SL 2018-100 (HB 500)

GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2017

SESSION LAW 2018-100

HOUSE BILL 500

AN ACT TO make various changes to the alcoholic beverage control laws.

The General Assembly of North Carolina enacts:

ALLOW AN ABC PERMITTEE TO TASTE ALCOHOLIC BEVERAGES FOR QUALITY CONTROL AT PREMISES OTHER THAN THE PERMITTEE'S LICENSED COMMERCIAL PREMISES

SECTION 1. G.S. 18B‑1121 reads as rewritten:

"§ 18B‑1121. Authority to sample for sensory analysis, quality control, or educational purposes.

Except as otherwise prohibited under Article 3 of this Chapter, a commercial permittee licensed under this Article, or its agent or employee, may consume samples of alcoholic beverages it is licensed to sell, free of charge, ~~on its premises~~ for purposes of sensory analysis, quality control, or ~~education.~~education on any of the following premises:

(1) The permittee's premises licensed for commercial activity under Article 11 of this Chapter.

(2) The permittee's premises licensed for retail activity under Article 10 of this Chapter, if the commercial permittee is authorized to hold a retail permit under Article 11 of this Chapter and the commercial permittee has obtained the appropriate retail permit under G.S. 18B‑1001.

(3) The premises of a special one‑time permittee under G.S. 18B‑1002.

(4) The premises of a special event where a commercial permittee is participating pursuant to a permit issued under G.S. 18B‑1114.1 or G.S. 18B‑1114.5."

CLARIFY THAT A DISTILLER REPRESENTATIVE'S PRESENCE IS NOT REQUIRED TO DESTROY DAMAGED OR DISTRESSED ALCOHOLIC BEVERAGES

SECTION 2.(a) Definition. – "Distressed Liquor Rules" means 14B NCAC 15A .1603 (Requirements for Storage), 14B NCAC 15A .1604 (Prohibited Practices), and 14B NCAC 15A .1701 (Removal of Beverages from ABC Stores) for purposes of this section and its implementation.

SECTION 2.(b) Distressed Liquor Rules. – Until the effective date of the revised permanent rule that the Alcoholic Beverage Control Commission is required to adopt pursuant to subsection (d) of this section, the Commission shall implement the Distressed Liquor Rules as provided in subsection (c) of this section.

SECTION 2.(c) Implementation. – Notwithstanding subdivisions (6) and (7) of 14B NCAC 15A .1603, subsection (b) of 14B NCAC 15A .1604 (Prohibited Practices), and subsection (b) of 14B NCAC 15A .1701 (Removal of Beverages from ABC Stores), the Commission shall not require the presence of a distiller representative for the Commission, a privately owned bonded warehouse, or a local board to destroy distressed liquor.

SECTION 2.(d) The Commission shall adopt rules to amend the Distressed Liquor Rules consistent with subsection (c) of this section.

SECTION 2.(e) Sunset. – This section expires when permanent rules adopted as required by subsection (d) of this section become effective.

ALLOW PLACEMENT OF MIXED BEVERAGES TAX STAMP ON ANY VERTICAL PORTION OF A SPIRITUOUS LIQUOR BOTTLE

SECTION 3.(a) Definition. – "Mixed Beverages Tax Stamp Rule" means 14B NCAC 15A .1901 (Mixed Beverages Tax Stamp) for purposes of this section and its implementation.

SECTION 3.(b) Mixed Beverages Tax Stamp Rule. – Until the effective date of the revised permanent rule that the Alcoholic Beverage Control Commission is required to adopt pursuant to subsection (d) of this section, the Commission shall implement the Mixed Beverages Tax Stamp Rule as provided in subsection (c) of this section.

SECTION 3.(c) Implementation. – Notwithstanding subsection (b) of the Mixed Beverages Tax Stamp Rule, the Commission shall not require the mixed beverages tax stamp to be affixed to the original paper labeling of each container and shall allow the mixed beverages tax stamp to be affixed to any vertical portion of the container.

SECTION 3.(d) The Commission shall adopt a rule to amend the Mixed Beverages Tax Stamp Rule consistent with subsection (c) of this section.

SECTION 3.(e) Sunset. – This section expires when permanent rules adopted as required by subsection (d) of this section become effective.

AMENDMENTS TO ESTABLISHMENT AND PREMISES DEFINITIONS FOR RETAIL PERMITTING

SECTION 4.(a) G.S. 18B‑1000 reads as rewritten:

"§ 18B‑1000. Definitions concerning establishments.

The following requirements and definitions shall apply to this Chapter:

(1) Community theatre. – An establishment owned and operated by a bona fide nonprofit organization that is engaged solely in the business of sponsoring or presenting amateur or professional theatrical events to the public. A permit issued for a community theatre is valid only during regularly scheduled theatrical events sponsored by such nonprofit organization.

(1a) Convention center. – An establishment that meets either of the following requirements:

a. A publicly owned or operated establishment that is engaged in the business of sponsoring or hosting conventions and similar large gatherings, including auditoriums, armories, civic centers, convention centers, and coliseums.

b. A privately owned facility located in a city that has a population of at least 200,000 but not more than 250,000 by the 2000 federal census and is located in a county that has previously authorized the issuance of mixed beverage permits by referendum. To qualify as a convention center under this subdivision, the facility shall meet each of the following requirements:

1. The facility shall be certified by the appropriate local official as being consistent with the city's redevelopment plan for the area in which the facility is located.

2. The facility shall contain at least 7,500 square feet of floor space that is available for public use and shall be used exclusively for banquets, receptions, meetings, and similar gatherings.

