New alcohol laws transform the way local distillers do business

There has been much fanfare about the recent passage of major alcohol legislation in North Carolina, particularly here in Beer City. SB 290 passed 41-10 and was signed by Gov. Roy Cooper on July 29, and most provisions of the bipartisan law went into effect at the beginning of September.

While most of the celebration revolved around the changing of a rule to allow breweries and bars to serve two beers to a customer at a time, the law actually went a lot further than that, particularly when it comes to burgeoning local distilleries. Among the myriad tweaks and changes to the strict and often maligned alcohol control state laws, the bill saw the reins slackened a bit on local producers of alcohol.

“The biggest thing that it does is allow unlimited bottle sales for distilleries; it also allows us to mix cocktails and obtain those retail permits,” says Leah Howard, co-owner of Cultivated Cocktails, formerly H&H Distillery. With a distillery in Fairview and a downtown Asheville shop and tasting room, the laws change the way Cultivated can compete with other local booze producers, such as wineries and breweries. Those mixed beverage permits and wine licenses will allow the company to host larger events in partnership with other area distilleries.

“That opportunity wasn’t a thing before,” says Howard. “It gives us the opportunity to really showcase one another.”

Mixing it up

It also gives the business the ability to sell local beers and wines to satisfy nonliquor-loving customers who may just be tagging along with a friend who is there for the spirits. The tasting room will still function as such, she says, but visitors will also be able to drop in and grab a beer or sip a gin and tonic while they shop and explore.

“The point is to showcase these products and to allow people to be able to taste them in the capacity that you would drink them anywhere else,” she notes. “It’s a one-stop shop. You can literally get your spirits here, your beer, your wine, vermouth … and other items that are just a little more difficult to get.”

“When I look at it, the most important things are allowing us to act as a bar here,” says Eda Rhyne Distillery co-owner Rett Murphy. Eda Rhyne focuses on the niche amari, Italian-style sipping bitters like Fernet, but made with Appalachian ingredients. “Since we sell more unique products, the fact that we can now put them into a format that [customers] can understand and enjoy… people come in here, and it’s an educational experience.”

He observes that a big problem for Eda Rhyne is that visitors frequently don’t know what to do with an amaro after they buy it. It’s not as straightforward as bourbon or vodka, and while it is often consumed neat, it takes a little skill to fit it into a proper cocktail. Thus, the distillery has employed the wisdom of reputable bartenders in the area, enlisting Phoebe Esmon and Christian Gaal, who both moved to Asheville from Philadelphia, where they ran cocktail bars. Esmon headed the cocktail programs at Cúrate and Nightbell before the latter shuttered at the start of the year.

Murphy says the two plan on using the distillery as an extension of the bar, implementing only spirits made on-site, and the new laws allow Eda Rhyne to produce liquors that will be used only on the premises. This is a big improvement from the previous law, which required distilleries to sell their products to the state then buy them back from an ABC store to pour in their own tasting rooms.

So while Eda Rhyne’s new spicebush vodka might not hit the shelves of stores, it will be available at the distillery to taste in a cocktail. Distillery venues, however, have limited hours — the law requires them to close at the same time as an ABC store, 9 p.m.

Previous legislation required that any product that didn’t make a certain level of profit for the ABC system in a calendar year would be delisted and not available on the market. That hit Eda Rhyne directly, because its nocino — a walnut liqueur — was an extremely niche, time-demanding product. “We only made 1,000 bottles of it,” Murphy says. As a result, that intricately crafted product went away, not because there wasn’t a demand, but because the distillery was limited as to how much it could make, and the state required a higher yield.

Grain to glass

Not all distilleries are going the route of a full-on bar, however. At Oak & Grist, owner William Goldberg is taking things a bit slower. “We’ve introduced some cocktails in our tasting room,” he says. “We’re not going the full mixed beverage route quite yet.

“Our model has always been all about the spirits, about making it from scratch, grain to glass,” he continues. “Everything else is just an add-on for us; to us it’s about the spirit.”

For Goldberg, the most important change from the new legislation is that customers are now able to purchase multiple bottles. In the past, distilleries were limited to selling one bottle to a customer per year, an attempt to limit most of the state-controlled alcohol sales to a state-run ABC store. “For us, being out on the outskirts of town, when people come and visit us, oftentimes we hear that they are coming out specifically for us,” he says. “They’ve made that drive to us.”

But it’s not all roses now for the distilleries in the region, Goldberg observes. “The biggest thing that I wish had been left in the bill was to have been able to ship directly to consumers outside of North Carolina,” he says. While wineries and breweries are able to ship, distilleries are not.

Goldberg notes that he has received requests for shipping from customers as far away as New Zealand and Israel wanting to restock on the purchases they made while visiting Asheville, but Oak & Grist cannot legally fulfill those orders. So to both the producers and those distant customers, North Carolina liquor products feel stuck in the mountains.

Additionally, it remains to be seen how the laws will ultimately be applied. “All of these laws will come with rules that are currently being talked over in Raleigh,” says Howard, noting that the ABC Commission has contracted attorney Walker Reagan to help establish standards under which the laws will function. That leaves distillers questioning what those finer points might look like. As Goldberg queries, though the law says distilleries can serve cocktails, will there be a size limit to those drinks? And what about their potency?

In an emailed statement to Xpress, ABC Commission spokesperson Jeff Strickland explains, “This session, the ABC Commission has identified 17 separate sets of rules that may be needed related to alcohol legislation. We are now in the process of going through the legislation to determine what existing rules need to be changed and what new rules may be needed.”

Once the rules have been drafted and feedback has been received, they will be published in the North Carolina Register then presented at a public hearing, eventually to be adopted after approval from the Rules Review Commission. “When the law does not define what terms mean or specify the process to accomplish what the law intends, rules are needed to fill in the gaps,” Strickland notes.