N.C. Distilleries Seek Beverage Equality | Eastern North Carolina Now

    Publisher's note: The author of this post is Barry Smith, who is an associate editor for the Carolina Journal, John Hood Publisher.

Bill would allow sale of spirits outside ABC system


Scott Maitland, who produces TOPO brand spirits at his Top of the Hill Distillery in Chapel Hill, says state liquor laws need to adapt to new economic opportunities.
    RALEIGH     Distilleries across North Carolina are hoping to follow in the footsteps of the state's growing winery and craft beer industries, but the law places distilleries at a competitive disadvantage — and they're asking the General Assembly to pass legislation allowing them to sell small quantities of spirits to visitors.

    Scott Maitland, founder of Top of the Hill Restaurant and Top of the Hill Distillery in Chapel Hill, calls microdistilling a "burgeoning industry" in North Carolina that would get a boost from the proposed law.

    "We need to take a look at regulations from time to time and update them according to new opportunities or economic need," Maitland said.

    The lead sponsor of Senate Bill 24, Sen. Rick Gunn, R-Alamance, calls his legislation permitting distilleries to sell a single container of spirits once a year to distillery visitors "a very restrictive way to promote a new and growing business in our state" and "a logical step to give these entrepreneurs."

    But there is opposition to the proposal. Local Alcoholic Beverage Control boards would lose out on revenues from those modest sales at distilleries. Some religious groups say the change could signal the first step toward the eventual demise of state controls over the sale of all alcoholic beverages.

    Maitland notes that in 1989, breweries were not allowed to sell beer directly to consumers. However, the law changed, and now they do. "North Carolina is the leading light of beer east of the Mississippi," Maitland said, adding that the change happened because the state adopted a regulatory scheme similar to Oregon's. A July 2014 report on CNBC quoted one industry consultant saying "North Carolina is the hottest emerging state for craft beer right now."

    "What I would like to do is for us to now here in 2015 do what some really smart people did in 1989 and say, hey, let's allow this to happen from craft distilling," Maitland said.

    In addition to allowing the sale of spirits for off-premises consumption, S.B. 24 also would allow liquor tasting at trade shows, conventions, shopping malls, beverage festivals, street festivals, holiday festivals, agricultural festivals, balloon races, local fundraisers, and similar events approved by the state ABC commission. Currently, such liquor-tasting events can be conducted only at distilleries.

    Gunn said the bill has bipartisan support, and he hopes to bring it up in the Senate Commerce Committee, which he co-chairs, in the coming weeks.

    Similar bills have been introduced in previous legislative sessions. In 2013 a bill introduced by Rep. John Bell, R-Wayne, was changed in committee. It called for a study of liquor sales at microdistilleries. It passed the House but was not taken up in the Senate.

    S.B. 24 faces opposition from the N.C. Association of ABC Boards and from the Christian Action League of North Carolina.

    John Carr, a lobbyist for the N.C. Association of ABC Boards, which represents local ABC boards across the state, said the change would disrupt the current liquor delivery system.

    "We have a control system for the sale of spirituous liquors that's worked well over the years," Carr said. "The ABC stores are not inconveniently located near those facilities. We carry those products in our stores."

    Carr said that while initially there would be a one-bottle limit placed on sales, he questioned what might come later.

    "It's one bottle now, what does it become next year?" Carr asked.

    The Rev. Mark Creech, executive director of the Christian Action League of North Carolina, echoed those sentiments.

    "It's sort of like a chip in the windshield of your car, but then you see the crack spread across the windshield," Creech said. "Every time a compromise is made, it always results in an additional compromise. It never fails."

    Creech said if the bill became law, it would be the first time that liquor would be sold legally outside the state's ABC store system, setting a dangerous precedent.

    "The Christian Action League is a strong supporter of control," Creech said. "That's what the 'C' in ABC stands for."

    Creech said that such a change also would circumvent the state's three-tier system of alcohol control, under which alcoholic beverages are shipped from the manufacturer to a distributor, which then sells to retailers. And he noted it would run awry of local liquor referendums, since no ballot has provided for the sale of liquor at distilleries.

    Supporters of the change, however, say it wouldn't lead to an eventual demise of the state's regulatory system. They argue that it resembles changes that have worked for the sale of other alcoholic beverages in the past. And they say it's necessary to help spur the interest in microdistilleries.

    Colin Crossman, proprietor of King's Daughters Inn in Durham and the Mayton Inn in Cary, which is expected to open later this year, said he is waiting to see how the legislation progresses before deciding whether to open his own microdistillery.

    "Having a microdistillery, microbrewery, and wineries supports the restaurant and other hospitality industries directly," Crossman said. "If you can do some of these things on the distillery side, you can make it much more interesting for people to come to your bar."

    Maitland said North Carolina already has 14 distilleries, and about six more have applied for licenses. "There are nine more distilleries waiting to see if S.B. 24 will pass," he said. "If it does, they will apply for their license."

    "Distilleries, just like breweries before them, are bringing energy back to communities," Maitland said.

    Maitland said that of the 17 states that control the wholesale or retail distribution of spirits (or wine) through a state government agency, only four — North Carolina, Alabama, Mississippi, and Idaho — do not allow distilleries to sell an item.

    "I was not born a North Carolinian; I got here as fast as I could," Maitland said. "I don't like being compared to Alabama and Mississippi."

    Maitland said he has support for the change from the state's restaurant and lodging industry, along with the state ABC commissioner. In addition, he said the state's agriculture industry is backing it because it would provide a market for farmers who grow soft red winter wheat.
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