by Anna Manning
In the latest research spotlight report, John Locke Foundation’s Jon Sanders explains how North Carolina’s ABC system works and makes the case for why it should be modernized:
Did you know that North Carolina used to be the nation’s leader in locally owned and operated distilleries? It’s true. In 1904 the state had 745 registered distilleries, 540 of which were operating.1 And they were all outlawed, an entire industry destroyed, by a series of laws culminating in voters passing the first statewide prohibition in the South in 1908.2
Here’s a signature state industry that has only just started coming back. They were legalized again in 1979, but the first one didn’t open until 2005.3 Now there are 57 distilleries in production in North Carolina.4
In 1933, federal Prohibition came to an end when the 21st Amendment was ratified (without North Carolina’s help). North Carolina wanted to maintain tight control over liquor sales. A legislative study commission recommended government control over the liquor market out of distrust of private retailers, which led to the Alcohol Beverage Control Act of 1937.5 Its passage officially ended Prohibition in North Carolina and established North Carolina as a control state.
What that means for North Carolina is, the state determines which liquor products from which distilleries may be sold at which prices, owns the central liquor warehouse, and contracts out the management of the warehouse. North Carolina is one of 17 states with government control over the wholesale distribution of liquor, and one of only 13 states with government control over retail distribution.6
The rest of the states have license systems. Wholesale distribution and retail sales of liquor are handled by private enterprises that are licensed by the state.
Read more here, including how less regulated industry, like breweries and wineries, are growing while distilleries suffer from red tape, regulation, and oppressed opportunity.