Part I.

Amends GS Chapter 18B (Chapter), Regulation of Alcoholic Beverages, as follows.

Amends the definitions used in the Chapter by deleting the following terms: ABC system, antique spirituous liquor, antique spirituous liquor seller, bailment surcharge, finance officer, general manager, and local board. Amends the definition of special ABC areas to remove reference to the approval or establishment of ABC stores and instead refers to areas where the off-premises sale of spirituous liquor is lawful.

Amends the duties of the North Carolina Alcoholic Beverage Control Commission (Commission) by (1) removing all duties related to ABC stores, including the authority to approve or disapprove the opening and location of ABC stores; (2) removing duties related to local ABC boards, including promulgating rules to establish performance standards for local boards; (3) removing authority to provide for the distribution of spirituous liquor to installations of the Armed Forces and to the Eastern Band of Cherokee Indians; and (4) removing duties related to Commission warehouses. Makes conforming changes throughout the Chapter by removing provisions related to ABC stores, local boards, and the operation of a warehouse. Amends GS 18B-112 to allow the Eastern Band of Cherokee Indians tribe to adopt an ordinance allowing for the sale of spirituous liquor beginning at 10am on Sunday under the licensed premises’ permit. Makes conforming changes.

Amends GS 18B-600 to allow a county to hold an off-premises spirituous liquor election instead of an ABC store election. Allows a county to hold a mixed beverage election only if the county already voted to allow the off-premises sale of spirituous liquor or a county election on off-premises spirituous liquor is to be held at the same time as the mixed beverage election. Makes the conforming changes to when a city may hold a malt beverage or unfortified wine election. Allows a city to hold an off-premises spirituous liquor election if (1) the city has at least 1,000 registered voters and (2) the county in which the city is located does not allow the of-premises sale of spirituous liquor. Makes conforming changes to city mixed beverages elections, small city mixed beverage elections, ski resorts elections, small town mixed beverages elections, multicounty/city elections, small resort town elections, township elections, and beautification district elections. Provides in GS 18B-603 that if an off-premises spirituous liquor election is held and the off-premises sale of spirituous liquor is approved, the Commission may issue off-premises spirituous liquor permits to qualified persons and establishments in the jurisdiction. Makes conforming changes throughout the Chapter to refer to these elections.

Amends GS 18B-1001 to allow the Commission to issue an off-premises spirituous liquor permit that authorizes (1) the retail sale of spirituous liquor in the manufacturer's original container for consumption off the premises and (2) the holder of the permit to ship spirituous liquor in closed containers to individual purchasers inside and outside the state. Prohibits any person, firm, or corporation from having interest in more than 30% of the number of off-premises spirituous liquor permits authorized for issuance in an eligible county or municipality. Allows issuance of the permit to: (1) food businesses; (2) retail businesses; or (3) if a food business or retail business does not seek or qualify for an off-premises spirituous liquor permit in an eligible county or municipality, then to the governing board of the county or municipality. Amends GS 18B-1100 to allow the Commission to issue spirituous liquor wholesaler and nonresident spirituous liquor vendor permits. Amends GS 18B-1002 by removing the authority to issue an antique spirituous liquor permit. Sets the following application fees: (1) $1,000 for an off-premises spirituous liquor permit, (2) $1,000 for a spirituous liquor wholesaler permit, and (3) $5,000 for a nonresident spirituous liquor vendor permit. Makes conforming changes throughout to make existing provisions also applicable to spirituous liquor.

Sets the total number of off-premises spirituous liquor permits available for issuance as the sum of: (1) 1,500 base permits and (2) beginning January 1, 2021, and annually thereafter, the Commission shall make available for issuance in a county or municipality one off-premises  spirituous liquor permit for each additional 7,500 person increase over the population in that county or municipality as of April 1, 2010, and requires the Commission to make additional off-premises spirituous liquor permits available for issuance on the basis of population for any  county or municipality that holds an election in which the majority votes for the sale of off-premises spirituous liquor. Requires the Commission to make available for issuance one base permit to each county and municipality for each ABC store established and operating in the county or municipality as of January 1, 2019. Provides that if there are more applicants than the available number of off-premises spirituous liquor permits, the Commission must use a method of double random selection by public drawing to determine which applicants are to be considered for issuance of permits. Sets out additional requirements for this process, including requiring an additional $100 filing fee.

Amends GS 18B-902 concerning ABC permit applications by adding the requirement that the Commission make all forms necessary to apply for and receive a permit available on the Commission’s website, and requires the Commission to allow for electronic submission of these forms. Allows the Commission to charge a processing fee of up to $5.

