After chairing the House Alcoholic Beverage Control Committee and introducing a series of alcoholic beverage bills, constituents have begun to ask me why do you work on ABC issues. Cynics suggest it must be about the money, but a quick check of my campaign report would suggest that isn’t it. I’ve gotten some support for my political campaigns from craft brewers, but that can be expected given my work to change laws governing brewing. Moreover, those contributions aren’t large. A partisan constituent also speculated that it was about “Another GOP power grab.” Nope, not that either.
One constituent opined that my work on ABC issues wasn’t about my district. Wrong again. That is exactly what it is about. Here’s the story.
In my first year in the legislature, one of the first requests for legislation I received came from the City of Hendersonville. A small brewery was interested in relocating to Hendersonville, but was surprised the brewery wouldn’t be allowed to open. The brewery could have waited to allow the City of Hendersonville to change its ordinance, but that was viewed as too long of a delay. So the local legislators were asked to help. Since it was usually harder to move ABC bills in the NC House, Sen. Apodaca told me to take a shot at passing a bill to fix the brewery’s and the City’s problem.
I introduced a bill, House Bill 98 [Breweries to Sell Malt Beverages on Premise], and then tried to pass it. After three committee hearings, I finally got a positive recommendation. When the bill came to the floor, it passed by a relatively narrow margin, 67-48. The brewery was Southern Appalachian Brewery. As chance would have it, Southern App opened as a membership club while waiting for me to pass that bill therefore, before buying one’s first beer, one had to become a member. I still have my membership card.
With that bill passed, I figured I’d done my last ABC bill. Well, I was wrong. In August of the same year, economic development folks contacted me about joining an economic development trip to California to recruit a new business. It was secret who we were recruiting, so I got on a plane with a bunch of other people and flew into Sacramento. While driving in the van, I finally asked where we were going, and it turns out we were heading to Chico, California, the home of Sierra Nevada Brewery.
Everyone knows how that turned out, but may not know that the last bill passed in 2011 was a bill to allow Sierra Nevada, New Belgium Brewing, and Oskar Blues Brewery to open their east coast breweries. Interestingly, the necessary changes to the ABC laws were attached to a bill dealing with community colleges, HB796 [Breweries/Comm. Coll./Supp. Fund Clarified]. Those changes allowed those breweries to have their restaurants and concert venues — not something previously allowed.
At this point, I’d passed two ABC bills in the House. Suddenly, I became the expert on all things alcohol. Next came a bill request by brewers to allow “growlers” — cleaned, sanitized, resealable containers that could be filled with beer at a brewery — HB829 [Sale of Growlers by Certain ABC Permittees]. In this session, I began working broadly on regulatory reform for the ABC laws. In the broad regulatory reform bill, Senate Bill 734 [Regulatory Reform Act of 2014], there were provisions related to allowing community colleges to brew beer so they could offer brewing courses and a clarification with respect to tastings at craft distillers. The former was sought by Blue Ridge Community College.
The following session, it was “crowlers” — cleaned, sanitized, resealable containers that could be filled with hard cider at a cidery — HB532 [Malt Bvg Tech Changes/Sell Cider in Growlers]. By this time, I’d been appointed to the House ABC as a vice chair. Another ABC regulatory bill passed, HB909 [ABC Omnibus Legislation], which contained many of the revisions to the ABC laws in my bill, HB625 [Brewery Law Revisions].
The big jump in my ABC responsibilities came in 2017 when I became a co-chair of the House ABC Committee. The focus was still on reforms related to craft brewing. My bill was HB500 [ABC Omnibus Legislation]. The major dispute was over the distribution cap. Under the law, a brewer could self-distribute beer up to 25,000 barrels. When the brewer exceeded 25,000, the brewer had to turn over all of its distribution to beer and wine wholesalers. There was no reason for the 25,000 barrel limit; it just was. In the House ABC committee, it was clear that the cap did not have the votes. When that provision was stripped out of the bill, it passed. Ultimately, those provisions were ultimately included in a Senate bill with the same name, SB155 [ABC Omnibus Legislation].
Since HB500 was still technically alive in the Senate, that bill became the vehicle in the second year of the session to move more ABC legislation. Initially, the bill was a consensus bill negotiated by the House and Senate chairs of the committees having responsibility for ABC matters. However, the beer and wine wholesalers successfully added provisions related to their businesses to the bill which were opposed by the brewers. Ultimately, the craft brewers were given protection from the changes to the modifications relating to the beer and wholesalers, but the same could not be said for the large national and international brewers.
And that connects to what is happening in the legislature today. HB363 and S 246 [Craft Beer Distribution and Modernization Act] are companion bills, the same bills filed in both legislative chambers. They reflect a change in the distribution cap, similar to the provision stripped from HB500 from the earlier session. The compromise was brought about by two Charlotte-based brewers, Noda Brewery Company and Olde Mecklenburg Brewery, that sued over the arbitrary distribution cap. The compromise also reflects changes in ownership of some beer and wine wholesalers made possible in the version of HB500 that ultimately passed in 2018.
So my work on ABC issues very much relates to my district. Southern App and Hendersonville started it. Then, Sierra Nevada and Henderson County continued it. Blue Ridge Community College was allowed to teach brewing and cideries buying Henderson County apples got the opportunity to sell crowlers. By then, I was about as knowledgeable as anyone in the North Carolina House about our ABC laws. I was given increasingly more responsibilities on ABC law, and the more I learned, the more I understood how archaic our ABC laws are. Having started with craft breweries and cideries, I’ve moved on to craft distillers.
My preference would be to have a comprehensive study of our ABC laws; my view is they need to be completely rewritten even if substantive changes aren’t made. They are nearly impossible to read and understand. Two lawyers can be asked the same question, and it is quite possible they would give you different answers to that question after reading our current law.
If comprehensive change is not possible, then the alternative approach is to move incrementally. Many changes have been made for craft breweries, wineries, and cideries, and now we’re moving to craft distilleries. Most states regulate the sale and distribution of distilled spirits through licensure, but North Carolina is not one of those states. While other states are in the sale and distribution of distilled spirits, no other state sells and distributes distilled spirits through local governments.
A Program Evaluation Report has shown that the small, one-store ABC Boards are not efficient and are not producing the revenues one might expect from a monopoly—which is what they are. The ABC system is one of the few patronage systems that remain in this state and inevitably there are periodic scandals related to the state and local monopolies.
My work on ABC is not about money or politics. ABC issues have never been decided along party lines over the past decade. My work is about Southern App, Sierra Nevada, Hendersonville, Henderson County, Blue Ridge Community College and local wineries and cideries. My work on ABC issues is also a function of the committee on which I serve. Chairing the House ABC Committee has given me responsibility for handling alcoholic beverage issues.
As with environmental law, I’m just trying to solve problems as I understand them. Perhaps I can help modernize the ABC law. I sure would like that as part of my legacy when I leave the legislature at some point in the future.