Any elevation of spirit is welcome in the time of COVID.
As attorneys representing breweries, wineries, distilleries, retailers, and countless other businesses working in North Carolina’s hospitality industry, we have witnessed the industry’s struggles first hand. during the COVID-19 pandemic. We’ve also seen our distillers, in particular, face the hurdles associated with North Carolina’s historic liquor monopoly.
Last month, North Carolina state lawmakers made it clear that they, too, had witnessed these struggles. On September 10, Governor Cooper signed House Bill 890, omnibus legislation containing liquor reform measures that should benefit all owners of businesses governed by the liquor control commission. Many provisions of the bill focus on the state’s nearly 100 distilleries.
In particular, the legislation, which passed by a 35-7 vote by the state Senate and a 95-8 vote by members of the House, levels the playing field for distilleries by making laws applicable to them more consistent with the laws governing wineries and breweries.
For example, distilleries previously could not be open during hours when local ABC stores were not open. Now, distilleries can offer tours, tastings, and can sell unopened containers of their product to consumers for off-site consumption seven days a week (9 a.m. to 9 p.m. Monday through Saturday and noon to 9 p.m. Sunday). Distilleries are no longer required to keep records related to tours given to people who visit the distillery before purchasing a bottle of distilled spirits, as required by NC Gen. Stat. 18B-1105(a)(4).
Distilleries or their representatives who obtain a Spirits Special Event Permit can now not only offer free tastings to consumers at trade shows, conventions, local fundraisers and farmers’ markets, but can also sell beverages blended or distilled spirits at the distillery during such events. Notably, however, the sale of mixed drinks as part of a consumer tasting is not permitted in shopping malls, street festivals, holiday parties or balloon races. Finally, after obtaining the appropriate permit, distilleries will also be able to give away one 50 milliliter mini-bottle per customer per day at trade shows, festivals and other similar approved events.
Additionally, changes for consumers are also coming to State ABC stores. Consumers will now be able to place orders online and then pick up products from ABC stores across the state. Business owners will no longer have to travel to pick up liquor from ABC stores and warehouses – they will be able to order liquor and have it delivered to their outlets, just like beer and wine are delivered.
The legislation also allows private label distilled spirits, meaning individuals and restaurants can contract to have products produced and labeled for them with a label indicating that the product was “bottled for”, “distilled for” or “in honor of” a particular individual, event, company or cause.
The legislation creates a new license known as the “Non-Resident Spirits Seller’s License” that can be issued to distilleries outside of North Carolina that sell their products in the state; brokerage of such products; or a spirits importer/bottler. Licensee is authorized to sell, deliver and ship spirits that have been approved for sale in North Carolina to Licensee’s employees in North Carolina and to Licensee’s brokerage if the brokerage holds a non-resident spirits vendor’s license for the purpose of holding special spirits events. Shipments and deliveries are limited to the quantity of spirits required for any consumer tasting scheduled within one month of shipment or delivery.
In areas where the sale of mixed beverages has not been approved, a distillery located on property used for bona fide agricultural purposes may sell mixed beverages containing only spirit alcohol produced at the distillery for consumption on the premises. .
Finally, a North Carolina Alcoholic Spirits Advisory Council will be created, made up of members with training or experience in the alcohol or tourism industries. Council members will receive no salary for their service, but will have powers and duties involving the promotion of public awareness and the quality of the North Carolina spirits industry.
Retail Provisions Benefiting Consumers
Retailers of all types and consumers will also benefit from the legislation, which expands the legal size of a growler (for beer or wine) from 2 liters to 4 litres. Business owners will also have the right to make their outdoor dining extensions (and liquor service areas) permanent and sell alcoholic beverages for offsite consumption in designated “social districts.” Cities and counties will have the ability to carve out Social Neighborhood Zones, where locals and tourists can walk around with alcoholic beverages purchased in the Social Neighborhood. And these ‘walktails’ aren’t the only new development; Charter buses that travel at least 75 miles will now be allowed to serve alcohol. Finally, the extension of on-site sales to outdoor spaces, temporarily authorized, is now codified. Retailers located in cities and counties that pass an ordinance authorizing the extension of premises must follow the steps set forth in 18B-904(h) to obtain approval for the extension of their premises.
Sports fans also have something to celebrate from the legislation. Stadiums, facilities and athletic arenas at public universities and colleges in North Carolina can now sell two malt beverages or glasses of wine to a single customer at a time. This should reduce the time fans spend in line for drinks at sporting events.
Finally, the legislation expands ABC’s jurisdiction to regulate not only alcoholic beverages, but also alcoholic consumables. Alcohol-based consumables are defined as any manufactured and packaged ice cream, gum or gelatin food product containing at least one-half percent (0.5%) alcohol by volume. These products were previously beyond the reach of the ABC system. The new legislation, however, will require that all manufacturers of such products be registered in the state, that all products and labels for such products be approved by the Commission, and that such products be sold only through appropriate retail channels.
Special Event Permit Provisions
Representatives of non-resident malt beverage, winery brand and spirits brand sellers may now qualify to hold a malt beverage, winery or spirits special event license, as applicable, to enable them to give free tastings of their products at Commission-approved shopping malls, entertainment venues, festivals, hot air balloon races, farmers’ markets and fundraising events.
Companies regulated by the ABC Commission have endured many challenges throughout the COVID-19 pandemic, which likely shed light on the historic challenges facing North Carolina distillers. Hopefully, this legislation’s focus on modernizing liquor sales and promoting outdoor dining and social neighborhoods in North Carolina will lift all boats. The authorization process is nuanced and requires attention to detail.
© 2022 Ward and Smith, Pennsylvania. All rights reserved.National Law Review, Volume XI, Number 304