A famous name can now hold an interest in a Tennessee alcohol brand and an interest in the bar that pours it, subject to a specific trust structure. They can be paid up to 10% of sales or profits to promote both. And any licensing or related document provided to the Tennessee Alcoholic Beverage Commission (TABC) under the new provision is treated as confidential proprietary information and is not subject to public inspection.
This is a substantial expansion of existing Tennessee law.
The change came in 2026 Public Chapter 917, which Gov. Bill Lee signed on May 18, 2026. It took effect that day.
There is a catch, and it lands on the operator. The celebrity cannot help run the business, and the venue keeps every bit of the legal exposure that comes with holding the license.
Most of the coverage so far has been written for the celebrity. This is written for the other side of the deal: the brand, the venue, and the people who have to build the arrangement and live inside it.
Why this was a problem before
Tennessee splits the alcohol business into three levels: the companies that make the product, the ones that distribute it, and the ones that sell it to the public. The state has long kept ownership in those levels apart. That is why a person with a stake in a distillery could not also take a stake in a bar down the street.
The rule doing that work is Tennessee Code Annotated Section 57-4-110, and 2026 Public Chapter 917 deleted it and wrote a new one in its place.
How the new path works
The new Section 57-4-110 covers licensed manufacturers (Section 57-3-202), wineries (Section 57-3-207), and out-of-state sellers (Section 57-3-605). It also reaches anyone who holds an interest in one of those businesses. Those people can now hold an interest in a bar, restaurant, or other place licensed to serve drinks on site.
There is an important qualification here. The law does not create a general exception for anyone who wants to invest in both sides of the alcohol business. The person has to have the kind of qualifying interest covered by the statute (an interest in a licensed manufacturer, winery, or qualifying nonresident seller) or be one of those businesses itself. The cross-ownership structure then has to satisfy the trust requirements that follow.
There is one condition, and everything else depends on it. One of the two interests has to sit in an irrevocable trust run by an independent trustee.
A trust is a legal arrangement where someone else holds property on your behalf. Irrevocable means you cannot take it back once it goes in, and independent means the person running the trust is not you wearing a second hat. Both of those words do real work, and both are worth confirming before anyone signs.
What the celebrity cannot do
The key restriction is that the person whose interest is held in the trust may not participate in the management or operation of the brand or business for which the interest was placed in the trust.
That does not mean the person has to disappear from the project. The statute spells out what stays allowed. The person can license their name, image, or likeness through the trust. They can also take part in advertising and promotion for the brand or business, including personal appearances, active promotion, and new content capture. An earlier version of the bill went further and listed approval rights over things like menus, décor, and taste profiles as activities that would not count as management. That list did not make it into the law that passed.
The question is whether the arrangement gives the celebrity a role in managing or operating the business. Opinions and public appearances are allowed. Management authority is not.
That distinction matters when the deal is being drafted. The statute does not say whether approving a menu, a cocktail recipe, or the décor counts as management or operation. A right like that has to be analyzed on its own terms, not assumed. Deciding who gets hired, directing employees, selecting vendors, and making day-to-day operating decisions sit on the management side of the line.
The safest approach is to spell out the permitted promotional rights in the agreement and draw a clear line between those rights and management authority. The more a proposed right looks like control over the business rather than promotion of the celebrity’s brand, the more carefully it should be analyzed under the statute. Until the TABC says how it will treat those rights, the conservative reading is the safer one.
What the celebrity can do
Quite a lot, as it turns out. Through the trust, the person can license their name, image, and likeness, and they can take part in ads and promotions for the brand or for the licensed venue. That includes personal appearances, active promotion, and shooting new content. They can show up, post about it, film there, and be the face of it.
Two limits come along for the ride. The activity has to stay focused on promoting the brand or the venue, and it cannot break federal law, which is covered further down.
How the money can work
The licensing agreement may provide for a fixed fee, a percentage of sales or profits not exceeding 10%, or both.
That cap is a real design limit, and it deserves attention early. A percentage deal can drift past 10% once the parties start adding revenue lines, minimums, or step-ups. Sorting out what the percentage is measured against belongs in the term sheet, not the closing.
The paperwork stays private
Any licensing agreement handed to the TABC under the new law is treated as proprietary information under Section 10-7-504(a)(24). That means it is not a public record. For deals involving people whose contracts would otherwise make the news, that matters.
It also means the document going to the state should be built as something a regulator will read closely, because it has exactly one audience.
What the liability shield does, and does not, cover
The new law does not create a blanket liability shield for the celebrity. Instead, it brings existing protections under the Tennessee Uniform Trust Code into the structure. Sections 35-15-1010 and 35-15-1015 address when trustees and trust beneficiaries are personally liable for obligations involving trust property and the administration of the trust.
That protection is useful, but it has limits. Putting the celebrity’s interest in the trust can separate the celebrity, as beneficiary, from liabilities that belong to the trust or arise from the trustee’s administration of it. It does not protect the celebrity from liability for the celebrity’s own conduct, and it does not make the operating business’s liabilities disappear.
The venue still holds its own license and remains responsible for operating the business in compliance with the law. The trust structure changes the ownership arrangement; it does not shift the venue’s regulatory responsibilities to the celebrity.
Federal rules did not change
Tennessee changed Tennessee law, and federal rules stayed exactly where they were. The new law says as much by requiring that the promotional activity not break federal law.
Those federal rules govern what a producer or supplier can give a retailer, and how an alcohol ad has to be built. A promotion plan can clear the new state structure and still create a federal problem, so the two questions have to be answered separately.
Guidance is still thin
Thus far, the TABC has not put out public guidance on the new Section 57-4-110 structure. That is normal this early, and it is also a reason to build conservatively instead of to the edge of the text. Whenever guidance or a first enforcement question shows up, the parties who wrote down their reasoning will be in better shape than the ones who assumed the friendly reading.
Questions to settle before anyone signs
If a deal like this is on your table, these tend to decide how it goes:
- Who is the independent trustee, and is that independence real on paper and in practice?
- Which interest goes into the trust, the production side or the venue side, and why that one?
- What does allowed promotional participation look like week to week, spelled out so a general manager can apply it?
- How is the percentage measured, and does it stay under 10% in every scenario the parties actually plan for?
- What goes to the commission, and who prepares it?
- Who carries the insurance, and does the policy account for the appearances, the filming, and the traffic a name on the door brings?
- What happens if the deal ends, and what happens to the name on the building?
None of that is exotic. It is the ordinary work of structuring a deal, and it goes a lot easier before the announcement than after.
Where BevLaw Group fits
A deal like this touches licensing, but it is not a licensing question. It is a structure question, a contract question, an insurance question, and an operating policy question all at once. And it lands on hospitality businesses that already have a full week without it.
That mix is what BevLaw Group handles: document review, contracts, employment guidance, regulatory questions, and ongoing advice as things change, on one flat monthly fee you can plan around. Your operation deserves a legal partner, not just a licensing attorney.
Maybe a deal like this is already in front of you. Maybe you are just trying to work out whether 2026 Public Chapter 917 reaches your situation at all. Either way, it is a conversation worth having before the term sheet.