which is owned by global liquor giant Diageo PLC, said it stores all of its Tennessee Whisky at its distillery near Tullahoma. But other products made there are stored at a company-owned distillery in Louisville, Ky.

The lawsuit filed in federal court in Nashville on Friday, March 28 claims that state law violates interstate commerce rights under the U.S. Constitution.

“Tennessee has never before sought to enforce the geographic limitations of the storage statute,” Dickel said in the lawsuit.

If the law isn’t tossed out, the company said it would have to decide whether to expand storage capacity in Tennessee or reduce production of spirits other than George Dickel Tennessee Whisky at the distillery, which would likely lead to job cuts there.

The case follows a legislative fight over the state’s legal definition of Tennessee whiskey. Diageo led the effort to scuttle a year-old state law enacted at the behest of Jack Daniel’s, arguing that a provision requiring whiskey to aged only in unused barrels to be too restrictive on smaller producers.

Lawmakers last week punted the bill to rewrite or repeal the labeling law a study committee after the Legislature adjourns for the year.

Jack Daniel’s, which is owned by Louisville-based Brown-Forman Corp., sold 11.5 million cases of its Black Label brand of Tennessee whiskey last year. The Dickel distillery, which is about 15 miles up the road, is the second largest producer, with about 130,000 cases sold last year.

Tennessee’s statute requiring spirits to be stored in the county where they are distilled dates back to 1937. The law was most recently amended last year to add adjacent counties as allowable storage locations.

Dickel said in the lawsuit that it had received a letter March 20 from the state Alcoholic Beverage Commission Director Keith Bell raising questions about its warehousing practices. Bell said in an email that he wrote the letter after reading a newspaper article about the Kentucky storage facility.

A spokeswoman for the Tennessee attorney general’s office said it was reviewing the lawsuit.