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NABCA Daily News Update (3/18/2019) 2 NABCA News March 18, 2019 NABCA 26th Legal Symposium SAVE THE DATE Control State News March 17-19, 2019 th NC: Liquor changes: ABC boards skeptical as McGrady plans 26 Annual Symposium on Alcohol Beverage Law and Regulation slate of alcohol bills Registration is open for NABCA’s 2019 Legal MI: Sunday alcohol sales cause some Michigan stores to Symposium. For program details, travel move or shutter information and to register online at www.nabca.org\meetings. WV: Craft brewers hopeful new law will open second wave of growth NABCA HIGHLIGHTS The Public Health Considerations of Fetal License State News Alcohol Spectrum Disorders (White Paper) DE: State alcohol commissioner questions Newark's unruly Native American Nations & State Alcohol bars point system Policies: An Analysis (White Paper) Alcohol Technology in the World of Tomorrow CT: Package stores offer dime recycling fee in lieu of liquor - (White Paper) bottle deposits The Control State Agency Info Sheets. Please Industry News view website for more information. NABCA Survey Database (members only) SWA loses trademark battle over ‘tartan’ Upcoming NABCA Meetings Bad State Laws and Big Money Beer Wholesalers Are Still Statistical Data Reports Hurting Craft Brewers www.NABCA.org Daily News Four Loko, Joose, and Sparks: an abridged history of caffeinated alcohol NABCA Daily News Update (3/18/2019) 2 NABCA NEWS NABCA 26th Legal Symposium March 18, 2019 Today is the inaugural day for NABCA’s 26th Annual Legal Symposium. About a dozen robust topics relating to beverage alcohol fill out the conference agenda for the next day and a half. Sessions include Direct Shipping, Product Liability and Tainted Product, Regulating Alcohol Tourism and Connecting with Craft. Beginning tomorrow, NABCA will share summaries of several topics presented in the Daily News Update. CONTROL STATE NEWS NC: Liquor changes: ABC boards skeptical as McGrady plans slate of alcohol bills BlueRidge.com By Derek Lacey, Times-News Staff Writer March 16, 2019 Changes are in the works for how North Carolinians buy liquor, and local officials from government representatives to ABC board members are worried about what it might mean for local communities that receive money from sales. State Rep. Chuck McGrady has filed a bill seeking to make a number of changes to ABC systems across the state, and he’s warming up to file a handful of bills in the coming weeks, leading up to a bill that would privatize liquor sales. The shift from government-run stores could mean residents would be able to buy liquor at the grocery store, for instance, and perhaps on Sundays. Proposals also call for allowing in-store tastings. Local ABC board chairs are worried about what that might mean for local stores, and what could happen to hundreds of thousands in contributions made to local governments, education and more thanks to annual ABC sales. McGrady is one of four primary sponsors of the ABC Modernization Bill filed in February that makes several various changes to the ABC system. These changes include requiring the consolidation of ABC systems within counties with more than one. In Henderson County, Fletcher, Laurel Park and Hendersonville each have ABC stores and boards. Legislation The modernization bill passed its first reading in the House and is set to go before the House ABC Committee this Tuesday, according to McGrady. But this bill isn’t all that’s proposed. Thursday, McGrady filed a bill to allow craft brewers to increase their brewing capacity before having to hire a distributor. Several more bills will be rolled out over the coming weeks, he said, including one that would establish a modern licensure system for distilled liquors, otherwise known as privatization. Early this week, likely Monday or Tuesday, he plans to file a craft distiller’s bill. A week or so after that, he plans to file an ABC regulatory reform bill which he comparted to a broader version of his previous efforts with craft brewing. About 10 days after that, he said, he plans to file the modern licensure bill, all of the above being “significant proposals to modernize how we handle alcoholic (beverages).” The current modernization bill isn’t actually McGrady’s preference, he said. His preference would be for the licensure bill, though the modernization bill could be a way to incrementally move toward a licensure system. A report McGrady requested from the state Program Evaluation Division served as the impetus for the modernization bill. He said he wanted them to look at where the state had come from and where it ought to go, and pointed out that once PED gets started on the study, it works independently. The recommendations in that report essentially became the proposals in the modernization bill. NABCA Daily News Update (3/18/2019) 3 “We can do this better,” McGrady said. The sticking points First, the proposal mandates ABC boards within counties consolidate, the main sticking point with local ABC organizations. The bill would also remove the requirement that a permit be required for transporting more than eight liters of liquor, allow for special orders of less than a case, allow ABC boards to deliver to restaurants, bars or other establishments for a fee as opposed to the current pick-up only system, allow local jurisdictions to decide on allowing Sunday sales and allow in-store tastings. Charles Byrd, chair of the Hendersonville ABC Board, said there are pros and cons to that bill, but didn’t find the same duality to the potential privatization of liquor sales in the state. He feels consolidating ABC boards within the county will create a number of headaches, from managing a larger base of inventory to working out exactly how the larger system will work and how the revenues might get distributed to local schools, governments and more. If the county’s boards merged, they’d likely need to lease or build a new warehouse to hold inventory, as one truck makes deliveries to the local ABC system, he said. He feels that would end up being a cost savings to the state but more expenses for local boards. “Financially, there’s not going to be that much gain for anybody, and you lose control of it,” said Fletcher ABC Board Chair Larry Waldrop, noting the money Fletcher ABC distributes to local groups, as well as the uncertain future of its financial assets in land and inventory. On privatization, Byrd said “The issue is, ABC — the C in there is ‘control.’” He said it’s much harder for distilled spirits to get in the hands of underage residents with the ABC system, and other states have experienced less control after moving to a privatized system. That is one of the biggest issues for Byrd, alongside losing revenues that are distributed locally. He also expects customers to lose the availability of top-shelf liquor that can be found at an ABC store and pay up to 15 percent more for the liquor that is available. The state would retain control under a licensure system, McGrady said, adding that some states limit the number of licenses and that the new rules would be whatever the state establishes. But the majority of states have moved to a licensure method in regulating alcoholic beverages, he said, something North Carolina has already done for beer, wine and cider. Liquor would become a similar system, though there are still lots of details to work out. Laurel Park opposition The Laurel Park Town Council heard from the staff of its ABC store during a work session Thursday, directing ABC Assistant Manager and former Laurel Park Town Manager Jim Ball to write a letter voicing concerns and opposition to the current bill. The council plans to take up the letter and consider action at its 9:30 a.m. meeting Tuesday, with concerns about keeping contributions intact and that nothing in the bill details what will happen to those contributions once boards consolidate. “We don’t have any real guidelines as to how that board would operate,” Ball said, noting different pay scales for employees, different operational software at stores and concerns about Laurel Park’s one full-time and seven part- time employees. Ball also noted that about six years ago when the county voted in favor of liquor by the drink, a study was done on consolidating the boards and the county decided against it. NABCA Daily News Update (3/18/2019) 4 Who gets the money? Each of the three local ABC Boards in Hendersonville, Fletcher and Laurel Park distribute their funds a little bit differently, splitting contributions up between local governments, education, law enforcement and other organizations. According to the state ABC Commission’s 2018 annual report, the three stores in Hendersonville did $7.16 million in gross sales in 2018, a 7.2-percent increase over 2017, with forecasts for another year of growth in 2019. Fletcher’s $2.28 million in gross sales was a 7.73-percent increase, and Laurel Park’s $1.3 million was a 2.81-percent increase over the previous year. The Hendersonville ABC Board gives 50 percent of its profits to the city of Hendersonville, 25 percent to Henderson County, 24 percent to the county school system and 1percent to the county library system, Byrd said. In the fiscal year that ended June 30, 2018, that was $175,000 to Hendersonville, $87,500 to Henderson County, $84,000 to Henderson County Public Schools and $3,500 to the library. The board also gives around $40,000 to other miscellaneous programs with schools and other organizations, like funding speakers who talk to students about alcohol for Project Graduation, for which the board gives $2,500 to each high school.
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