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Diageo In New Battle In Tennessee

April 1, 2014

Diageo has filed a lawsuit against the Tennessee Alcoholic Beverage Commission (TABC) asserting that Tennessee’s law requiring in-state warehousing of distilled spirits made within its borders violates the Commerce Clause of the Constitution. The Tennessee law, which dates to 1937, mandates that spirits produced in the state must be stored either in the county of their making or an adjacent county. Diageo says the law was never enforced until it received a letter from the TABC on March 20 alleging that its George Dickel distillery in Coffee County, which stores some non-Dickel products in Kentucky, is in violation. Diageo claims the statute is at odds with the Commerce Clause because, among other things, it discriminates against out-of-state storage facilities and effectively regulates out-of-state transactions.

The lawsuit is the drinks giant’s second dust-up in Tennessee in only a few weeks; in recent days the Tennessee legislature voted to convene a study committee to examine another state law governing Tennessee whiskey production, which Diageo says is unfairly tilted to mirror rival Brown-Forman’s production process for its Jack Daniel’s brand.

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