News: CJ Exclusives

ABC reform bill including distilleries, brunches moves closer to House vote (updated)

Measure loosens rules on brewers and distillers, expands Sunday retail and restaurant alcohol sales

Lee Katrincic, co-owner of Durham Distillery. (Photo courtesy of Durham Distillery)
Lee Katrincic, co-owner of Durham Distillery. (Photo courtesy of Durham Distillery)

Distillers in North Carolina aren’t quite ready to extend their arms in a celebratory toast, but they’ve certainly opened the bottle and dropped some ice in the glass.

Senate Bill 155, omnibus legislation loosening rules on North Carolina distillers and brewers, is headed to the House Finance Committee.

The House Alcoholic Beverage Control Committee on Thursday overwhelmingly approved a Proposed Committee Substitute, which combines the Senate Bill with an earlier measure from the House specific to breweries and wineries.

S.B. 155, which cleared the Senate on June 1, allows restaurants to begin selling alcohol Sunday at 10 a.m., as opposed to noon, which is the current law. North Carolina is one of a handful of states that restricts liquor sales on Sunday mornings.

A provision allowing grocery stores to begin selling beer and wine at 10 a.m. had been removed from the bill, but Rep. Jon Hardister, R-Guilford, citing a desire for consistency, offered an amendment to return it. The amendment passed, 17-5.

Sen. Rick Gunn, R-Alamance, a primary sponsor of S.B. 155, says the entrepreneurial spirit shines among North Carolina distillers, who drive ABC sales, hire local people and invest their time, money, and passion in demographically diverse communities from Asheville to Manteo.

“As we know, North Carolina is known for the tourism and hospitality industries, and this bill will help both of those industries grow and prosper.”

The bill allows out-of-state sales online, subject to laws in the other jurisdictions, and the sale of antique or rare spirits in special auction, contingent on auctioneers first obtaining a $750 permit.

But maybe most important for North Carolina craft distillers, S.B. 155 would allow distilleries to sell five bottles of spirits per customer per year; the current law allows people to buy one bottle every 365 days.

The significance of giving distillers the ability to sell people additional bottles can’t be discounted.

Melissa Katrincic is president and CEO of Durham Distillery. She and her husband, Lee, make award-winning gin, as well as a line of liqueurs and, most recently, a cold-distilled cucumber vodka.

At least 30 percent of the people who tour her distillery are tourists, she said.

“The tourism in downtown Durham is fantastic on the weekends,” she said. “We got a lot of tourists who come in for an evening tour on Saturday who are leaving town on Sunday. There’s no chance for them to go to an ABC store.”

The measure provides a means to obtain a special event permit, which would cost $200 and allow distillers to offer tastings of their products — 0.25 ounce per product not to exceed an ounce — during events and gatherings such as trade shows and festivals, contingent on local approval. Lawmakers removed a provision from S.B. 155 that limited the number of distillers who could take part in a particular event.

For brewers, the measure allows the sale of “crowlers,” which are basically cans of beer, typically 32 ounces, sealed on site.

Senate Bill 155 eases the rules for home brewers and vintners, who can share but not sell their products at organized events, such as competitions. The bill also gives beer taprooms the option to sell liquor and mixed drinks, with the required and relevant permits, and would allow farm brewers in dry counties to sell their beer; again, pending local approval of the city or county jurisdiction.

Four people signed up to share their thoughts about the bill.

Two spoke against it.

The Christian Action League’s Mark Creech is a regular at legislative hearings about alcohol. He worries about the spread of underage drinking and called parts of S.B. 155 dangerous to public health.

Jon Carr, a lawyer and lobbyist for the Association of N.C. ABC Boards, spoke against increasing allowable distillery sales to five bottles and, referring to a study on the ills of underage drinking, direct shipment to consumers. He called the three-tier system effective and good for distilleries.

Two people spoke in support of S.B. 155.

Jim Beley, general manager of The Umstead Hotel and Spa in Cary, spoke on behalf of the N.C. Restaurant and Lodging Association. Allowing alcohol sales during the early hours of Sunday brunch would be a huge boost to tourism and, subsequently, additional revenue in the form of sales taxes.

Donald Bryson, state director for Americans for Prosperity, said North Carolina ABC sales in fiscal 2015-16 totaled almost $1 billion, and he scolded those trying to demonize distillers. Making liquor is part of our state’s history, and, before Prohibition, North Carolina, by some accounts, had as many as 500 distilleries.

Oh, and there’s that whole NASCAR thing, which rose from moonshiners and bootleggers, who traversed our dirt-crusted backroads and craggy pine forests to delivery corn-based white lightning.

“We’re a state that needs to respect distilling as we are a state that created a multibillion-dollar sport because of distilling,” Bryson said, half-jokingly. “I think we need to understand that heritage.”

More seriously, he said, “We have entrepreneurs in our state. We should let the businesses grow, and that’s all this is about.”

There’s reason for optimism among distillers, who, collectively, navigate a labyrinth of complex rules and Prohibition-era laws that generally inhibit growth and innovation.

Said Scott Maitland, TOPO proprietor and N.C. Distillers Association president: “I think, based on the conversations we had today in committee, and on the floor, that even opponents of the bill see the wisdom and recognize that this is an opportunity to create a new industry and to create a new tax base.”

John Trump, managing editor of Carolina Journal, is author of Still & Barrel: Craft Spirits in the Old North State. (Blair 2017) .