UPDATE: North Carolina Governor Roy Cooper officially signed the bill into law on Friday, June 30, hours after this article was published.
A few months ago, we provided a summary of North Carolina House Bill 500 and how it would have clarified many ambiguities under our state's existing alcoholic beverage laws and benefitted the brewing industry. Unfortunately, the General Assembly did not pass House Bill 500. However, many of its provisions survived and were included in Senate Bill 155, known as the "Brunch Bill," which yesterday was ratified by the General Assembly. In addition to many of the provisions proposed in House Bill 500, Senate Bill 155 includes a provision that allows the sale of alcoholic beverages as early as 10:00 a.m. on Sunday mornings. The Governor is expected to sign the bill soon.
Some of the more important provisions of Senate Bill 155 are as follows:
- Sale of Alcoholic Beverages on Sunday Morning. Local county and city governments may adopt an ordinance allowing for the sale of malt beverages, unfortified wine, fortified wine, and mixed beverages, beginning at 10:00 a.m. on Sunday. Originally this provision only applied to restaurants, but it was revised to apply to any licensed permit holder, including retail businesses. Breweries, bottle shops, and other retails businesses that have the necessary permit to sell malt beverages, unfortified wine, fortified wine, and mixed beverages for on premises and/or off premises consumption may now sell such beverages beginning at 10:00 a.m. on Sunday if the local government adopts the necessary ordinance.
- Crowlers. A crowler, which is typically a 32 oz. aluminum can filled to order and sealed, may now be filled by retail permit holders including brewery taprooms and bottle shops. Previously, crowlers could only be filled in the manufacturing area of a brewery.
- Distillery Sales and Samples. Distilleries may now sell up to five bottles of spirituous liquor directly to consumers in a 12 month period. The existing law permitted only one bottle per year. Distillery permit holders may also now obtain a spirituous liquor special event permit that will allow them to provide free quarter-ounce tasting samples of any of their products at trade shows, conventions, shopping malls, festivals, and other similar events.
- Off-Site Storage. A brewery, winery, or distillery may store any alcoholic beverages it manufactures pursuant to a permit at a non‑contiguous storage location approved by the United States Alcohol and Tobacco Tax and Trade Bureau ("TTB"). This aligns with federal law and alleviates the problem of many fast growing breweries that quickly run out of room in their current location.
- Sale of Wine Without Food. Retail businesses, such as breweries and bottle shops, may obtain a permit that allows them to sell unfortified wine without the requirement to also provide a food menu.
- Brewery Samples. Breweries are now expressly permitted to provide samples of their beer, either paid or complimentary, to customers, visitors, and employees for consumption on premises. Most breweries have provided samples since opening, but this now makes the legality of this practice clear.
- Testing. Brewers may consume samples of alcoholic beverages they are licensed to sell on their premises for purposes of sensory analysis, quality control, or education. It makes sense that brewers want to test their beer and now the law clearly provides that they can.
- Homebrew Competitions. Homebrewers may make, possess, and transport wines and malt beverages for the individual's own use, the use of the individual's family and guests, or the use of organized affairs such as homebrew competitions. The homebrewer's wines and malt beverages may be tasted and judged at these competitions. Home brewing was previously permitted, but this law makes it clear that homebrewers can enter competitions.
- Sale of Other Alcoholic Beverages. This law makes it clear that a brewery taproom is not limited to selling its own products. Now, in addition to selling their own beer, brewers may sell in their brewery taproom, any other alcoholic beverages approved by the ABC Commission for sale in North Carolina if the brewer has the appropriate permit.
- Farm Breweries. A brewery that produces agriculture products such as barley, grain, hops, or fruit used by the brewery in the manufacturing of its malt beverages may sell malt beverages owned by the brewery in an area where the sale of malt beverages is otherwise not allowed if it obtains the appropriate permit and approval from the governing body of the city or county where the brewery is located.
- Breweries with Locations in Other States. Breweries may receive malt beverages manufactured by the permittee in another state for shipment to dealers in other states or to wholesalers in the state. This is beneficial to brewers with locations in multiple states and eliminates the need for a brewery to "park" its beer at a distributor.
- Sales Reporting. This new law requires holders of a brewery permit who obtain a malt beverage wholesaler permit to provide a sales report to the ABC Commission within 60 days of the request. The report must include all of the following information for the 12 month period preceding the date of the request:
- Number of barrels of malt beverages sold by the permit holder that were produced by the permit holder.
- Quantity and dollar amount of all malt beverages sold by the permit holder at his or her brewery.
- Quantity and dollar amount of malt beverages produced by the brewery and sold on-premises.
- Quantity and dollar amount of malt beverages produced by the brewery and sold off-premises.
- Quantity and dollar amount of malt beverages sold at a special event.
- Quantity and dollar amount of malt beverages destroyed, spoiled, or otherwise rendered unsalable.
The report requirements are by Commission request only and the Commission may only request one sales report in a 12 month period. The original version of this new law contained several more onerous requirements, but those were negotiated out of the ratified bill.
The items covered by this soon to be enacted legislation are important to this industry and serve as a critical step in modernizing outdated laws as they apply to an ever growing craft beverage industry in North Carolina. Senate Bill 155 clears up some previous gray areas and provides assurances that this industry needs in order to enact best practices.
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This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.