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Distillery reform ‘game-changer’ passes key Senate committee

Jeremy Norris, owner of Broadslab Distillery in Benson, built the still for the distillery, which he started after learning the craft from his grandfather. (Photo from N.C. Department of Agriculture)
Jeremy Norris, owner of Broadslab Distillery in Benson, built the still for the distillery, which he started after learning the craft from his grandfather. (Photo from N.C. Department of Agriculture)

A bill that would align laws for North Carolina craft distilleries more closely with rules governing wine and craft beer easily cleared the Senate Finance Committee on Tuesday, June 18. It now heads to Senate Rules.

Senate Bill 290, Distiller Regulatory Reform Bill, would allow N.C. distilleries to sell malt beverages and unfortified and fortified wine, as well to sell mixed beverages. It also would allow distilleries to sell spirits directly to consumers and would allow liquor tastings at state Alcoholic Beverage Control stores.

The bill, maybe most important, would allow distillers to, much like ABC stores, sell to consumers without facing the current five-bottle-per-person annual restriction, according to state and local laws.

North Carolina craft distillers are patiently — and anxiously — watching the measure as it creeps through the General Assembly.

George Smith is president and CEO of Copper Barrel Distillery in North Wilkesboro. He and his wife, Kathleen, also run Key City Spirits, a sales and marketing company that acts as a brand ambassador for distillers throughout North Carolina.

Copper Barrel, with legendary distiller Buck Nance, makes a line of moonshine, flavored with things such as black cherries and blueberries. Smith says his business would benefit by removing the five-bottle-per-year limit on sales, which, he says, are lost as potential customers wait so the distillery can copy information from people drivers’ licenses.

Not everyone enjoys their whiskey — moonshine, vodka, brandy, etc. — warm and straight, though many people do. Allowing distilleries to serve mixed drinks would be a significant step for N.C. craft distillers, Smith says.

“I’m actually looking forward to being able to serve mixed drinks,” said Smith, whose moonshine is available from 96% of the state’s 170 ABC boards. “People want to see what [the moonshine] would taste like in a traditional cocktail.”

A sticking point in the process came with a provision allowing distillers to distribute their own state-approved spirits to customers such as bars and restaurants, via local ABC stores. The issue, in fact, led to a proposed committee substitute for the bill, which Sen. Rick Gunn, R-Alamance, presented during a June 5 meeting of the Senate Commerce and Insurance Committee.

Opponents of the measure, namely the N.C. ABC and the local boards, were worried about losing control of state alcohol sales and about collecting the appropriate taxes. Now, all liquor that is made in and comes into North Carolina goes through the N.C. ABC and is stored in a warehouse in Raleigh, to be distributed throughout the state. Problem is, the local boards aren’t compelled to carry any particular product, so a restaurant that may want to sell, say, an N.C-made whiskey, may be unable to procure it from the respective local board, which operates independently.

“We are not going to direct distribute,” Gunn said June 5. “That was very, very critical to our ABC boards and to our ABC commission, and even to some of the other stakeholders. … We have come up with a plan that will, in fact, help us get the product to the permittee so that they have a chance to compete.”

WIth the bill, Gunn said, a permit holder (restaurant or bar) can order a single bottle, which would be delivered to the local ABC store. If the local store cannot deliver the product, for whatever reason, the store will notify the commission within 48 hours, and the commission will allow the distiller to deliver an approved product to the ABC store for pickup, Gunn said.

House lawmakers filed a companion bill, but Gunn is effectively taking a lead on the measure. Gunn and Rep. Chuck McGrady, R-Henderson, have long been proponents of reforming the antiquated system and are among the sponsors of the most recent bills.

The state, which didn’t approved the manufacture of alcohol in North Carolina after Prohibition until 1979, got its first legal distillery since the early 1900s in 2005. The state, which had just a handful of distilleries 10 years ago, now has close to 80.

Still, it’s not the easiest place for distillers to do business, as archaic state rules have only inched forward since 1938, when the state formally ended Prohibition. Brewers and vintners can sell their products directly to customers at their breweries and wineries, and they also can make small batches of special or seasonal products, which they, too, can sell or bottle. Not so for distillers, who must rely on the state to approve, store, sell, and police their products.

Patrick Ballantine, who represents the state’s distillers, said this bill and others like it aren’t about drinking or getting drunk.

“As Senator Gunn has said, this is not about consumption,” Ballantine has said. “It’s about jobs. It’s about growing an industry.”

It is, in simple terms, a game changer.

“The distillery regulatory reform bill represents an important step forward for the distilling industry in North Carolina,” said Gentry Lassiter of Lassiter Distilling Co.

The distillery in Knightdale makes rum, and allowing Lassiter — as just one example from the bill — to serve cocktails would undoubtedly be a boon to his business.

As Lassiter says, the state’s distillers rely on local grains — corn, wheat, malted barley — for their products, as well, for example, as N.C. sweet potatoes, blueberries, and honey.

“The provisions in this bill will move N.C. distillers forward, and will allow them to continue the significant investments these family-owned businesses have already made in their local communities, N.C.-grown raw materials, and our state’s labor market.”

Many aspects of the bill — from cocktails to allowing distillers to sell beer and wine — would drastically change the so-called game, says Zeb Williams of the Old Nick Williams Farm and Distillery in Lewisville. Williams and his family just a few years ago revived the distillery, which was first established in the late 1700s.

The Old Nick distillery and its history, in fact, were recently featured on the Discovery Channel in a spinoff of the network’s “Moonshiners” franchise. Since the show aired earlier this year, Williams says, business has been just this side of crazy.

“People are coming from all over the place, bringing dollars to North Carolina.”

Including a man from Nova Scotia, who, because of state restrictions on liquor sales at distilleries, was limited to what he could take back home.

“We’re leaving money on the table, for us and state,” Williams says. “That’s a huge thing.”

He envisions the distillery becoming a destination for people, although in many ways it already is, despite the ABC restrictions. He sees families hanging out on the farm, sipping beer and wine, much like they do at breweries and wineries just down the road.

Things trickle down, he says. From the farmer to the distiller to the customer, and, ultimately, to state coffers, as well.

“What this does, it generates [economic growth] across the board for the people of North Carolina,” Williams said.

S.B. 290 would help distillers, sure, he said. But, in reality, Williams says, he occupies just one corner in what could become a much more colorful — and much larger — picture of growth for North Carolina.