Enacts new GS 18B-1003.1 to require each off-premises spirituous liquor permittee to display warning signs on the store’s premises to inform the public of the effects of alcohol consumption during pregnancy. Sets out requirements for the signs.

Amends GS 18B-1105 to add the following to the authority of a distiller permit holder. Allows the holder to sell, deliver, and ship spirituous liquor in closed containers to licensed wholesalers, except that spirituous liquor may be sold to exporters and nonresident wholesalers only when the purchase is not for resale in this state. Specifies that this does note prohibit a permit holder from selling spirituous liquor to a nonresident wholesaler, nonresident spirituous liquor vendor, bottler, or other similar party for resale in this state if the spirituous liquor is shipped from the distillery to wholesalers licensed under this Chapter. Allows the permit holder to receive, in closed containers, and sell at the distillery, spirituous liquor produced inside or outside North Carolina under contract with a contract distillery. Makes the contract distillery that manufactures the spirituous liquor be responsible for all aspects associated with manufacturing the product. Allows the contract spirituous liquor to be sold at affiliated retail outlets of the distillery physically located on or adjacent to the distillery. Requires any spirituous liquor received from a contract distillery under these provisions to be made available for sale by the distillery to wholesalers for distribution to retailers in the same manner as if the spirituous liquor was being imported by the distillery. Allows contract distilling between affiliated distilleries. Allows the permit holder to obtain a spirituous liquor wholesaler permit to sell, deliver, and ship at wholesale only spirituous liquor manufactured by the distillery, applicable to a distillery that sells, to consumers at the distillery, to wholesalers, to retailers, and to exporters, fewer than 100,000 proof gallons of spirituous liquor produced by it per year. Also allows a distillery not exceeding this sales quantity limitation to sell the spirituous liquor manufactured by the distillery, and malt beverages, at not more than three other locations in the state, where the sale is legal, upon obtaining the appropriate permits. Requires a distillery permit holder who obtains a spirituous liquor wholesaler permit to provide a sales report to the Commission within 60 days of such a request; lists what is to be included in the report.

Amends GS 18B-1105.1 to allow the holder of a liquor importer/bottler permit to (1) import spirituous liquor from outside the United States in closed containers; (2) bottle, package, or label in this state spirituous liquor imported under this statute; (3) store the spirituous liquor; and (4) sell the spirituous liquor to spirituous liquor wholesalers for resale. Deletes all other existing provisions of the statute.

Enacts new GS 18B-1109.1 to authorize a spirituous liquor wholesale permit holder to: (1) receive, possess, and transport shipments of spirituous liquor; (2) sell, deliver, and ship, in closed containers and in quantities of one case or container or more, spirituous liquor of any brand filed pursuant to GS 18B-1403(a) to wholesalers or retailers licensed under this Chapter, as authorized by the ABC laws; (3) furnish and sell spirituous liquor filed pursuant to GS 18B-1403(a) to its employees subject to the rules of the Commission and the Department of Revenue; and (4) in locations where the sale is legal, furnish spirituous liquor of any brand filed pursuant to GS 18B-1403(a) to guests and any other person who does not hold an ABC permit, for promotional purposes, subject to the Commission’s rules.

Amends GS 18B-1111 to allow the holder of a salesman permit to sell and transport spirituous liquor for a spirituous liquor wholesaler.

Enacts new GS 18B-113.1 to allow the holder of a nonresident spirituous liquor vendor permit to sell, deliver, and ship spirituous liquor in this state only to wholesalers, importers, and bottlers licensed under this Chapter, as authorized by the ABC laws. Allows such a permit to be issued to a distillery, an importer, or a bottler outside North Carolina who desires to sell, deliver, and ship spirituous liquor into this state.

Amends GS 18B-1115, concerning commercial transportation, to prohibit obtaining a permit to transport spirituous liquor unless the transportation is for delivery to a federal reservation over which the State has ceded jurisdiction to the United States, for delivery to a spirituous liquor wholesaler, for delivery to an off-premises spirituous liquor permit holder, for delivery to a mixed beverages permit holder, or for transport through this state to another. Makes additional conforming changes.

