By Jennifer A. Morgan, M. Keith Kapp, Richard A. Zechini, and Sarah P. Sonnenberg for Williams Mullen

The North Carolina General Assembly passed the ABC Omnibus bill, Senate Bill 527, and it was signed into law by Governor Cooper on Monday, July 8, 2024. Most of the provisions of the bill go into effect immediately. The bill makes numerous changes to update North Carolina ABC laws. Most notably, the bill:

• Authorizes certain permittees to sell sealed, single-serving mixed drinks to go with food, which was previously authorized by the governor’s executive orders issued during the COVID-19 pandemic emergency.
• Allows distilleries and spirituous liquor special event permittees to sell two mixed drinks per person per calendar day, rather than one, at certain festivals and special events.
• Provides local ABC boards flexibility to open their ABC stores on New Year’s Day, Fourth of July, and Labor Day, but not Sundays.
• Authorizes ABC store gift cards and online orders.
• Increases spending limits on advertising by industry members.
• Reforms ABC permit issuance, by deeming temporary ABC permits permanent after 90 days and clarifying transitional ownership changes.
• Creates new ABC permits for malt beverage shops, cotenant permits, mobile bar services, home maker special event permits, and bring your own bottle (BYOB) permits at adult entertainment businesses.
• Establishes distillery estate districts for land parcels with distilleries and multiple permittees under common ownership or control.
• Authorizes community colleges to sell beer and wine at stadiums and arenas.
• Prohibits draft line cleaning by wholesalers and industry members unless they are paid fair market value.
• Permanently allows 15-year-olds to work inside ABC-permitted establishments.
• Clarifies due dates and payment of excise taxes.
• Allows retailers to purchase liquor from any designated ABC store in the same county.
• Authorizes the Catawba Indian Tribe to self-govern their own ABC permits and ABC stores, as the Cherokee Indian Tribe currently does.
• Clarifies contiguous properties may be considered a single premises under certain circumstances.

A summary of the ABC Omnibus bill is below, and a link to the full bill may be found here:

Ready to Drink Premixed Cocktails Do Not Need Tax Stamps

The bill creates a new definition of “premixed cocktails” in closed containers and excludes those cocktails from previously applicable mixed beverage tax charges and requirements to affix mixed beverage tax stamps.

North Carolina ABC Commission and Board Members Can Sample Products

North Carolina ABC Commission members, local ABC Board members, general managers, and store managers can sample .25-ounce samples of alcoholic beverage products being considered for sale. 

Local ABC Stores Can Open on Additional Holidays

Local Boards can decide to allow ABC stores to open on New Year’s Day, Fourth of July, and Labor Day, but cannot open on any Sunday. Previous state law required ABC stores to be closed on those holidays.

Spending Cap Raised on Advertising, Product Displays, and Coolers

Industry members can provide retailers up to $600 (up from $300) worth of advertising specialty items and product displays per brand per year and can provide up to $1,000 of these items to a local ABC board. These cannot be customized for individual retailers or boards. Industry members can provide branded plug-in coolers, valued at up to $1,500 per brand per year, to local boards, separate from the $1,000 allowance for advertising specialty items.

Mixed Drinks and Wine “To-Go” Allowed Again Post-COVID

Mixed beverage permittees, on-premises wine permittees, and distilleries may again sell single-serving mixed drinks and wine to consumers to-go, as was temporarily allowed during COVID. Delivery service providers may also deliver these items to consumers. The mixed drinks must be sold with food and must be single-serving and packaged in a container that does not exceed 24 fluid ounces, with a secure lid or cap. Transportation of these drinks is allowed if the container continues to be sealed. The retailer may sell more than two of these drinks at a time if they are sold for delivery or off premises consumption. The retailer or delivery service provider must provide the beverage to the purchaser who is at least 21 or to another person who is at least 21. The bill also modifies laws to provide for the transport of these sealed beverages in vehicles.

