It started as a dispute between prominent bounce artist Big Freedia and a Mississippi town’s alcohol enforcement division over suspected gyrating.

The hip-hop artist from New Orleans, who was recently featured on Beyoncé’s new song Formation, was due to perform in Hattiesburg, Mississippi, as she had several times before.

But officials with the Mississippi Alcohol Beverage Control (ABC) have rules that limit the intersection of scantily clad entertainment and liquor, and this January, they decided to start enforcing them.

“You can’t wear a thong. You must keep the cleft of your buttocks covered. And you cannot simulate a sex act,” said Mississippi ABC’s chief of enforcement, Rusty Hanna, explaining the Mississippi provision that called into question Freedia’s show.

According to Ben Shemper, owner of The Dollar Box Showroom where Freedia’s show was to take place, an alcohol agent threatened to shut the concert down if Big Freedia performed, and even threatened to shut down his club for a year. Some other bars in the town who were also threatened with fines during the same period in January question whether Shemper was forced to cancel the show. They say they were flagged for ABC review over burlesque shows and simply offered to alter their choreography.

But either way, the threats ended in the show’s cancellation, and outrage from Big Freedia that the alcohol officials had deemed twerking “adult entertainment”.

“I would just like to apologize to all my fans in Mississippi for my show being canceled tonight due to the state alcohol beverage control saying that my show violates some law out there,” Freedia posted on her Facebook page, announcing that the show would be canceled. “This is some twerkloose bullshit.”

Freedia, who is the star of the reality television show Big Freedia: Queen of Bounce, has been performing bounce music for 15 years, a New Orleans genre of hip-hop that is known for fast beats, call-and-response vocals and a dance known as twerking, in which dancers squat, place their hands on the floor and shake their butts.

Local fan JC Diaz planned to attend the concert and does not understand why the ABC would approve a burlesque show but then threaten to shut down the Big Freedia concert. “It seemed to me that [Big Freedia] was targeted because she’s gay,” Diaz said.

“It’s some bogus bullshit,” Big Freedia told the Guardian. “No matter where it’s coming from.

“Even though we do ass shaking, it’s the culture of bounce music. I didn’t know twerking violated anybody’s amendments. Our right is to be who we want to be and dance in a manner that we want to.”

After learning of the threats to shut down the show, Freedia’s manager, Reid Martin, contacted the alcohol agency. He says he was told that the agent had “seen things on YouTube that might be against Mississippi code” and that agents would supervise the show if it went forward so that they could shut it down if it exceeded the terms of the town code.

“I would happily have us take a stand for twerking,” Martin said. “The fact of the matter is that the way that [agent Miles] spelled it out was, we wouldn’t be fined. It’s the venue owner that would have his license revoked, that would get fined. But it wasn’t certain what the punishment would be. The terms of the clause are broadly defined and there’s no defined punishment so they could just make something up.”

Hanna, the alcohol enforcement chief, could not verify whether the agent had threatened to shut the show down, but he explained the agency’s rules: “Sexually orientated adult entertainment is not permitted in a place that sells alcoholic beverages … They can sell beer at a topless club but they cannot sell liquor.”

Chapter 7 of Mississippi ABC’s policy specifies all prohibited conduct and activities. Hanna explained that the codes were created about 30 years ago to prevent Mississippi strip clubs from selling any liquor other than beer.

Hanna’s department and Freedia have since resolved their differences, after a round of local and entertainment industry coverage publicized the cancellation of the show due to “potential gyrating”.

A Footloose-inspired replacement concert has been booked at The Dollar Box Showroom for 25 March. They are calling the event “Twerkloose”.

Hanna said of the show: “I hope they got it worked out that they got a show planned that meets our regs. I hope they can perform and the patrons can behave in a way that there’s no violations. That’s our goal. For everybody to do what they want to do as long as it complies with our reg.”