By L.A. Williams, Correspondent
Christian Action League
RALEIGH — The N.C. House addressed shortcomings of the state’s Alcoholic Beverage Control system Tuesday, passing a bill that would increase oversight of local ABC boards and give the state Commission both more responsibility and authority. It would also give new ABC stores a better chance at survival by increasing to 1,000 the voter threshold for referendums to establish them.
“This is a thorough bill that should help North Carolina’s unique control system continue to serve our state for years to come,” said the Rev. Mark Creech, executive director of the Christian Action League. “We are pleased that lawmakers are choosing to make changes in an already strong system rather than giving up control and turning to privatization.”
The bill includes some recommendations from a 2008 study by the General Assembly’s Program Evaluation Division and addresses concerns regarding inappropriately high general manager salaries and ethics violations at the local level. Media reports on these issues last year prompted the formation of a Joint Study Committee which held five meetings and heard from more than 50 speakers during public hearings.
The bill sponsor and supporters stressed the number of stakeholders that had contributed to its content and the number of compromises required to reach consensus.
“This bill reminds me of squeezing a blown-up balloon,” said Rep. Marvin Lucas (D-Cumberland) as he referred to months of “delicate negotiations” required to bring it to the table. “Each time you’d squeeze it someone would complain or another configuration would evolve.”
If it passes the Senate, the bill will put local ABC boards under the same ethics policies as other local boards and empower the ABC Commission to adopt rules and performance standards. It will also set up specific procedures for removing local board members for cause. Additionally, the legislation calls for much more detailed budgeting at the local level with increased reporting to appointing authorities, the Commission and the public.
Prior to voting on the bill, House members approved an amendment to raise the voter threshold from 500 to 1,000 for a town to be able to hold an ABC store referendum. The goal was to keep towns too small to support an ABC store from opening one in the first place and thereby keep failing stores from bleeding the system’s profits. Early versions of the proposed legislation had suggested moving the threshold from 500 to 5,000, but met with opposition in committee.
The only part of the bill that seemed to raise concerns on the House floor Tuesday was Section 25 which deals with the relationship between wineries and distributors and led Rep. Jane Whilden (D-Buncombe), to float an amendment to delay that provision’s effective date for a year.
Whilden said wineries in her district wanted the extra time to prepare for the change and see how a related court case would be settled. But Rep. Ray Warren (D-Alexander), the bill’s sponsor, said it is time that wineries become part of the three-tier system that already governs most alcohol sales. He said the provision would protect distributors who have marketed a product, often spending millions of dollars to advertise a certain brand — from having that brand taken from them by “an out-of-state or out-of-country entity moving in and purchasing a winery here and then selecting new distributors.”
Other lawmakers with wineries in their districts questioned the wisdom of the “Obligations of purchaser” section and what effects it would have on the wine industry.
Steve Metcalf, representing The Wine Institute, said Wednesday that wineries wanted more time to address their concerns.
“We just want lawmakers to slow it down, take that part out until the long session and then if they want to pick it back up, fine,” Metcalf said. “This section has nothing to do with reform of the ABC system so this bill is really not the proper vehicle for it.”
But Dean Plunkett, executive director of the North Carolina Beer and Wine Wholesalers Association, said the provision is needed to close a loophole that presents a “clear and present danger” to the state’s wine wholesalers and would not change the way Tar Heel wineries do business, but would only effect international wineries. He said there is no need to wait for the outcome of a lawsuit involving The Country Vintner of North Carolina and E.&J. Gallo Winery because the state law would not be retroactive.
“We have checked with contract lawyers and lawyers familiar with the three-tier system and they have clearly stated that this legislation will not effect this law suit,” Plunkett said. “Instead, it is about being proactive, to try to prevent future lawsuits.”
The provision was not part of the original version of the bill filed in May, but was added June 9 as part of a Committee Substitute that received a favorable recommendation from the House ABC Committee.
Rep. W.A. Wilkins (D-Durham) reminded fellow lawmakers that the bill had won approval from the ABC and State Government/State Personnel committees where amendments led to what he called a “well thought out product.”
The bill is expected to be taken up by the Senate’s Judiciary II committee as early as Tuesday.