The limit on alcohol in beer also impacts breweries that only have a license in Tennessee, confining them to produce beer below the legal ABW percentage.
"Without other expensive licenses we can't produce styles like a barleywine in Tennessee. Breweries outside of Tennessee, in states with less restrictions, can produce these styles and then sell them in Tennessee," said Memphis Made President and Co-Founder Drew Barton. "We're effectively put at a disadvantage behind out-of-state breweries.
In order to brew beverages over 5 percent, businesses must obtain a distillery license, according to Tennessee code. Craft breweries including Memphis' Wiseacre and Nashville's Yazoo Brewing Company have the license.
"Raising the limit will definitely help all breweries in Tennessee by allowing them to produce more styles of beer, without an extra license, and compete with out-of-state breweries. Restaurants and retail stores will then have more options of Tennessee produced products to sell," said Barton.
The bill, sponsored by Republican Rep. Ryan Haynes and Sen. Bill Ketron, would raise the limit to 8 percent by weight, or about 10 percent by volume.
Fix the Beer Cap, a group working toward reform, wanted a 12 percent ABW. But supporters say the bill means progress for beer laws in Tennessee—surrounded by states with a 17.5 percent ABW or even no cap—as it improves production for current breweries and encourages other entrepreneurs to start up in the state.
Craft breweries contributed more than $445 million to the Tennessee economy in 2012, according to the Brewers Association.