Exemption in 'Tennessee Whiskey' law raises legal flags

By Erik Schelzig
Associated Press

NASHVILLE, Tenn. (AP) — An embattled state law establishing legal requirements to market spirits as “Tennessee Whiskey” could run afoul of both the U.S. and state constitutions for carving out a special exemption for a single distiller, according to a new legal opinion from state Attorney General Herbert Slatery.

The state Legislature in 2013 excluded Kelso-based Pritchard’s Distillery from the law passed at the behest of Jack Daniel’s that for the first time established rules for which products could label themselves as Tennessee whiskey.

Those rules codified what is known as the “Lincoln County Process,” which requires whiskey to be filtered through maple charcoal before being aged in unused charred barrels made out of oak. The filtering requirement makes up the principal difference from making bourbon.

Distiller Phil Pritchard gained his exemption after arguing that he shouldn’t have to follow a charcoal filtering requirement because it does not follow the technique used by his grandfather.

“If I subscribe to this rule that Jack Daniel’s has imposed on us all, then I would then be paying homage to Jack Daniel’s and not paying homage to my grandfather Benjamin Pritchard,” he said in a phone interview Wednesday.

Pritchard has since opened another distillery in Nashville, creating the odd scenario in which his product made at the original location is grandfathered out of the Tennessee whiskey law, while spirits flowing from the new still are not.

“The fact that I can’t make whiskey according to my grandfather’s techniques at the Nashville location is a bit of a slap in the face to me,” Pritchard said. “It’s still the same grandfather, and I’m still Phil Pritchard.”

Slatery said in the legal opinion that Pritchard’s exemption could run afoul of the equal protection provisions of the U.S. Constitution and the Tennessee Constitution’s ban on suspending “any general law for the benefit of any particular individual.”

The state law exempts Pritchard’s by saying it does not apply to distilleries established between certain dates that match when Phil Pritchard began doing business.

“There is no discernable reason to distinguish one distillery from other existing distilleries on this basis, especially since the exemption at issue is purportedly the one that distinguishes Tennessee Whiskey from bourbon,” Slatery said.

The fight over the Tennessee whiskey law has drawn in global liquor giants Diageo PLC, which owns George Dickel, and Louisville, Kentucky-based Brown-Forman Corp.

Several craft distilleries have lined up behind Jack Daniel’s to support the new law, but the makers of Dickel, Pritchard’s and Full Throttle have been vocal opponents of having to conform to the new law they have deemed too restrictive.

It’s unclear whether a successful legal challenge to Pritchard’s exemption would sink the entire Tennessee whiskey law, which does not carry a so-called severability clause that would keep constructional provisions in place in the event that part of the statute is thrown out.