Retailers Can Purchase Liquor from Any ABC Board in the County

Retailers may purchase liquor from any ABC Board in the county in which they operate but must still go through an ABC store the Board designates. The bill also makes changes to statutes governing alcohol elections in small towns.

Tax Stamps Can Be Adhered With Clear Tape

Retailers may use clear adhesive tape to prevent mixed beverage tax stamps from falling off liquor bottles.

Special Purchase Allowance Modification

The Commission must notify industry members and local boards at least 60 days in advance of the effective date of a retail price reduction on liquor.

ABC Stores May Sell Value-Added Items, Gift Cards, and Liquor Barrels and May Also Take Online Orders

Effective July 1, 2024, ABC stores may sell branded consumer specialty items such as can openers, bags, glasses, clothing, and key chains packaged with spirituous liquor. Under previous law, ABC stores were not allowed to sell any items except liquor at uniform set prices, so value-added items had to be given away. Value-added items cannot include tobacco, vapes, hemp products, or paraphernalia. ABC stores can also now sell physical or electronic gift cards. Electronic gift cards can be sold and delivered online to the purchaser and can only be purchased or redeemed by a person who is 21 years or older. Gift cards are valid at ABC stores operated by the local board from which the gift card is purchased. ABC stores can also sell empty barrels in which liquor was aged, provided they also purchased the liquor aged in the barrel.

ABC stores can also accept orders for alcoholic beverages placed online, which shall be picked up in person at the store by the individual who placed the order.

Local ABC Boards Can Sell Products Below Distiller’s Price

A local board may get permission from the Commission to sell liquor below the distiller’s price. The local board shall notify the distilleries affected. Distilleries would have a two-day right of first refusal to purchase back the products.

Beer and Wine on Trains

Beer and wine can be sold on a rail line that is at least 100 miles long and connects to the national rail network.

Spirituous Liquor Special Event Permittees Can Sell Two Drinks, Rather Than One

Spirituous Liquor Special Event Permittees, including distilleries holding this permit, can now sell two mixed drinks per person per calendar day at certain special events such as trade shows, conventions, and farmers markets. Previous law only allowed one per customer per day.

ABC Permit and Transitional Ownership Changes

The bill provides that after 90 days, a temporary ABC permit is deemed to be a full permit. Under previous law, temporary permits were being extended many times by the Commission due to staff backlogs, resulting in some permittees being on temporary permits for two years or more. This was problematic because temporary permittees lack the protections under law that permanent permittees have, such as appeal rights under the North Carolina Administrative Procedures Act. This was also problematic because temporary permittees do not pay annual registration/renewal fees, resulting in a loss of revenue for the state from extended temporary permit holders.

The bill establishes a safe harbor and late fee period during which applicants can pay registrations and renewals with a late fee of 25%. This is helpful to permittees who in the past were subject to cancellation of existing permits for failing to renew in time.

The bill also makes changes to the transitional ownership permit statutes as follows:

• Clarifies the new owner may purchase alcoholic beverages during the transitional period.
• Clarifies the new owner is authorized to operate to the same extent as the predecessor until the Commission either issues or denies the new permit application.
• Clarifies the prior owner is not liable for any acts or omissions of the new owner during the transitional period.
• Clarifies a prior owner who receives ABC violations at one location is not precluded from receiving an ABC permit for a different establishment.
• Streamlines the documentation the Commission can request for the transitional period.
• Provides if a person has applied for inspection/zoning and local government opinion forms from local governments but has not received those within the 60-day period, the applicant may submit an affidavit stating this, in lieu of submitting those approvals. The applicant shall submit the government approvals within three business days of receipt. If the local government finds the person to be non-compliant, the person may not operate during the transition period until the establishment is brought into compliance.

The bill also clarifies there is no need to obtain new ABC permits if a person transfers an ownership interest to a revocable or irrevocable trust and continues to operate the establishment following the transfer.

Revocation or Withdrawal of Temporary Permits

Revocations or withdrawals of temporary permits by the Commission must be served on the permittee at their residence or business address or must be mailed with five business days’ notice.

