In many ways, craft beer in North Carolina is demanding the national spotlight. Whether a young brewery claims some coveted industry hardware, a craft expansion finds a second home in Appalachia, or a hometown hero collaborates with a household favorite, there's a lot to talk about. And because North Carolina is an illustration of the craft beverage industry at large, its legal landscape, too, is evolving.
On February 8, 2017, the same day Jim Gardner, Chairman of the North Carolina Alcoholic Beverage Control Commission, resigned, House Bill 67 was filed with the North Carolina General Assembly.
House Bill 67 is an act to increase the production cap as applied to limits on a brewery's right to self-distribution from 25,000 barrels of beer per calendar year to 100,000 barrels per calendar year. Many among us are aware that the legally imposed limit on a North Carolina brewery's right to bring its own beer to the retail market has become a point of major contention over the last several years. Currently, Chapter 18B of North Carolina's General Statutes requires that its breweries sign rights to offer and sell their respective brands to independent wholesalers, absent the commonly-used Small Brewery exception referenced above. Click here and here for some light reading.
The key takeaway is that House Bill 67 prospectively quadruples the production threshold for self-distribution, affording North Carolina breweries' what is widely regarded as greater autonomy in the path to retail market and business growth. House Bill 67 passed its First Reading on February 9th and was submitted to the Committee on Alcoholic Beverage Control the same day. If the ABC gives a favorable reading, House Bill 67 will move to the Commerce and Job Development Committee; if favorable, House Bill 67 will then proceed to the Finance Committee.
House Bill 67 is sponsored by Representative Michael Speciale (Primary), Rep. Becky Carney, Rep. Mike Clampitt, Rep. Pricey Harrison, Rep. Phillip A. Lehman, Rep. Chuck McGrady, and Rep. Larry G. Pittman.
Some Recent Beer Bill History
The premise of House Bill 67 is nothing new. The North Carolina General Assembly has been an especially effective barometer for intra-state beer industry growth for the last several years and the manifestation of three-tier friction points around the state. Within that time, three notable bills have emerged (with only one being signed into law).
- House Bill 278 — Proposed the increase of the production cap on self-distribution from 25,000 barrels to 100,000 barrels per calendar year. Yes, this is the exact proposition of the currently filed House Bill 67. It even shares the same primary sponsor. HB 278 died in the ABC Committee in mid-March 2015.
- House Bill 625 — Proposed, among other things, that beer sold in a brewery to its consumers would not be included in the self-distribution calculation, and contract brewing would be legal. With the proliferation of on-premise retail activity here in North Carolina and around the country, HB 625's production calculation relief seemed to pose an intriguing compromise between brewers and distributors. For reasons unrelated to contract brewing (see the next bill), HB 625 died in the Finance Committee in Mid-April 2015.
- House Bill 909 — This North Carolina ABC Omnibus legislation did a lot. HB 909, unlike its 278 and 625 counterparts, became law in Mid-June 2015. With is ratification, North Carolina formally legalized contract brewing, started a slow on-premise sales trickle in the distilled spirits category, expanded retail sales of cider, legalized growler sales and banned powdered alcohol. HB 909 did not, however, address the self-distribution issue.
Hurry Up and Wait
If you've got technical questions regarding House Bill 67, its impact on any of the production, wholesale or retail tiers, or any of the past legislation, reach out. We'll make sure to keep you in the loop as things develop in Raleigh. Cheers.