N.C. lawmakers, one could argue, have had unprecedented success this legislative session in reforming the state’s archaic laws governing spirituous liquor.
Senate Bill 290 — which passed the Senate, 39-4, and was sent to the House, where it passed the House ABC Committee and now sits in the House’s Rules Committee — is one example.
S.B. 290 would allow N.C. distilleries to sell malt beverages and unfortified and fortified wine, as well to sell mixed beverages. The bill would allow distillers to, much like ABC stores, sell to consumers without facing the current five-bottle-per-person annual restriction.
Sen. Rick Gunn, R-Alamance, a primary sponsor, says the bill allows distilleries to grow while remaining under state control.
An amendment to S.B. 290 clarified some of the language in the bill and effectively delays implementation for about a month, to Aug. 1. The bill, if it becomes law, would significantly impact the state’s distillers, aligning rules more closely with those governing wine and craft beer, industries that have grown exponentially throughout North Carolina in recent years.
S.B. 290, in short, is the proverbial game-changer, and the House is expected to take it up again after the Fourth of July break.
Success, though, as life teaches us, rarely occurs without setbacks.
House Bill 536, in this case, provides an example.
The bill, ABC Omnibus Regulatory Reform, has undergone some heavy edits, the result of negotiations and compromises with lawmakers who objected to specific provisions.
All that’s missing are marks left by a red pen.
The bill’s sponsor, Rep. Chuck McGrady, R-Henderson, opened discussion in a House Finance committee meeting Thursday, June 25, by recounting a list of things no longer in the proposed committee substitute.
Gone from that bill is a provision for a local option to open N.C. ABC stores on Sundays. Distillers lost a provision allowing them to sell directly to consumers out of state, a move the Christian Action League has consistently opposed. Alcohol also won’t be sold on trains and ferries, providing one more example of how some North Carolina lawmakers won’t relax what’s now a tenuous grip on Prohibition-era rules.
As it stands, H.B. 536 will allow brewers to offer tastings at farmers markets and removes a limitation on sales at the state’s craft distilleries. The bill allows restaurants and other venues to sell up to two drinks per customer at any one time, and would allow liquor tastings at state ABC stores, from 1 to 7 p.m., for three hours, with no more than three tastings per week.
“It looks like the distiller bill (S.B. 290) should be able to make it unless it gets somehow caught up in politics,” McGrady, who will retire after this term, said Friday evening.
McGrady, who is working closely with Gunn and Rep. James Boles Jr., R-Moore, wants to clear H.B. 536, which, McGrady said, was delayed in House Finance.
“They took two months from the time the bill got there … before they let it out,” said McGrady, a long-time leader in efforts to reform N.C. ABC laws.
“And now they’ve put me in a difficult situation because, while I can get it on the floor when we come back, and I’m confident that we will pass it out of the House, I don’t know if we will be home by the time the Senate has an opportunity. I’m not as disappointed that some things came out of it as I am disappointed with how slowly the bill got taken up. That was really my disappointment.”
Although legislation moving the state toward privatization of liquor sales has proved unsuccessful, H.B. 536 does restrict the formation of new ABC boards, of which the state has about 170. Brunswick County, for instance, has nine boards. Wake and Mecklenburg counties have one apiece. An earlier move by lawmakers to force counties with multiple boards to consolidate failed.
H.B. 536 was first heard in the ABC Committee and passed the Finance Committee 12-9, but not without lawmakers expressing concerns. The measure now sits in House rules.
Worries from lawmakers included the idea of people making a “party-day” of ABC store tastings, of potential riots in bingo parlors if alcohol is permitted, and of North Carolina becoming more like Wisconsin, which was second behind North Dakota in a list of the nation’s “most drunken” states published last year by USA Today. The newspaper cited a study based on research by the Centers for Disease Control and Prevention. North Carolina was 43rd on that list.
H.B. 536 also clarifies rules for the consumption of alcohol in common areas, such as the Morgan Street Food Hall in downtown Raleigh, and would allow customers to order up to two drinks at a time, as opposed to the current one.
One step, one piece at a time.
