North Carolina § 18B-100 - Purpose of Chapter.

§ 18B-100. Purpose of Chapter.

This Chapter is intended to establish a uniform system of control over the sale, purchase, transportation, manufacture, consumption, and possession of alcoholic beverages in North Carolina, and to provide procedures to insure the proper administration of the ABC laws under a uniform system throughout the State. This Chapter shall be liberally construed to the end that the sale, purchase, transportation, manufacture, consumption, and possession of alcoholic beverages shall be prohibited except as authorized in this Chapter. If any provision of this Chapter, or its application to any person or circumstance, is determined by a court or other authority of competent jurisdiction to be invalid or unconstitutional, such provision shall be stricken and the remaining provisions shall be construed in accordance with the intent of the General Assembly to further limit rather than expand commerce in alcoholic beverages, and with respect to malt beverages, unfortified wine, and fortified wine, the remaining provisions shall be construed to enhance strict regulatory control over taxation, distribution, and sale of alcoholic beverages through the three-tier regulatory system and the franchise laws imposed by this Chapter. Except as provided in this Chapter, local ordinances establishing different rules on the manufacture, sale, purchase, transportation, possession, consumption, or other use of alcoholic beverages, or requiring additional permits or fees, are prohibited. History (1937, c. 49, s. 1; 1971, c. 872, s. 1; 1981, c. 412, s. 2; 2019-18, s. 1.) Local Modification. - (As to this Chapter) city of Concord: 1985 (Reg. Sess., 1986), c. 861, s. 1; (As to this Chapter) city of Reidsville: 1989 (Reg. Sess., 1990), c. 957, ss. 1, 5; town of Chadbourn: 1989 (Reg. Sess., 1990), c. 895, s. 5; (As to this Chapter) town of Lake Lure: 1979, c. 353, s. 5; 1987, c. 194, s. 5. Cross References. - As to the alcoholic beverages tax, see G.S. 105-113.68 et seq. Editor's Note. - Session Laws 1981, c. 412, repealed Chapter 18A , effective January 1, 1982, and enacted this Chapter in lieu thereof. Where appropriate, the historical citations to the sections of the repealed Chapter have been added to the corresponding sections of the new Chapter. Session Laws 1981, c. 412, which enacted this Chapter, as amended by Session Laws 1981, c. 747, s. 66, provided in s. 4(4) that in all places where they appeared in the General Statutes, the phrases "intoxicating liquor" and "liquor," except where "liquor" appears in the phrase "spirituous liquor," would be amended to read "alcoholic beverages." Session Laws 2014-100, s. 15.2A(a), provides: "The North Carolina Alcoholic Beverage Control Commission is hereby transferred to the Department of Public Safety. This transfer shall have all of the elements of a Type II transfer, as described in G.S. 143A-6 , except that the management functions of the ABC Commission shall not be performed under the direction and supervision of the Secretary of the Department of Public Safety." Session Laws 2014-100, s. 1.1, provides: "This act shall be known as 'The Current Operations and Capital Improvements Appropriations Act of 2014.'" Session Laws 2014-100, s. 38.4, provides: "Except for statutory changes or other provisions that clearly indicate an intention to have effects beyond the 2014-2015 fiscal year, the textual provisions of this act apply only to funds appropriated for, and activities occurring during, the 2014-2015 fiscal year." Session Laws 2014-100, s. 38.7, is a severability clause. Session Laws 2018-65, s. 5.1(a)-(e), provides: "(a) Definition. - 'Advertising Rule' means 14B NCAC 15B.1006 (Advertising of Malt Beverages, Wine and Mixed Beverages by Retailers) for purposes of this section and its implementation. "(b) Advertising Rule. - Until the effective date of the revised permanent rule that the Alcoholic Beverage Control Commission is required to adopt pursuant to subsection (d) of this section, the Commission shall implement the Advertising Rule as provided in subsection (c) of this section. "(c) Implementation. - Notwithstanding the Advertising Rule, the Commission shall allow a sports or entertainment venue with a permanently constructed seating capacity of 3,000 or more, which is not located on the campus of a school, college, or university, to display point-of-sale advertising for malt beverages and unfortified wine inside the venue that is visible from the outside of the venue, and shall not require the venue to move or remove the advertising. "(d) The Commission shall adopt rules to amend the Advertising Rule consistent with subsection (c) of this section. "(e) Sunset. - This section expires when permanent rules adopted as required by subsection (d) of this section become effective." Session Laws 2018-100, s. 2(a)-(e), provides: "(a) Definition. - 'Distressed Liquor Rules' means 14B NCAC 15A.1603 (Requirements for Storage), 14B NCAC 15A.1604 (Prohibited Practices), and 14B NCAC 15A.1701 (Removal of Beverages from ABC Stores) for purposes of this section and its implementation. "(b) Distressed Liquor Rules. - Until the effective date of the revised permanent rule that the Alcoholic Beverage Control Commission is required to adopt pursuant to subsection (d) of this section, the Commission shall implement the Distressed Liquor Rules as provided in subsection (c) of this section. "(c) Implementation. - Notwithstanding subdivisions (6) and (7) of 14B NCAC 15A.1603, subsection (b) of 14B NCAC 15A.1604 (Prohibited Practices), and subsection (b) of 14B NCAC 15A.1701 (Removal of Beverages from ABC Stores), the Commission shall not require the presence of a distiller representative for the Commission, a privately owned bonded warehouse, or a local board to destroy