The history and next steps of North Carolina’s ABC system

Welcome back. Tomorrow is March 17, which for most of the period since the 17^th century was associated with a feast honoring St. Patrick and a brief respite from the strictures of Lent.
 
But in recent decades, St. Patrick’s Day has become popularly known for green beer and parades. It’s in that spirit that we’ll focus today’s analysis on North Carolina’s alcohol laws. Though those laws can’t trace their roots as far back as St. Patrick’s Day, they are certainly a relic of a bygone era.
 
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It’s difficult to fathom a system more centralized and less aligned with basic capitalism than North Carolina’s state-run alcohol scheme. State regulators – appointed, not elected – decide who can sell alcohol, how much they can sell, and at what prices. They also decide whose alcohol can be sold.
 
North Carolina has a long and sordid history with alcohol regulation. The state banned alcohol in 1909, years before the 18^th Amendment came into effect. But the roots of that decision – and the politics behind it – began many decades earlier. (The Wilmington Star-News has an excellent primer worth reading, which we won’t detail in full.)
 
After enactment of the 21^st Amendment, which repealed nationwide prohibition, North Carolina still enforced state laws banning alcohol sale and distribution. “By 1935,” the Star-News recounts, “North Carolina legislators observed that two-thirds of the state’s population lived within 50 miles of either the Virginia or South Carolina lines. Apparently, a lot of them were crossing those lines to buy booze legally – taking huge sums of money, potential tax dollars, out of the state with them.”
 
That year, the General Assembly authorized a number of counties to hold referenda to decide whether to permit alcohol sales. The counties that voted to permit sales still tightly controlled distribution through government-run stores. Thus began what turned into a statewide alcohol bureaucracy – the Alcohol Beverage Control (ABC) Commission.
 
State rules have tinkered around the edges of that 1930s-era regime – by permitting consumers to select their own bottles off shelves, for example, which came into effect in 1976. But the basic structure of tight government control over the market remains intact.
 
Today, if an entrepreneurial North Carolinian wishes to produce his own liquor, he must win approval from the ABC Commission before ABC stores can stock it on their shelves. And selling his own liquor at his own distillery is fraught with complex rules and restrictions. Even a Bolshevik might blush.
 
For consumers and business owners, North Carolina’s tightly controlled market means an inefficient system and some products that are simply impossible to find here.
 
Bar owners complain that state regulations require them to purchase liquor from government regulators and lay out the cash in advance, while delivery of their purchase might take months. “[The ABC system] is an archaic, terrible system that should be destroyed,” a bar owner told Raleigh Magazine. “I’ve been dealing with it for so long and seen so much and it’s just ridiculous.”
 
Connoisseurs complain they can’t find particular brands anywhere in the state, though they’re readily available across the border in South Carolina. Want to purchase a spirit online and have it shipped to your North Carolinian homestead? Illegal. When state regulators discover an out of state retailer that ships here – they aren’t added to our Christmas card list, they get a threatening cease and desist letter. 
 
And then there are the rumors. I heard so-and-so snagged a bottle of Blanton’s. He must know someone on the inside. Whether those in charge of the state’s alcohol really do dispel rare supply to close friends is immaterial (though one wonders what a proper audit might reveal of how much allocated product actually makes it to the shelf). Many widely assume the corruption exists anyway because of how the system is arranged.
 
In part for these reasons, lawmakers have begun chipping away at the ABC system in recent years. Most recently, in 2023, Senators Tim Moffitt and Todd Johnson introduced an omnibus reform bill. A sampling of the reform measures only confirms how utterly state centralized this segment of our economy truly is. The bill would:

• Allow spending on product displays at ABC stores to increase from $300 to $1,000;
• Allow industry members to showcase branded coolers in stores so long as each brand spends less than $1,500;
• Allow bar owners to buy their liquor from any ABC store in their county, instead of just one;
• Allows distilleries to sell two drinks per person per day, instead of just one.

A number of other measures were introduced last year, and law/lobbying firm Williams Mullen has a good rundown.
 
North Carolina’s state-centralized alcohol system is so embedded it will prove difficult to uproot. Still, momentum for doing away with it seems to be slowly building. In the coming years, perhaps a North Carolina distillery owner will be able to sell her product in stores of her choosing, and without prior government review. Perhaps a North Carolina consumer will be able to buy his favorite bourbon without secreting away across state lines. And, perhaps, the thought of an entrepreneur being able to start a business that sells spirituous liquor, stock, price and display his own products – may soon become a thought that isn’t too far out of reach. 
 
The state’s current system has been in place for nearly a century. It’s probably time for a change.