wordpress custom taxonomy list of terms and posts

loop.php

<?php
// using a specified custom taxonomy slug
// find all taxonomy terms (categories) and
// the associated posts
$tax = 'TAXONOMY-SLUG';
echo '<ul>';
$terms = get_terms($tax);
foreach($terms as $term) {
	echo '<li>'.$term->name;

	// echo all posts with specific term as new list
	// using tax_query within the WP_Query loop arguments
	$args = array(
		'post_type' => 'CUSTOM-POST-TYPE',
		'tax_query' => array(
			array(
				'taxonomy' => $tax,
				'field' => 'slug',
				'terms' => $term->slug
			)
		)
	);
	global $wp_query;
	$wp_query = new WP_Query($args);
	echo '<ul>';
	while ($wp_query->have_posts()) : $wp_query->the_post();
		$post_title = get_the_title();
		$post_url = get_the_permalink();
		echo '<li><a href="'.$post_url.'">'.$post_title.'</a></li>';
	endwhile;
	echo '</ul>';

	echo '</li>';
}
echo '</ul>';
?>