20House Bill 909, also known as the ABC Omnibus Legislation, has passed through the North Carolina Senate and is headed back to the North Carolina House ABC Committee for concurrence. This bill, if it becomes law (and it appears likely headed that way), will make several significant changes to the ABC laws affecting breweries in North Carolina (along with affecting distilleries significantly and banning the sale/possession/manufacture/consumption of powdered alcohol).
Of note, HB 909 allows for alternating proprietorships for breweries (HB 909, Section 6). An alternating proprietorship is an arrangement wherein one brewery holding a brewery permit leases or otherwise makes available its facility to another holder of a brewery permit. The clarifying language of HB 909 specifically allows for this arrangement, without voiding ABC permits (such an arrangement previously may have, under statutory language). Under HB 909, “the tenant brewery shall maintain title to the malt beverages at all states of the brewing process and shall be responsible for all aspects associated with manufacturing the product, including maintaining appropriate records, obtaining label approval in its own name, and remitting the appropriate taxes.” The bill also allows for affiliated breweries to carry on alternating proprietorships, but those affiliated breweries cannot use the alternating proprietorship as a means to allocate production quantities between the breweries in such a way to obtain a malt beverage wholesaler permit (where either brewery would not otherwise qualify for such a permit).
Additionally, HB 909 Section 7 allows the holder of a brewery permit to sell beer to nonresident (out of state) wholesalers, vendors and bottlers for resale in North Carolina, if the beer is first shipped to a licensed wholesaler (i.e., an in state licensed wholesaler) for sale to those nonresident wholesalers/vendors/bottlers.
Finally, HB 909 Section 7 also allows for contract brewing between two breweries. This means that a brewery permit holder may “receive, in closed containers, and sell at the brewery, [beer] produced inside or outside North Carolina under contract with a contract brewery. The contract brewery that manufactures the [beer] shall be responsible for all aspects associated with manufacturing the product, including maintaining appropriate records, obtaining label approval in its own name, and remitting the appropriate taxes. The contract beer may be sold at affiliated retail outlets of the brewery physically located on or adjacent to the brewery, and any contract beer received from a contract brewery must be made available for sale by the brewery to wholesalers for distribution to retailers, without discrimination.
In short conclusion, HB 909 will promote some additional freedoms for breweries in North Carolina, and will effectively eliminate alternating proprietorship and contract brewing issues that have been a thorn in the side of many brewers over the past few years. If/when this law passes, it will be a good “win” for North Carolina breweries, and should help to keep NC beer competitive against other major brewing states. To read the latest wording of the bill, go here.
Edit: HB 909 was signed into law by Governor McCrory on Friday, June 19th. Big win for breweries, wineries and distilleries in the state.
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