Technical Corrections for Bar Definition; Allow Malt Beverages to be Mixed With Other Beverages

The bill clarifies the definition of bar in the statutes and eliminates references to “private bars.” A bar is defined in G.S. 130A-247(1) as an establishment “that does not prepare or serve food as defined in this part other than beverage garnishes, ice, or food that does not require time or temperature control for safety as set out in G.S. 130A-248(a) and rules adopted to implement that section and that is in an unopened original commercial package, except for food used as a beverage garnish.”

The bill clarifies that on-premises permittees may mix beer with other beverages. A similar provision already exists for unfortified wine.

New Malt Beverage Shop Permit

The bill creates a new malt beverage shop permit similar to the existing wine shop permit. Malt beverage shops primarily sell malt beverages for consumption off the premises, and regularly educate customers through tastings, classes, and seminars. Entities holding this permit can sell beer or wine for consumption on or off the premises, provided that to sell on-premises, the sale of malt beverage on-premises does not exceed 40% of the establishment’s total sales for any 30-day period.

New Cotenant Permit

The bill creates a $50 cotenant permit, which can be issued to a restaurant that occupies the same building as another ABC permittee, provided the building has no other tenants or a common area open to the public that is not part of the premises of one of the two permittees. Customers can bring open containers from one of the businesses to the other.

New BYOB Permit at Adult Live Entertainment Businesses

While some BYOB permits already exist in the NC ABC laws, the bill creates a new $100 BYOB permit available to adult live entertainment businesses. These businesses can allow persons to bring closed containers of beer and unfortified wine onto the premises and consume those on the premises. The bill makes it unlawful to consume alcohol at any adult live entertainment business except pursuant to one of the ABC permits allowing sale or consumption.

New Mobile Bar Services Permit

The new mobile bar services permit can be issued to a business that provides bartending services for events and authorizes the permittee to bring beer, wine and liquor onto the premises of a business that is not an ABC permittee and serve the alcohol to guests at the event. The beer can be purchased from either a retailer or a wholesaler, fortified wine from an ABC store or wholesaler, and liquor from a designated ABC store in the same county where the permittee’s principal office is located. A limited special occasion permit is not required where the alcohol is exclusively provided by the holder of a mobile bar services permit. The permittee can bring alcohol onto the premises and serve at the event regardless of whether there is a charge or fee for guests to attend the event. The permit does NOT allow retail sales of alcohol to guests at an event.

Community Theatre Clarification

Community theatres are now defined to include a broader number of performing arts events.

ALE Required to Notify Permit Holder of Violations

The bill requires ALE or ABC officers who issue citations to employees for criminal or ABC violations occurring on the premises to also notify the permit holder by certified mail or e-mail within five business days. This section is effective September 1, 2024, for violations occurring on or after that date.

Distillery Estate Districts

The bill defines a distillery estate district to be a tract of land where a distillery, winery, and at least three other establishments holding mixed beverage permits are located. Each of the establishments must be under common ownership and control. A mixed beverage permittee in the district can sell spirituous liquor produced at the distillery in the district, the distillery may conduct consumer tastings anywhere in the district, and wine permittees in the district can sell bottles of liquor produced at the distillery.

Importer/Wholesaler Distribution Centers

Beer, wine, and liquor importers that import wine into North Carolina through North Carolina ports can now store those products and ship them to other states or to the state warehouse.

Supplier’s Interest in NC Wholesaler

A supplier cannot have an ownership interest in its North Carolina wholesaler, with certain exceptions. The new law provides a supplier’s wholesaler cannot directly or indirectly through an affiliated entity possess a nonresident vendor permit.

Catawba Indian Tribal ABC Commission

The Catawba Indian Tribe is authorized to operate a tribal ABC commission and regulate alcoholic beverage on its own property to the same extent as the Cherokee Tribe.

Tax Capped on Qualifying Spirituous Liquor Purchase

The bill provides for an effective cap on the amount of sales and use tax payable on the purchase of a single container of liquor for which the purchase price is at least $50,000. This section is effective January 1, 2025.