distressed liquor. "(d) The Commission shall adopt rules to amend the Distressed Liquor Rules consistent with subsection (c) of this section. "(e) Sunset. - This section expires when permanent rules adopted as required by subsection (d) of this section become effective." Session Laws 2018-100, s. 3(a)-(e), provides: "(a) Definition. - 'Mixed Beverages Tax Stamp Rule' means 14B NCAC 15A.1901 (Mixed Beverages Tax Stamp) for purposes of this section and its implementation. "(b) Mixed Beverages Tax Stamp Rule. - Until the effective date of the revised permanent rule that the Alcoholic Beverage Control Commission is required to adopt pursuant to subsection (d) of this section, the Commission shall implement the Mixed Beverages Tax Stamp Rule as provided in subsection (c) of this section. "(c) Implementation. - Notwithstanding subsection (b) of the Mixed Beverages Tax Stamp Rule, the Commission shall not require the mixed beverages tax stamp to be affixed to the original paper labeling of each container and shall allow the mixed beverages tax stamp to be affixed to any vertical portion of the container. "(d) The Commission shall adopt a rule to amend the Mixed Beverages Tax Stamp Rule consistent with subsection (c) of this section. "(e) Sunset. - This section expires when permanent rules adopted as required by subsection (d) of this section become effective." Sessions Laws 2018-100, s. 8(a), is a severability clause. Session Laws 2019-18 provides in its preamble: "Whereas, the General Assembly reaffirms its support of the Beer Franchise Law and the three-tier system for the distribution of malt beverages and finds that the Beer Franchise Law and the three-tier system does all of the following: "(1) Promotes consumer choice and product variety by providing a platform that enables new malt beverage products to come to market that might not otherwise be available to the consumer. These laws encourage wholesalers to make investments in their businesses necessary to expand distribution of new products and to allow large and small breweries alike an opportunity to enter the market through independent distribution. Wholesaler investments include adding resources such as warehouses, personnel, vehicles, equipment, merchandise, and marketing. Consumers have access to an exceedingly wide array of malt beverage products, unlike other industries that foster closed distribution networks and vertical integration. "(2) Promotes the growth of the craft beer industry by providing suppliers with access to markets outside of the brewery. Brewers that use wholesalers are able to instantly access and utilize a wholesaler's established infrastructure in markets they may not otherwise be able to enter. Smaller breweries further benefit because wholesalers are able to act independently to carry all brands, from large and small suppliers. The goal of these laws is to allow brewers of all sizes to fairly compete in the marketplace and to access retailers of all sizes. "(3) Helps ensure that the industry, as a whole, complies with the alcohol laws of this State. A wholesaler must remain independent and free from unfair conduct to promote responsible sales and marketing practices. Wholesaler independence also promotes and maintains fair dealing among industry participants. Ultimately, these measures protect consumers and the public from abuses that might occur absent the three-tier system. "(4) Promotes a vibrant marketplace that carefully balances fair competition with health and public safety concerns. The Beer Franchise Law and the three-tier system ensure that all three tiers operate independently and on a level playing field so that no one participant or sector of the industry becomes too dominant over the others. These laws allow for fair checks and balances in the beer industry. Wholesaler independence further creates a transparent and accountable distribution system that assists in identifying improper marketing practices and potentially unsafe products when issues arise and provides brewers that engage a wholesaler with an established means to access new markets. "(5) Prevents vertical integration of the manufacturing, distribution, and retail tiers. This still occurs in other countries today where adverse health and public safety effects are observed. The historical three-tier system model incorporated a deliberate regulatory structure that prevents monopolization. However, as the number of beer industry participants has grown substantially, it is necessary to make important adjustments to the three-tier system to promote the overall success of the beer manufacturing industry in North Carolina by recognizing the different stages of brewery development. "(6) Assists in collecting excise taxes, particularly from nonresident suppliers. While self-distributing resident breweries are required to remit excise taxes directly to the Department of Revenue, wholesalers collect and remit the excise tax on malt beverages on behalf of resident and nonresident suppliers to the Department of Revenue, totaling approximately $140 million in excise taxes each year to the State. "(7) Promotes local regulatory control, temperance, and moderate consumption of malt beverages. The three-tier system in particular incorporates features to promote healthy competition in the marketplace while minimizing overly-aggressive marketing practices, such as limits on quantity discounts, requirements of nondiscriminatory treatment among wholesalers and retailers, and limits on advertising and promotional materials. The three-tier system also provides clear chain of custody for products in distribution, which enables law enforcement to easily track products in the marketplace when issues arise. "(8) Provides a vital platform that promotes product safety for consumers. Malt beverage distributors invest