Thursday, 02 May 2019 11:10

Craft distilleries one step closer to parity with breweries, wineries

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Gentry Lassiter at his distillery in Knightdale. Gentry Lassiter at his distillery in Knightdale. Kari Travis - Carolina Journal

RALEIGH — Gentry Lassiter and his wife, Rebecca, run a small distillery on the main street in Knightdale. Lassiter Distilling Co. is the epitome of a small business, which the couple built just a few years ago.


The Lassiters procure molasses, yeast, and other ingredients needed to make and bottle their award-winning line of rums.

They order and stock the shelves with merchandise, they do the books, and they promote their products. They distill, age, and infuse their rum in — at least by modern distillery standards — a tiny room just off the lobby.

They sweep the floors.

The Lassiters are trying to make it in an industry world dominated by giants. In a state that, historically, hasn’t been a friend to liquor and to the North Carolina entrepreneurs working hard to make those spirits from scratch.

But things are starting to change, albeit incrementally, yet steadily. Lawmakers have realized the economic — even cultural — benefits from the growth of beer and wine, which prospered after the legislature began to ease restrictions on things such as sales and alcohol content.

Beer and wine have helped to revitalize small towns, with vibrancy emerging from dormancy.

Spirits can do that, too, if, craft distillers say, only lawmakers would allow it.

Rep. Chuck McGrady, R-Henderson, knows it all too well. In this and past legislative sessions he’s introduced a parade of bills to modernize an archaic, and at times draconian, state system of controlling liquor.

He and his like-minded colleagues sensed the momentum, and they seized it.

House Bill 536, ABC Omnibus Regulatory Reform, seems well on its way to clearing an important legislative test.

The N.C. House Alcoholic Beverage Control committee spent about an hour Tuesday, April 30, reviewing House Bill 536, ABC Omnibus Regulatory Reform — section by section — before sending it on to Finance.

The bill would, for example, allow liquor tasting at ABC stores, allow online sales on a reciprocal basis, and allow distillers to sell an unlimited number of bottles from their distilleries.

Lawmakers opened Tuesday’s meeting by clearing House Bill 99, which would establish state Alcohol Law Enforcement as a separate division in the Department of Public Safety. ALE now falls under the auspices of the state ABC. That bill heads to Rules, Calendar, and Operations of the House.

ABC committee members, almost in unison, found all sections of H.B. 536 favorable.

Rep. Pat Hurley, R-Randolph, a staunch prohibitionist, made repeated efforts to amend provisions that would ease burdens for N.C. craft distillers.

Hurley proposed five amendments, and all but one failed. Her lone successful amendment involved assigning responsibility — should something go awry — during tastings hosted by N.C. ABC stores. Her amendment passed, yet the issue remains unclear, according to the way the bill is worded.

Hurley was a lone voice of dissent, and she seemed to know it.

Still, Gentry Lassiter watched nervously.

McGrady, the bill’s primary sponsor, more than once pointed out the House N.C. ABC committee has already cleared a similar bill, House Bill 91, which would implement several recommendations from a report on modernizing state alcohol sales by the Program Evaluation Division.

Much like classes in college economics, Lassiter sees H.B. 536 from a micro perspective, as well as the macro.

“The provisions in this bill moves us as a distillery closer to parity with beer and wine,” he said, referring to the macro.

“From a micro perspective, I think all the different provisions, as a whole, will be very impactful for us. It would be huge for us. It’s going to allow for a lot of growth, to continue to grow as an industry, as we should be allowed to.”

The state, Lassiter says, has come to appreciate that distilleries such as his generate revenue. And they could, if allowed by law, generate much more. He says new breweries, wineries, and, potentially, distilleries, are indicators for impending growth.

Tastings in ABC stores, for instance, would put North Carolina on par with neighbors Virginia and South Carolina, plus it would give distillers an opening to introduce their spirits.

“Allowing us to do tastings in stores is a commonsense step to bringing us into the 21st century, and support craft distilling in our state,” Gentry Lassiter says.

Lawmakers such as Hurley won’t be swayed.

Hurley on Tuesday tried to remove a provision to serve alcohol on the state ferry from Hatteras to Ocracoke. Alcohol would not, according to the bill as filed, be served on the return trip, however.

“It seems odd the [Department of Transportation] would want to get into the business of selling alcohol on ferries,” Hurley said.

She also tried to strike provisions that would allow distilleries to sell alcohol to people who don’t tour the facilities, and a provision allowing distilleries to sell directly to consumers.

Only a handful of states would allow it, McGrady says, citing the reciprocity provision.

“If the state is fine with it, then why should we prohibit it here?” he asked.

Hurley cited a newspaper story focused on reports of a spike in alcohol-related deaths, as well as a CDC study, she said, that centered on a rising problem regarding binge drinking.

Lassiter doesn’t discount her concerns. But he has a different take.

“This opens up a new channel of growth for us,” he said. “It’s what responsible adults have been doing outside North Carolina for a long time, and it’s time that North Carolina gets the opportunity to get that type of exposure in other states.

“It doesn’t make sense to limit the number of bottles we sell,” Lassiter says. “Why should there be a limit on us? We have a great partnership with the ABC. … We still need the volume they can supply in the state.”

Hurley, not surprisingly, spoke up against proposed Sunday sales, which, ABC lobbyist Jon Carr said, would just alter the days in which people choose buy spirits.

“We like the current system of being open six days a week,” he said.

A more restrictive provision, in fact, is found in H.B. 91, McGrady said, rendering Hurley’s amendment over Sunday sales inconsistent with an already-approved measure.

Rep. John Bell, R-Wayne, said he sees little reason state lawmakers should continue treating spirits differently than they treat beer and wine, which are allowed business to prosper throughout the state.

“This is a booming industry in the state,” he said of the state’s craft distillers, as well as brewers and vintners.

“You take alcohol away from it …. any of us would jump on board. We want the jobs, we want the revenue.

“Throw in the world ‘liquor’ in there and it scares people to death.

“Look what the breweries have done for the downtowns all across our state. This is a jobs bill.”

Leanne Powell of Southern Grace Distilleries in Mount Pleasant east of Charlotte is a fan of ABC reform, but she — like many N.C. craft distillers — would stop short of privatizing the ABC system, which is part of another proposal from McGrady.

“I do support some reforms like in-store ABC tastings that can help craft distilleries like me educate the public about our brand,” said Powell, who on Tuesday released a straight-bourbon version of Conviction whiskey.

“A measure that would be incredibly helpful to my business is to be able to promote where my products can be found,” she said. “It is currently prohibited for me to tell the public where they can find my spirits in North Carolina, except in alphabetical order on my website. I think the legislature ought to make it easier for our business to actually do business by allowing us to promote where consumers can find brands like my Conviction Small Batch Bourbon. I hope that they will focus on in-store tastings and taking off the advertising restrictions. Nothing would be more helpful to my business.”