Just over 100 years ago North Carolina led our nation’s liquor industry with 540 distilleries before Prohibition shut them down. Now, that same promising market is reemerging, but the Tar Heel State has a long way to go to reclaim its former dominance.
We can start by uncapping some vintage Prohibition-era regulations.
There’s little doubt that the state is missing out. From 2011 to 2014, the number of distilleries across the country tripled. Craft distilleries made their mark by producing distinct, artisanal spirits, creating their own market for tours and tastings.
North Carolina could catch up to – and surpass – other states if it reformed the regulatory regime that limits how much and to whom distilleries can sell their products. One recent change shows what’s possible. Until last October, if a tour visitor liked a product he sampled at a local distillery, the distiller’s only recourse was to offer his potential customer directions to the nearest retailer.
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Fortunately, state lawmakers passed legislation last summer allowing craft distilleries to sell their products directly to customers. This sensible change is already making a difference: Today our state has more than 30 distilleries, up from 13 just three years ago, that have begun to expand their businesses.
But, there’s still a catch. Distilleries may only sell one bottle of liquor to each customer per year.
This sales cap tilts the scales in favor of the only other people who can sell their products – state-run liquor stores.
When the new law took effect last October, critics argued distillers would “steal” sales from retailers. On the contrary, our state-run Alcoholic Beverage Control Board stores did $7 million more in retail sales than the previous October. It wasn’t a fluke, either. ABC retail sales in the first four months of 2016 increased 8 percent from the same period in 2015.
If anything, allowing distillers to sell consumers a taste created new customers and drove them to spend more at ABC stores. That’s why legislators should continue reforming or repealing outdated regulations.
Other states that got rid of similar restrictions have already tasted the ensuing success. Three years after Ohio loosened distillery regulations, the number of small-production distilleries there grew sevenfold. And when California and Florida enacted similar deregulations, they attracted new distilleries and even enabled current facilities to expand.
Expanding sales can open new markets, creating more local jobs in the state and boosting economic growth. But as long as distillers’ sales are limited, they will continue to lag behind their competitors. It’s time we loosen the cap on distillery regulations and reclaim our lead in the industry.
Bryson is North Carolina state director of Americans for Prosperity.