The push to allow Tennessee to join dozens of other states in allowing wine to be sold in supermarkets was abandoned Wednesday.
The proposal to revise the state liquor law was withdrawn from consideration in the House Local Government Subcommittee.
Rep. David Shepard, a Dickson Democrat and the measure's main sponsor, said the decision reflects a lack of support among lawmakers and a failure to reach a compromise with retailers and wholesalers.
"This has been an unusual year, we're trying to finish up, and we just don't have the support right now in the Legislature to pass the wine in grocery stores bill," Shepard told reporters after the meeting.
Legislative analysts projected that the proposal would net the state millions in new revenue, which had lent hope for the bill amid the state's budget struggles.
The measure failed despite the support of several prominent lawmakers, including Republican Senate Speaker Ron Ramsey of Blountville and House Democratic Leader Gary Odom of Nashville.
Under the state's rigid three-tier beverage control system, every drop of alcohol is supposed to flow from the manufacturer to a wholesale distributor before going to the retailers. Grocery stores can't sell wine, and liquor stores can't sell beer.
Democratic Gov. Phil Bredesen expressed regret at the bill's failure.
"I can't imagine what danger to the fabric of society would exist by having wine in supermarkets," he said. "I'm kind of sorry that option is not there."
Opponents argued the proposal would hurt small businesses and make wine more widely available to underage drinkers.
Shepard acknowledged that the proposal has wide support among wine consumers. "But I don't think everybody fully understands the complications of it," he said.
Since the bill wasn't defeated in a committee vote, Shepard could bring it up again in next year's session. But he said it's unclear whether a consensus can be crafted by then.
"We're going to start this summer, we're going to work on it," he said. "When we get it right, we're going to bring it. But we're not going to bring it until we get it right."
While the supermarkets measure has failed, wine lovers may still have reason to rejoice. Two separate measures advancing in the Legislature would allow Internet sales from out-of-state wineries, and for consumers to transport wine into the state in their cars. It is currently illegal to bring any alcohol into Tennessee.
The Senate has already passed both measures. The measure to allow direct shipment of up to three cases per year is awaiting a House vote, while the proposal to allow consumers to personally transport wine from licensed out-of state wineries cleared the Local Government Subcommittee on Wednesday.