Premises on Contiguous Properties

The Commission is authorized to treat multiple parcels of land with different addresses as a single premises if the parcels (1) share a single perimeter, (2) are under common ownership or control as evidenced by deed, lease, or management agreement, and (3) access between the buildings is available to customers without the customers having to enter a public street or sidewalk.

Home Maker Special Event Permit

The bill authorizes a new home maker special event permit that a club devoted to the home production of beer or wine may obtain. The club must have a general liability insurance policy in the amount of $1,000,000 to qualify. The club may offer free tastings of homemade beer and wine on the premises of ABC retail establishments, at shopping malls, and at events such as trade shows, conventions, and street festivals. The home maker club must give the Commission advance notice, label the product, and limit the samples to six one-ounce samples per customer. Clubs shall not charge for these samples. Consumers participating must provide their contact information at the event.

Private Club Franchises

Private clubs in North Carolina are 501(c) organizations that have been in operation for at least 12 months. Franchisees of a franchisor that is a private club and that has been in operation for 12 months can receive an ABC permit without also having to have been in operation for 12 months.

Common Area Entertainment Permit Clarifying Change

The bill clarifies that only one common area entertainment permit is needed at a multi-tenant establishment, and a single designated consumption area can include both indoor and outdoor common areas.

ABC Training Updates

Providers of ABC training courses now have 90 days, rather than 30 days, to update course content.

Sale of Beer and Wine at Community College Sporting Events

Community colleges are now included in the definition of “public college or university,” which allows the sale of beer and wine at community college stadiums, athletic facilities, and arenas. 

Local Boards and Third-Party Vendors to Transport Liquor

Local boards may contract with independent contractors to provide for delivery of liquor from the local board’s warehouse to its ABC stores.

Allow Possession and Consumption of Alcohol in Security-Screened Areas of Airports

The consumption of alcohol sold by an establishment at the airport may be consumed and sold throughout the screened portion of the establishment’s airport terminal. These must be in containers not made of glass, be limited to 16 fluid ounces, and display the statement “Drink Responsibly – Be 21.” This applies to airports boarding at least 150,000 passengers annually.

Draft Line Cleaning

It is unlawful for a manufacturer, bottler, or wholesaler of alcohol to provide draft line cleaning services to a retailer unless the retailer pays fair market value. This section is effective January 1, 2025.

Sports Club May Include Pickleball

An establishment can now qualify as a sports club permittee in North Carolina if it has at least four or more pickleball courts.

Allow 15-Year-Olds to Work Inside ABC-Permitted Establishments

Senate Bill 527 makes permanent a provision which authorizes 15-year-olds to work inside an ABC-permitted business that allows on-premises consumption. Previous bills post-COVID included such provisions but those provisions expired on January 31, 2023. Under the law:

• No youth under 18 can prepare, serve, dispense, or sell any alcoholic beverages except for point-of-sale locations for off-premises consumption.
• 14-year-olds can only work at an ABC-permitted establishment with the written consent of a parent or guardian and only on the outside grounds of the premises and for a purpose that does not involve the preparation, serving, dispensing, or sale of alcohol.

Excise Tax Returns and Due Dates

The bill clarifies excise tax reports must be filed regardless of whether alcoholic beverages were sold. The bill clarifies monthly due dates for the return of excise taxes. The bill also authorizes the North Carolia Department of Revenue to request copies of the agreements between breweries, wineries, and wholesalers to ensure tax remittance compliance.

Cigar Bars

Cigar bars that do not serve prepared food do not have to be in a freestanding structure provided smoke does not migrate into enclosed areas where smoking is prohibited.

ATMS in ABC Stores

Local ABC boards can contract with third parties to make an ATM available to customers.

The preceding article was written by Jennifer A. Morgan, M. Keith Kapp, Richard A. Zechini, and Sarah P. Sonnenberg and originally appeared on July 9, 2024 at Williams Mullen’s website and is made available here for educational purposes only. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 106A-117 of the U.S. Copyright Law.