heavily in infrastructure, such as modern warehouses and vehicles, that maintain product integrity during distribution. There are also strict record-keeping requirements, which enable wholesalers to readily track malt beverage products sold in the market for prompt return in the event of a product recall. "(9) Encourages wholesalers, under the Beer Franchise Law, to invest capital and labor for suppliers of all sizes, large and small, to expand into new markets with new products. Unfair or arbitrary termination is prohibited, but suppliers who are subject to the Beer Franchise Law are still afforded the ability to terminate a distribution agreement for good cause. The Beer Franchise Law inhibits forced consolidation among wholesalers. The three-tier system also affords small retailers the same market access opportunities to the same wide selection of brands that other large-scale retailers have, and on equal terms. "Whereas, the General Assembly also reaffirms its support of the craft beer industry and makes the following findings: "(1) The current small-brewery provisions of Chapter 18B of the General Statutes were intended to foster the growth of small craft breweries while simultaneously protecting wholesalers from the risk of economic uncertainty. Since the adoption of those provisions, however, the craft beer industry has seen exponential growth. The craft beer industry now provides a significant source of high-quality manufacturing and service employment and wages and generates significant tax revenue for the State. In addition, the growth of the craft beer industry has resulted in significant positive secondary impacts on the economy through increased business to a myriad of suppliers to the craft breweries, resulting in even greater employment and tax revenue for the State's citizens. "(2) It is in the best interest of the State to continue supporting the entrepreneurial spirit and economic growth driven by the craft beer industry. Yet it remains vital to preserve the integrity of the State's three-tier system. Today, mid-sized independent breweries possess only a fraction of the malt beverage market in light of increased consolidation and globalization of large suppliers. Consequently, the growth of these mid-sized independent breweries promotes economic development, employment and wages, and significant tax revenue without the same risks of harm that the three-tier system is designed to minimize. "(3) In view of these new market realities, the existing small brewery provisions of Chapter 18B of the General Statutes warrant revision. Specifically, recognition for a new category of breweries, Mid-Sized Independent Breweries, is needed to reflect the market's evolution, foster the continued growth of the craft beer industry, promote consumer choice, ensure access to market, and promote stable and healthy competition in the malt beverage industry in this State. The following legislative enactments are expressly intended to further these purposes. "Whereas, the General Assembly finds that regulation of the malt beverage industry and the objectives sought to be achieved by this act fall squarely within the authority granted to the State by the 21st Amendment to the United States Constitution and the inherent police powers of this State; Now, therefore," Session Laws 2019-18, s. 6, is a severability clause. Session Laws 2019-18, s. 7, provides: "This act does not apply to any exemption order or amendment thereto entered by the Alcoholic Beverage Control Commission prior to the effective date of this act [May 30, 2019], or to any such exemption order or amendment that is renewed or reissued by the Commission after the effective date of this act [May 30, 2019]." Session Laws 2019-182, s. 11(a)-(e), provides: "(a) Definition. - 'Discount Rule' means 14B NCAC 15B.1004 (General Prohibitions) for purposes of this section and its implementation. "(b) Discount Rule. - Until the effective date of the revised permanent rule that the Alcoholic Beverage Control Commission is required to adopt pursuant to subsection (d) of this section, the Commission shall implement the Discount Rule as provided in subsection (c) of this section. "(c) Implementation. - Notwithstanding any provision of subsection (b) of 14B NCAC 15B.1004 to the contrary, all of the following shall apply: "(1) A combination of the use of a coupon, a rebate, or a permittee's loyalty card, discount card, or membership card shall not exceed thirty-five percent (35%) of the advertised retail price for the purchase of a malt beverage or wine. "(2) A coupon or rebate shall not provide a discount exceeding thirty-five percent (35%) of the advertised retail price for the purchase of a malt beverage or wine. "(3) A loyalty card, discount card, or membership card shall not provide a discount exceeding thirty-five percent (35%) of the advertised retail price for the purchase of a malt beverage or wine. "(d) Adoption. - The Commission shall adopt rules to amend the Discount Rule consistent with subsection (c) of this section by no later than September 1, 2019. The Commission may adopt temporary rules to comply with the deadline set in this subsection. Any temporary rules adopted in accordance with this subsection shall remain in effect until permanent rules that replace the temporary rules become effective. "(e) Sunset. - This section expires when permanent rules adopted as required by subsection (d) of this section become effective." Session Laws 2019-182, s. 28, is a severability clause. Effect of Amendments. - Session Laws 2019-18, s. 1, effective May 30, 2019, added last sentence of first paragraph. Legal Periodicals. - For article, "A History of Liquor-by-the-Drink Legislation in North Carolina," see 1 Campbell L. Rev. 61 (1979). For survey of 1981 administrative law, see 60 N.C.L. Rev. 1165 (1982).