When elected to the North Carolina House of Representatives six years ago, I would never have guessed that among my legislative specialties would be alcoholic beverages — which also includes distilled spirits, beer, wine and hard cider. Having never mentioned alcoholic beverage law as something that interested me in any campaign, it is surprising to find myself as the co-chair of the House Alcoholic Beverage Control (ABC) Committee.
The journey began in my freshman year when the City of Hendersonville came to me wanting local legislation to allow a craft brewer, Southern Appalachian, to open in Henderson County. Basically, the lack of an up-to-date city ordinance and archaic state law was thwarting the opening of the craft brewer. Eventually, Southern Appalachian found a work-around, becoming a membership organization [Yes, one had to become a member of a private club before buying a beer.], and eventually got 2011 Session House Bill 98 [Breweries to Sell Malt Beverages on Premises] passed to rectify the situation. It took three trips to the House ABC Committee, but I passed it in the House and then-Senator Apodaca got it passed in the Senate. Traditionally, it is harder to get alcoholic beverage legislation through the House, and I had no idea how hard it would be when I took on this little local matter.
Next up was a mysterious economic development prospect from California that might also have been an alcoholic beverage issue. Of course, that was Sierra Nevada. Working with Senator Apodaca and then-Representative Tim Moffitt (R-Buncombe) we passed a statewide bill allowing Sierra Nevada and New Belgium to locate in our area. Basically, they wanted to be able to operate in the same way they did in California and Colorado respectively. North Carolina laws were very restrictive, and they couldn’t do entertainment and food service like they did at their breweries in those states.
Since then I’ve had a hand in most every alcoholic beverage bill that has gone through the House, including 2013 Session’s HB 829 [Sale of Growlers by Certain ABC Permittees] to provide for growlers for beer and later a bill, H2015 Session’s HB909 [ABC Omnibus Legislation], to allow growlers for hard cider. Last session, I asked to be appointed to the ABC Committee, and this session I asked to chair the committee. I serve as co-chair with Rep. Jamie Boles (R-Moore).
People always ask how come you seem to be involved in these alcoholic beverage bills, and there are several reasons. First, there is a lot of activity in western North Carolina, including Henderson County, on alcoholic beverage issues. I have many breweries in my district: Basic Brewery, Sanctuary Brewing Company, Southern Appalachian Brewery, Blue Ghost Brewing, and of course, Sierra Nevada. I have two wineries: Saint Paul Mountain Vineyards and Burntshirt Vineyards. And we’ve also got cider: Bold Rock Hard Cider and Flat Rock Cider Works, with Saint Paul Mountain Vineyards about to add cider to its winery operations. With the exception of Sierra Nevada and Bold Rock Hard Cider, all of these are small businesses. All of them are not what our parents would have thought were a brewery, winery or cidery. They are very family-friendly, where parents bring their kids and pets to enjoy time together — the kids playing while the adults enjoy the beverages.
Second, given all the barriers Southern Appalachian and Sierra Nevada faced when looking to locate in Hendersonville and Henderson County, I knew alcoholic beverage law was an area of the law that needed regulatory reform. In fact, it needs more than just changing archaic regulations. The whole ABC code was antiquated. Over the years, it had been amended in so many ways that if you put the same question to two lawyers, they were likely to give two different answers. For example, hard cider is regulated like wine is, apparently for no other reason than both are made from fruit.
Finally, I just like working with the passionate people who brew beer and make wine and hard cider. Having come out of the summer camping industry where camps competed with each other but formed a close-knit community, I found the craft brewers to be the closest thing to the summer camp community. Everyone knows each other, and the breweries compete, but they also work together. They trade ideas, work together with suppliers, and have an interest in each of them being successful.
I also loved their passion for what they do. For example, Alan Ward is passionate about his wine, but now he’s equally passionate in expanding into a European-style cider. I loved it when meeting Ken Grossman of Sierra Nevada that he seemed so concerned about how locating his east coast brewery might be seen by the local craft brewers. Despite the size of Sierra Nevada, he wasn’t going to locate in Mills River in western North Carolina unless the brewers guild was comfortable with his locating there. In other words, these people are passionate about what they do and, while they compete with each other, they also view themselves as part of a community. I’ve not seen a lot of that community among other industries.
So that brings us to HB500 [ABC Omnibus Legislation], which I introduced along with Reps. Bill Brawley (R-Mecklenburg), Pricey Harrison (D-Guilford), and Jon Hardister (R-Guilford). The bill is a regulatory reform bill that seeks to address problems that I view are inhibiting the growth of the craft beer industry.
There are several different types of provisions in this bill. Some are simple clarifications of an extremely complex code, and I don’t expect much opposition to those, such as offering tastings during tours which most breweries already do. Some are provisions that inhibit craft brewers running their businesses as they want, for example authorizing tasting the beer by workers at a brewery for quality control or allowing taprooms to sell alcoholic beverages that were not brewed in-house.
Others provisions will receive opposition from those that have benefited from the state-authorized monopoly as to how craft brewers can market their products. Specifically, Sections 11 and 12 of the bill, which allow breweries to self-distribute up to 200,000 barrels and makes it easier for them to end franchise agreements.
The cap on self-distribution is the provision that is drawing the most interest. Under current law, a brewery can distribute its product up to 25,000 barrels. However, when it reaches the 25,000 barrel cap, the brewery has to get out of the distribution process. In other words, they have to sell their beer trucks, layoff their employees who distribute beer and put the distribution business with a beer and wine distributor. They’ve invested in growing their business and pushing distribution to mostly local groceries, bars, and restaurants, but now that business goes to the distributors. My view is that the law that was originally put in place to keep the big breweries and wineries from distributing their products — using their market share to influence the market — and thwart distributors’ businesses is now being used as a weapon against small breweries and wineries.
Having said that, distributors are typically local businesses, too. They also have local owners and employees, although they are much larger than all but a few breweries or wineries, such as Sierra Nevada, Oskar Blues Brewery or New Belgium. My view is that some balance must be struck. Some number of breweries, for example, Highland Brewery Company or Wicked Weed Brewery, both in Buncombe County, have decided they don’t want to self-distribute and use distributors, even before they hit the 25,000 barrel cap, and they should be able to make that choice.
My hope is that HB500 has struck the right balance. I expect it will be heard by the ABC Committee in the coming month, and my intention is to have it fully vetted. Very rarely do I introduce a bill that is a take-it-or-leave it proposition, and I’m hoping all interested parties will engage in discussion of the bill. I am committed, though, to removing the burdensome red tape and nonsensical limits on the growth of craft breweries.