Liquor giant Diageo Americas, the owner of Tullahoma, Tenn.-based Dickel whiskey, has sued the state of Tennessee over a nearly 80-year-old law requiring distillers to store their alcohol within the state's borders.
Diageo says the state law is unconstitutional and argues that the state's enforcement of the law could eventually take jobs and some of the company's operations outside of the state.
The dispute began earlier this month when the state notified Diageo in a letter that it was in violation of the law because it was storing some of its George Dickel-branded whiskey at the company's storage facilities in Louisville, Ky.
According to state law, distillers must store their spirits either in the county where it is manufactured or in an adjacent county. The original law dates to 1937 and was amended in 2013 to allow for storage in adjoining counties.
Diageo, however, contends in the lawsuit that while the law had been on the books, the state has not enforced it.
The company argues that it would be too expensive to ship the whiskey to Tennessee and that it wants the flexibility to store the whiskey where it sees fits.
The company argues that the law "prevents the movement of commercial goods in interstate commerce," which it contends violates the company's constitutional rights.
The company is asking for a federal judge to issue an injunction that would force the state to stop enforcing the storage law.
This represents yet another escalation in the battle over Tennessee whiskey.
Under a law enacted at the behest of Jack Daniel's in 2013, spirits must be charcoal filtered and stored in unused oak barrels, among other rules, in order to print "Tennessee whiskey" on their labels.
However, some state legislators and some distillers — Diageo among them — pushed for a repeal this year, but the effort failed.
Supporters of the repeal said the new law unfairly benefits Jack Daniel's, the world's most famous Tennessee whiskey.
Jack Daniel's is by far the largest producer of Tennessee whiskey, shipping 11.5 million cases of its Black Label last year, a 5 percent increase from 2012. Dickel was the second-largest Tennessee whiskey producer in 2013, with 130,000 cases sold.
Jack Daniel's is owned by Louisville, Ky.-based Brown-Forman Corp., while Dickel is owned by global rival Diageo.
Diageo and Brown Forman are neck-and-neck for overall whiskey market share in North America. Both have about a quarter of the market share in North America.