“I’m quite willing to move things piecemeal, if that’s what we have to do,” McGrady said,
“When you look at the perspective from how hard it was to move an alcohol bill eight years ago, and what we accomplished this year, you know, I’m pretty happy. We get the craft distiller bill through, and if we get the omnibus bill through, or most of the way through, this will be a pretty big year.”
Other measures pending this session included H.B. 971, Modern Licensure Model for Alcohol Control, which nearly went by the wayside, as has S.B. 91, which was based on a Program Evaluation Division study that, too, called for Sunday sales.
“When they held up the omnibus bill in finance,” McGrady said, “I had to turn all my attention to that bill, to get it moving again.”
But the licensure bill isn’t dead, he said.
“I’m intending to have a hearing on the licensure bill before the session is over. I want to get it out there, so people can see it, and put out a fiscal note that shows you that you can get [the state] out of the liquor business. You can still generate money for local government that the current system does. It’s not that hard.”
Though parts of myriad alcohol bills introduced this session have failed, other aspects survive in related bills. McGrady has said expect more amendments and revisions as H.B. 536 and S.B. 290 progress through the legislature.
Among the other successes this session regarding alcohol reform were House Bill 99, which establishes Alcohol Law Enforcement as a separate division under the Department of Public Safety. ALE had fallen under state ABC.
On Wednesday, June 26, Gov. Roy Cooper signed of pair of alcohol-related bills into law.
House Bill 389 allows universities to sell beer and wine at college sporting events. H.B. 389 brings N.C. public universities in line with private schools — such as Wake Forest, Elon and Duke — that are already selling alcohol at athletic games, a news release from sponsor Rep. John Bell, R-Wayne, says.
Another enforcement measure, Senate Bill 11, strengthens permitting rules for selling alcohol and the ability of law enforcement to crack down on violators.
Sen. Andy Wells, R-Catawba, introduced SB. 11, in large part because of a spate of shootings and killings outside three Catawba County bars between April 2017 and April 2018.
A big win for brewers was the passage House Bill 363, the Craft Beer Distribution and Modernization Act, the result of a compromise among mid-sized craft brewers and the N.C. Beer and Wine Wholesalers Association.
“We all know the beer industry is important to N.C.’s economy,” Cooper said during the signing ceremony at Raleigh Brewing Co. “We know it represents thousands of jobs for our state and tens of millions of dollars in investment.”
That new law maintains the current three-tier system — producers, wholesalers, and retailers — and adds a new, mid-level classification of brewers to state law. Brewers, under the proposal, could self-distribute 50,000 barrels of their products, as opposed to the current 25,000. The legislation also gives growing brewers more flexibility in choosing where and how to distribute their beers around the state.
Breweries that exceed 50,000 would not lose the ability to self-distribute, although the new law would affect only those breweries that sell fewer than 100,000 barrels of beer per year.
Before Cooper signed H.B. 363, if a brewer sold 25,001 barrels per year, by state law, every barrel produced — including the first — had to go through a third-party wholesaler/distributor.
Negotiation and compromise were key to the success of H.B. 363, but those factors were probably secondary to a lawsuit and pending trial brought by craft brewers. The brewers’ complaint said certain state statutes were unconstitutional and consequently sought a permanent injunction against enforcement of the state’s distribution cap and franchise laws. The distribution cap and franchise laws, they said, were inflicting injury and threatened to impose additional damage to the brewers.
“In my first year,” said McGrady, “I ran a little bill just to help my local brewery. I had no idea what I was getting into. It took me three times in committee to get it out.”
The bill, though a local measure, barely passed the House.
“So, you’ve got younger members,” he said.
He points to Bell.
“He’s got an eastern, more rural district, and yet he’s been willing to be out front as a leader in these things. … I’m just stunned at how much progress we’re making. I mean, it took us about 100 years to get here. Really, in four or five years we’ve gotten a lot of movement. A few more (lawmaker) retirements over the years and, more importantly, more exposure, as these little small businesses — distilleries, breweries, cideries, wineries — become part of the community, those legislators are going to recognize that. They’ve got a lot at stake, and these things bring people into the area. I think we’re winning the battle.”