The commission is an independent organization that reports to the Department of Public Safety. It was established by the Alcoholic Beverage Commission Act of 1937, which created a state monopoly of the sale, distribution and transportation of spirituous liquor.
All 50 states use some form of regulation to monitor the sale and distribution of alcohol, but North Carolina is one of only 17 states that use the “control” model. This model means the commission provides uniform control over the sale, consumption and possession of alcohol.
And people that try to challenge the commission’s monopoly are met with a wall of resistance.
On behalf of the North Carolina Distiller’s Association, Scott Maitland, founder and manager of Top of the Hill restaurant, brewery and distillery, authored a new house bill that would allow state distilleries to sell one item per customer per year after taking a tour of the distillery.
Under the current system, customers have to travel to a local ABC store to buy any item made at the distillery. Though it costs TOPO Distillery only $16 to make a bottle of its vodka, the ABC has marked it up to $28.95 in stores.
“Us fostering craft distilling is going to bring attention to spirits in general and grow ABC sales as a whole,” Maitland said.
Maitland said people who go on a tour of the distillery are shocked they can’t purchase a bottle after a tour. He said the demand for liquor post-tour is consistent.
Esteban McMahan, the spirit guide at Top of the Hill distillery, said not everyone is able to go to the ABC store and buy a bottle after they take a tour.
“Basically we’re trying to push for some of the same rights that breweries and wineries have as far as being able to sell to people taking a tour,” McMahan said. “If you go to a winery you can pretty much buy unlimited alcohol, and we don’t think one bottle per person per year is that much of a stretch.”
Maitland’s bill, written in 2012, has passed in the N.C. Senate and House of Representatives, but not in the same legislative session.
There is no opposition to the bill, just a general wariness from the ABC Commission that the distilleries will take some of their business, Maitland said. Only four legislators voted against the bill in the N.C. House of Representatives when it was brought to a vote last legislative session.
Maitland received support from local legislators such as Orange County Reps. Verla Insko and Valerie Foushee. Officially, the ABC Commission remains neutral on the bill.
Rep. Nathan Ramsey, R-Buncombe, said the bill would give distilleries the same benefits breweries enjoy.
“It is basically an extension of what is going on — an extension of breweries,” he said.
The bill won’t infringe upon ABC stores’ liquor sales, Maitland said. Instead, Maitland believes it would increase in-store sales because once a customer gets a taste of the product at the distillery, they will go back to the liquor store to get more.
“A big part of the law is that it’s the same exact price and we can’t undercut the ABC store. And the taxes that go to the state on the front-end stay the same,” Maitland said.
Tim Ferris, the owner of Blue Ridge Distilling Co. and Keith Nordan, the owner of Carolina Distillery, emphasized they are not trying to compete with ABC.
“We have no desire to become an ABC store or compete with ABC stores,” Ferris said. “Our desire is to legitimize the experience of the tour.”
The Blue Ridge Distilling Co., located in Golden Valley near Morganton, only makes one product —Defiant Whisky. The farm distillery has seen an amazing growth since opening in December 2012, but it still relies on tourism to stay afloat as a small business 30 miles from the nearest town.
Nordan, owner of the Carolina Distillery in Lenoir, N.C., said when he opened the second distillery in the state in 2008 along with Chris Hollifield, he was under the assumption that they would be treated the same as breweries and wineries. But it has been the exact opposite.
“One shot, one glass of beer, it’s the same amount of alcohol,” Nordan said.
Nordan estimated he would see a 25 percent increase in sales of the distilleries products.
“North Carolina is the sixth most-visited state in the nation,” he said. “People should be able to buy something to take with them when they go on a tour with us.”
Ferris said it feels discriminatory that wineries and breweries can sell their products after tours, but he can’t.
Ferris said he does about three tours a day, six days a week, and estimated he spends $200,000 a year allowing people to sample his product and tour his facilities for free. The ability to sell Defiant after tours would help him recoup some of that money.
Ramsey said there was some push back from the bill during the legislative session.
“North Carolina has a very controlled environment relating to liquor sales,” he said. “There were advocates who thought it would undermine the ABC Commission.”
Ferris said the distillery industry is one of the fastest growing industries in North Carolina, which is why he thinks the request to sell his product after tours is reasonable.
“These antiquated laws are not conducive to modern business, though” he said. “They tie your hands and feet and shoot you because you can’t dance.”
Agnes Stevens, spokeswoman for the N.C. ABC Commission, said the state’s tight control over liquor sales offers clear public health benefits.
“They recommend against the privatization because there is evidence that it increases per capita consumption and that is an indicator of excessive consumption and the issues that stem from that,” Stevens said.
North Carolina is the only state where local governments appoint a board to operate retail stores. The state commission is comprised of three members who oversee all commission activities, including two state warehouses where all alcohol sold in statewide ABC stores is kept.The actual stores are operated by local ABC boards. North Carolina is home to 422 ABC stores and more than 18,000 retail businesses that are regulated by the commission.
“(Alcohol is) in our warehouse until the local boards ship it to put it on their shelves,” Stevens said of the strict control the commission has on businesses. “It is on their shelves until a business or individual purchases it. There is not a scenario where you’ve got a secondary market in North Carolina.”
Since 1937, the N.C. ABC Commission has grown enormously. Between fiscal years 1984 and 2013, revenues grew 166 percent to $800 million. Of this, $316 million went to the N.C. General Fund — the budget the state uses for operations — and then went back local county boards where alcohol is sold.
“It certainly is a growth story that generates revenue for the state,” Stevens said.
The ABC Commission has long drawn criticism from advocates for governmental efficiency. In 2008, a legislative report found that local boards had difficulty turning a profit as more ABC stores were opened in response to growing populations in urban areas. Without a clear mission, the report found that many local boards were left to operate inefficiently. The report recommended consolidating local boards in areas with lower populations.
Stevens said the commission cooperated with the division in its research and gathering information for the report. In 2010, the N.C. General Assembly passed reform legislation to fix some of the issues the report found.
In 2013, the commission also went through an internal reorganization. Prior to that year, Alcohol Law Enforcement was in charge of preliminary investigations for ABC permits.
“But, that’s something that the commission and the ALE leadership looked at that and thought it was better to use ALE for just enforcement,” Stevens said.
Rep. Elmer Floyd, D-Cumberland, said he believes the commission is still necessary.
“When you are selling alcohol you need to have some sort of control, tight control in today’s environment,” he said.
Tyler Huntington, owner of Tyler’s Restaurant & Taproom, said Maitland’s proposed bill is an important law because it gives distilleries a monopoly on their own product.
“We don’t want it to be controversial at all,” Huntington said. “What we want is for people to understand that it’s not really controversial at all, but an important bill to support N.C. homegrown products.”
Ferris said the distillery industry is strong and it’s just going to keep growing and creating more product, more revenue and more tourism for the state.
“It’s a legitimate industry and we don’t have to do much now but get out of the way of it to foster growth,” he said. “Now the state has to do their part to back us up.”
This bill is part of a larger effort on behalf of TOPO and the local distilling industry to keep liquor revenue in state.
“By doing this, we keep the money in, and that just helps in so many ways that the way we’re going to become more affluent as a state is to build industries in our state,” Maitland said.
TOPO Distillery supports the local economy by only using ingredients found within 100 miles of the Chapel Hill site.
“We’re out on the bleeding edge here because a lot of people don’t realize this is an agricultural product,” Maitland said.
“Just like you should know the farmer of your chicken or eggs or broccoli, you should know the farmer of your spirits.”