Relaxing Heavy Restrictions to Bring More Freedom to N.C. Distilleries | Eastern NC Now

    Publisher's note: The author of this post is Jon Sanders, who studies regulatory policy for the John Locke Foundation.

    Since the end of Prohibition eight decades ago, North Carolina's wineries and breweries have been making a return. As state laws have relaxed over time, those industries have started to thrive.

    North Carolina's distilleries have been much slower to return. It seems strange, considering that before state prohibition North Carolina was the nation's leader in distilleries. The reason is quite simple, however: distilleries face a much stricter regulatory climate here than wineries and breweries.

    My report on North Carolina's Alcoholic Beverage (ABC) System includes a chart showing many different restrictions North Carolina places on its distilleries that other states don't put on theirs. The table contrasts "What we can't have in NC" with what "They can in other states."

    (Astute readers will see that we now can have one item in the table. With last week's signing of House Bill 363, craft breweries were given much greater freedom to self-distribute: as many as 50,000 barrels as opposed to 25,000, and also not having to use a third-party distributor for all of their production if they produced more than the self-distribution cap. This welcome reform makes North Carolina one of the freer states for craft brewers seeking to self-distribute.)

    Here's the table (click on it for a larger size):


    Perhaps someday we can, however

    A bill before the General Assembly, House Bill 378 (Senate Bill 290 is a companion bill), would address several areas highlighted in the table above. Among other things, the bill would allow distilleries to:

    Hold tastings at ABC stores (distilleries can do that in most other states, including every Southeastern state except Florida and Georgia)

    Receive ABC permits to sell beer, wine, and mixed drinks on premises (distilleries can do that in at least 37 other states)

    Sell bottles to distillery visitors without limiting them to no more than five bottles in a 12-month period (no longer would North Carolina distilleries face more restrictions on bottle sales to their own visitors than do distilleries in 46 other states)

    Self-distribute to mixed-beverage permittees and out-of-state consumers (joining distilleries in at least 21 other states that are allowed some freedom to self-distribute)

    Those changes would free up North Carolina distilleries from burdensome rules not faced by their peers in many other states. That would be important regardless, but especially so for distilleries, because they are so dependent upon sales to local consumers.

    Unless it's a very large distillery, 92 percent of a distillery's sales are to consumers in its home state. Distilleries rely on sales to friends and neighbors.

    Relaxing heavy restrictions not leveled by most other states would help open North Carolina distilleries to more sales and business with their vital, natural customer base.