Enacts new Article 14, Spirituous Liquor Franchise Law. Sets out purpose of the Article. Sets out exemptions from specified provisions of the Article for a distillery holding a valid spirituous liquor wholesaler permit when acting as its own master wholesaler. Sets out six conditions that constitute prima facie evidence of an agreement (defined as a commercial relationship between a spirituous liquor wholesaler and a distillery). Prohibits a distiller from (1) inducing, coercing, or attempting to do so, any spirituous liquor wholesaler to accept delivery of any alcoholic beverage or any other commodity which has not been ordered by the spirituous liquor wholesaler;  (2) inducing, coercing, or attempting to, any spirituous liquor wholesaler to do any illegal act by any means, including threatening to amend, cancel, terminate, or refuse to renew any agreement existing between a distillery and a spirituous liquor wholesaler; (3) requiring a spirituous liquor wholesaler to assent to any condition, stipulation, or provision limiting the wholesaler in his or her privilege to sell a product offered by any other distillery; or (4) unlawfully discriminating on the basis of race, color, creed, sex, religion, or national origin in awarding or maintaining agreements covered by this Article. Requires each agreement to designate the wholesaler’s sales territory and prohibits a distillery from entering into more than one agreement for each brand of spirituous liquor or beverage it offers in any territory. Prohibits a wholesaler from distributing any brand of spirituous liquor to a retailer whose premises are located outside the territory designated in the agreement for that brand. Allows, with the Commission’s approval, a wholesaler to distribute spirituous liquor outside the wholesaler's designated territory during periods of temporary service interruption when requested to do so by the distillery and the wholesaler whose service is interrupted. Requires, upon request from a retail permit holder, each wholesaler to make a good-faith effort to make available any brand of spirituous liquor the wholesaler is authorized to distribute in the territory.

Prohibits a distillery from amending, canceling, terminating, or refusing to continue to renew any agreement, or cause a wholesaler to resign from an agreement, unless good cause exists for amendment, termination, cancellation, nonrenewal, noncontinuation, or resignation. Sets out what constitutes good cause. Places the burden of proving good cause on the distillery.

Requires a distillery to give a wholesaler at least 90 days' prior written notice of any intention to amend, terminate, cancel, or not renew any agreement; sets out an exception to the notice requirement in five specified circumstances, including bankruptcy or receivership of the wholesaler, or revocation of the wholesaler’s permit or license. Provides that when the reasons relate to conditions that can be rectified by the wholesaler, he or she has 60 days in which to do so; sets out additional requirements for such situations.

Prohibits a distillery from unreasonably withholding or delaying consent to any transfer of the wholesaler's business or transfer of the stock or other interest in the wholesaleship whenever the wholesaler to be substituted meets the material and reasonable qualifications and standards required of the distillery's wholesalers. Prohibits a distillery from withholding consent to, or in any manner retaining a right of prior approval of, the transfer of the wholesaler's business to a member or members of the family of the wholesaler.

Allows a wholesaler to sue a distillery that violates the Article. Allows a court to grant injunctive and other appropriate relief, including damages to compensate the wholesaler for the value of the agreement and any good will, to remedy violations of this Article. Requires any distillery that amends, cancels, terminates, or refuses to renew any distillery agreement, or causes a wholesaler to resign from an agreement, to compensate the spirituous liquor wholesaler for the spirituous liquor wholesaler's spirituous liquor inventory. Sets out actions the Commission may take against a distillery that violates this Article.

Prohibits a distillery from directly or indirectly fixing or maintaining the prices at which the wholesaler may sell any spirituous liquor or beverage.

Prohibits retaliatory action against a wholesaler who files or manifests an intention to file a complaint alleging that the distillery violated a State or federal law or rule.

Prohibits a distillery from requiring or prohibiting any change in management or personnel of any wholesaler unless the current or potential management or personnel fails to meet reasonable qualifications and standards required by the distillery.

Prohibits a distillery from discriminating among its wholesalers in any business dealings, unless the classification among its wholesalers is based upon reasonable grounds.

Makes the purchaser of a distillery, and any successor to the import rights of a distillery, obligated to all the terms and conditions of an agreement in effect on the date of the purchase or other acquisition of the right to distribute a brand, except for good cause.

Makes it a violation of the Article for a distillery to: (1) restrict the sale of any equity or indebtedness or the transfer of any securities of any wholesaler or in any way prevent or attempt to prevent the transfer, sale, or issuance of shares of stock or indebtedness to employees,  personnel of the wholesaler, or heirs of the principal owner, as long as basic financial requirements of the distillery are complied with and the sale, transfer, or issuance does not have the effect of accomplishing a sale of the wholesaler; (2) impose unreasonable standards of performance upon a wholesaler; or (3) prohibit directly or indirectly the right of free association among wholesalers for any lawful purpose.

Makes conforming repeals of the following: GS 18B-204 (State warehouse); GS 18B-205 (accounts and reports required); GS 18B-501 (local ABC officers); GS 18B-902(d)(43) (Antique spirituous liquor permit fee); GS 18B-1001(20) (Antique spirituous liquor permit); Article 7 (local ABC boards); Article 8 (operation of ABC stores); GS 105-113.68(a)(4a) (defining Antique spirituous liquor); GS 105-113.107(d) (tax levied on illicit mixed beverages); and GS 105-113.108(b)(4) (concerning illicit mixed beverage reporting).

