The ABCs of a Bill Becoming Law (Part Two)

    Earlier this month, we posted part one of our interview with House ABC Chairman Rep. Tim Moffitt, which explored how House Bill 890 became law. In today’s post, we follow-up with a detailed discussion of the legislation’s many provisions.

    Let’s turn to the new law itself. Didn’t it start off as many separate bills?

    That’s right. In the House, it started off as a more technical corrections-type of bill. For instance, we took the word “distilled” and replaced it with the word “produced” — a small but significant change. The initial omnibus legislation was heavily centered on things that are just not that exciting, like different types of permits, permit flexibility, things that generally would not warrant a standalone bill.

    We had other alcohol-related bills in the pipeline as well, like House Bill 722, which expanded beer growler size.

    I like to mentor people who are new to the General Assembly, and I think it’s important that they understand how the legislative process works — so I did multiple bills to give our freshmen an opportunity to better participate in the process by being a primary sponsor.

    Take HB722 for example. It’s a great bill; it’s an easy bill to work through the House; not only to achieve a legislative outcome, but to help a new member understand how the legislative process works by having them help marshal it through the system. That to me is as valuable as the legislation itself.

    The Senate then folded those stand-alone bills that passed the House into the final version of the legislation?

    Yes. The growler size bill became Part 7 of the final bill, for instance. The Senate has a tendency to want to improve House bills — much like the House has a tendency to want to improve Senate Bills. So when we sent a number of alcohol-related bills to the Senate, the Senate decided for the sake of efficiency they would take anything that was alcohol-related and just combine it into one bill. That way they would have only one alcohol-related bill to contend with this particular long session.

    Did the Senate make any substantive changes to the legislation by the end of the process?

    Not really. My counterpart in the Senate is Commerce Committee Chair Todd Johnson. He is a fantastic teammate to work with in dealing with what really are a very complicated set of laws.

    Much of the new law addresses very specific situations in communities that required fixes of a technical nature. Let’s look at some of the more wide-ranging parts of the  law. Social districts, for example.

    I think this is particularly exciting. Municipalities will now be allowed to designate a clearly-marked area of their downtowns as a “social district” where folks can walk along the sidewalk from place to place and shopping at our stores during designated hours — all while enjoying their adult beverage of choice.

    We’re also making permanent the idea of expanded premises for restaurants and bars. The idea first came about during the summer of 2020, when Governor Cooper allowed restaurants to extend their serving areas on to sidewalks and parking lots to better accommodate social distancing measures. I really thought that was an effective, business-friendly solution and the new law makes those changes permanent.  

    And ABC stores will now be able to sell refrigerated drinks (Part 15)?

    Yes. Some of the fastest growing products in the country are ready-to-drink spirits, which typically come in cans. You have malt-based seltzers, which are already available for sale at stores, and you have distilled spirit-based seltzers. Because distilled spirits are regulated in our state, they have not been available for retail. And in order for the product to be available refrigerated, we needed to allow ABC stores by law to provide refrigeration in their stores if they want to do that.

    How did one buy those kind of drinks before?

    You couldn’t. You couldn’t buy a distilled spirit-based drink in North Carolina. Now, they’ll have them in the ABC stores, as well as other products that contain distilled spirits, like bourbon ice cream and pre-packaged jello shots.

    Part 23 of the new law allows the trade or exchange of liquor between individuals, for personal use and not for resale. What’s that about?

    Speaking of bourbon, you have these bourbon clubs — you can go to Facebook and type in “Bourbon Club North Carolina” and it pulls up all these bourbon clubs. So what you have are these people who have bottles of bourbon that they’re trading amongst themselves. I have my Whistle Pig here and I’ll trade you for two of your Buffalo Traces.

    That was against the law in North Carolina prior to the new legislation. Now, you can do that. And not just bourbon, of course, but any distilled spirit — as long as you legally purchased it, and you are trading it or exchanging it, you can now do it without any trouble.

    Tell me about Part 8 of the bill, which changed the requirement that a distillery had to provide a tour of its facilities in order to sell a bottle of its liquor to a customer.

    The initial rules being proposed by the ABC Commission regarding tours and the record keeping process were very daunting. So we decided to remove that burden from the commission’s perspective as well as the distiller’s perspective. Now, a distiller can say that the “tour” is whatever they say it is — without having the burden of record-keeping or having an exhaustive plan for having a tour.

    So unless the General Assembly directs the ABC commission to do something very specifically, the commission is going to interpret legislative intent in the narrowest possible way?

    The commission interprets alcohol law in the most restrictive way. They are never more permissive; they are always more restrictive. And I think that erring on the side of caution when it comes to legislative intent, especially regarding a controlled substance, is a good way to go. I’m generally good with that. 

    But when a rule or a regulation becomes overly burdensome or when legislative intent is not clearly understood, then I’m very interested in communicating with them directly and making sure that they understand exactly what the legislature’s position is. But I’m also one who wants to memorialize that in the general statues, so subsequent folks on the commission, through turnover or retirement, understand what the legislature’s position is.

    A lot of times they’ll say “we fixed this with our internal policy” — but that’s not good enough for me. I want to put it in the law to remove all ambiguity.

    890 also changes how ABC permit referenda are handled. Can you tell me about that?

    In North Carolina, before alcohol can be sold by businesses in a given community, it first must be approved by the voters in that community by way of a referendum. There are essentially four different types of alcohol-related permits that require voter approval: the sale of unfortified wine, the sale of fortified wine (a wine to which a distilled spirit has been added), the sale of malt beverages (e.g. beer), and the sale of mixed beverages (liquor).

    There are a number of communities across the state that held successful mixed beverage referendums allowing the sale of liquor drinks. But, by a quirk of the law, they were not allowed to sell wine, fortified wine, or malt beverages independent of being able to sell mixed beverages.

    From my regulatory reform experience (Moffitt chaired the House Regulatory Reform Committee from 2013 – 2014) I decided that since the mixed beverage permit is the most difficult one to get — it’s the one that’s the most regulated by the state — that if you hold that mixed beverage referendum and it passes, then the lesser permits will automatically follow that one so you don’t have to have a independent referendum for each of those permits.

    Despite that being kind of an obvious idea, it’s not as simple as it would seem to be. We had to change the entire law.

    Doesn’t that sidestep the local control that is implicit in allowing a referendum to be held in the first place?

    In order to respect the process, the lesser permits become automatic within 60 days unless your local elected officials petition not to participate, then the law would not apply. So the new law still allows local control. It’s not the state being heavy-handed, it’s the state understanding efficiencies in regards to the way things should work. If your community feels strongly about having a separate referendum on each of the specific permits, it still can but the local government needs to notify the public within that 60 day window.

    It seems unlikely that a community would vote to allow the sale of liquor but not beer and wine.

    The issue first came to me from Laurinburg, in Scotland County. They were wanting to do the mixed beverage referendum so they could have all these nice restaurants, but they didn’t want to do malt beverages because they didn’t want a bunch of bars popping up. They were concerned about unseemly characters coming into their community.

    At first, I thought they had made a mistake — so when I spoke with the mayor, I found out it was intentional but they later regretted it. They were looking for a solution, and the only solution afforded by law was to hold separate referendums on each one until we decided to do it this way.

    Are there other communities like Laurinburg?

    Believe it or not, there are around 50 communities across the state that hold mixed beverage permits but nothing else. This would apply to all of them. So one issue is going to have such a positive outcome from an economic development perspective for so many communities across the state.