Deems any city or county that has authorized the establishment and operation of an ABC store in accordance with Article 6 of this Chapter as of the effective date of this Part to have authorized the off-premises sale of spirituous liquor for purposes of Article 6.

This Part is effective January 1, 2020.

Part II.

Amends GS 105-113.68 to modify the definition of wholesaler or importer as used in Article 2C, Alcoholic Beverage License and Excise Taxes. Now includes resident distilleries that produce fewer than 100,000 proof gallons of spirituous liquor per year when the term is used with reference to wholesalers or importers of spirituous liquor.

Amends GS 105-113.77 and GS 113.78 to provide for a $15 city tax for an off-premises spirituous liquor license, and a $25 county tax for an off-premises spirituous liquor license.

Amends GS 105-113.79 to authorize a city to charge an annual tax of up to $37.50 for a city spirituous liquor wholesaler license.

Changes the excise tax of spirituous liquor set out in GS 105-113.80 to $28 per gallon (was 30% of the seller’s price). Makes conforming changes.

Amends GS 105-113.81 to expand the scope of the four existing exemptions from excise tax on malt beverages and wine (unsalable by major disaster, sales to oceangoing vessels, sales to US Armed Forces, and out-of-state sales) to exempt sales of spirituous liquor under the same circumstances.

Amends GS 105-113.82 to require the Secretary of Revenue (Secretary) to distribute 25 percent of the net excise tax proceeds collected on spirituous liquor to the counties or cities where the sale is authorized, with both the county and city receiving distributions allocated based on population in circumstances where retail sales are authorized in both the city and the county, or solely to the city if otherwise prohibited in the county. Additionally, provides that in a county in which the off-premises sale of spirituous liquor is lawful, the revenue is distributed as if the entire county approved retail sales. Restricts the use of funds distributed to counties and cities for taxes levied on spirituous liquor to: 4 percent for the treatment of alcoholism and substance abuse, 15 percent for research or education on alcohol or substance abuse, and 11 percent for costs incurred by local law enforcement from enforcing ABC laws (GS Chapter 18B). Allows any remaining funds to be used for any public purpose. Further, requires the Secretary to annually distribute the following amounts of the net excise taxes collected on spirituous liquor during the preceding year: $2 million to the Department of Health and Human Services for the treatment of alcoholism or substance abuse, or for research or education on alcohol or substance abuse and $8.5 million to the ABC Commission to be used for the operating and administrative costs of the Commission.

Amends GS 105-113.83 to require the resident wholesale or importer who first handles the liquor in the state to pay the Secretary the excise tax monthly, payable on or before the 15th day of the month following the month in which the liquor is first sold or otherwise disposed of in the state by the wholesaler or importer. Limits the tax to one time on the same liquor, and requires the wholesaler or importer to submit verified sale report records to the Secretary for the month in which the taxes are paid, as specified.

Makes conforming changes to GS 105-164.4 concerning the privilege tax for certain retailers.

Amends GS 105-113.106, which sets forth the definitions applicable to Article 2D, Unauthorized Substances Taxes. Removes illicit mixed beverage from the term unauthorized substance. Makes conforming changes.

Applies to the sale of spirituous liquor on or after January 1, 2020.

Part III.

Amends GS 66-58 concerning the sale of merchandise or services by governmental units. Specifies that the statute does not prohibit the off-premises sale of spirituous liquor by a county or municipality under the authority of GS 18B-1001.

Makes conforming changes to GS 20-187.2, GS 147-69.3, and GS 105-251.2.

Amends GS 153A-145.7 and GS 160A-205.3 to authorize counties and cities to adopt an ordinance allowing for the sale of spirituous liquor beginning at 10:00 a.m. on Sunday pursuant to permits issued under GS 18B-1001.

Effective January 1, 2020.

Part IV.

Directs the Commission to sell the State warehouse by January 1, 2020. Further directs the Commission to sell any spirituous liquor within its possession. Mandates the Commission to sell the warehouse and spirituous liquor by public sale to the highest bidder(s). Limits sales of spirituous liquor to permitted spirituous liquor wholesalers. Directs that proceeds be credited to the General Fund and remain unspent until appropriated.

Similarly, directs local ABC boards to liquidate all assets by public sale to the highest bidder(s) by January 1, 2020. Limits sales of spirituous liquor to permitted spirituous liquor wholesalers. Specifies that local boards remain subject to any liabilities arising or remaining from the liquidation.  Directs that proceeds be paid to the general fund of the local board’s respective county or municipality and restrict use of the proceeds to capital expenses for public schools located within the county or municipality.