3. The facility's annual gross receipts from the sale of alcoholic beverages shall be less than fifty percent (50%) of the gross receipts paid to all providers at permitted functions for food, nonalcoholic beverages, alcoholic beverages, service, and facility usage fees (excluding receipts or charges for entertainment and ancillary services not directly related to providing food and beverage service). The person to whom a permit has been issued for a privately owned facility shall be required to maintain copies of all contracts and invoices for items supplied by providers for a period of three years from the date of the event.

A permit issued for a convention center shall be valid only for those parts of the building used for conventions, banquets, receptions, and other events, and only during scheduled activities.

(1b) Cooking school. – An establishment substantially engaged in the business of operating a school in which cooking techniques are taught for a fee.

(2) Eating establishment. – An establishment engaged in the business of regularly and customarily selling food, primarily to be eaten on the premises. Eating establishments shall include businesses that are referred to as restaurants, cafeterias, or cafes, but that do not qualify under subdivision (6). Eating establishments shall also include lunchstands, grills, snack bars, fast‑food businesses, and other establishments, such as drugstores, which have a lunch counter or other section where food is sold to be eaten on the premises.

(3) Food business. – An establishment engaged in the business of regularly and customarily selling food, primarily to be eaten off the premises. Food businesses shall include grocery stores, convenience stores, and other establishments, such as variety stores or drugstores, where food is regularly sold, and shall also include establishments engaged primarily in selling unfortified or fortified wine or both, for consumption off the premises.

(4) Hotel. – An establishment substantially engaged in the business of furnishing lodging. A hotel shall have a restaurant either on or closely associated with the premises. The restaurant and hotel need not be owned or operated by the same person.

(5) Private club. – An establishment that is organized and operated solely for a social, recreational, patriotic, or fraternal purpose and that is not open to the general public, but is open only to the members of the organization and their bona fide guests. This provision does not, however, prohibit such an establishment from being open to the general public for raffles and bingo games as required by G.S. 14‑309.11(a) and G.S. 14‑309.13. Except for bona fide religious organizations, no organization that discriminates in the selection of its membership on the basis of religion shall be eligible to receive any permit issued under this Chapter.

(5a) Residential private club. – A private club that is located in a privately owned, primarily residential and recreational development.

(6) Restaurant. – An establishment substantially engaged in the business of preparing and serving meals. To qualify as a restaurant, an establishment's gross receipts from food and nonalcoholic beverages shall be not less than thirty percent (30%) of the total gross receipts from food, nonalcoholic beverages, and alcoholic beverages. A restaurant shall also have a kitchen and an inside dining area with seating for at least 36 people. If the restaurant is located on an 18‑hole golf course, the premises shall include the parking lot and the playing area of the golf course, including the teeing areas, greens, fairways, roughs, hazards, and cart paths.

(7) Retail business. – An establishment engaged in any retail business, regardless of whether food is sold on the premises.

(7a) Sports and entertainment venue. – Stadiums, ballparks, and other similar facilities with a permanently constructed seating capacity of 3,000 or more which are not located on the campus of a school, college, or university.

(8) Sports club. – An establishment that meets either of the following requirements:

a. The establishment is substantially engaged in the business of providing equine boarding, training, and coaching services, and the establishment offers on‑site dining, lodging, and meeting facilities and hosts horse trials and other events sanctioned or endorsed by the United States Equestrian Federation, Inc.; or

b. The establishment is substantially engaged in the business of providing an 18‑hole golf course, two or more tennis courts, or both.

The sports club can either be open to the general public or to members and their guests. To qualify as a sports club, an establishment's gross receipts for club activities shall be greater than its gross receipts for alcoholic beverages. The premises of a sports club substantially engaged in the business of providing an 18‑hole golf course shall include the parking lot and the playing area of the golf course, including the teeing areas, greens, fairways, roughs, hazards, and cart paths. This provision does not prohibit a sports club from operating a restaurant. Receipts for food shall be included in with the club activity fee.

(9) Congressionally chartered veterans organizations. – An establishment that is organized as a federally chartered, nonprofit veterans organization, and is operated solely for patriotic or fraternal purposes.

(10) Wine producer. – A farming establishment of at least five acres committed to the production of grapes, berries, or other fruits for the manufacture of unfortified wine."

SECTION 4.(b) G.S. 18B‑1001 reads as rewritten:

"§ 18B‑1001. Kinds of ABC permits; places eligible.

When the issuance of the permit is lawful in the jurisdiction in which the premises are located, the Commission may issue the following kinds of permits:

(1) On‑Premises Malt Beverage Permit. – An on‑premises malt beverage permit authorizes (i) the retail sale of malt beverages for consumption on the premises, (ii) the retail sale of malt beverages in the manufacturer's original container for consumption off the premises, and (iii) the retail sale of malt beverages in a cleaned and sanitized container that is filled or refilled and sealed for consumption off the premises and that identifies the permittee and the date the container was filled or refilled. It also authorizes the holder of the permit to ship malt beverages in closed containers to individual purchasers inside and outside the State. The permit may be issued for any of the following:

a. Restaurants.

b. Hotels.

c. Eating establishments.

d. Food businesses.

e. Retail businesses.

f. Private clubs.

g. Convention centers.

h. Community theatres.

i. Breweries as authorized by subdivisions (7) and (8) of G.S. 18B‑1104(a).

j. Sports and entertainment venues.

(2) Off‑Premises Malt Beverage Permit. – An off‑premises malt beverage permit authorizes (i) the retail sale of malt beverages in the manufacturer's original container for consumption off the premises, (ii) the retail sale of malt beverages in a cleaned and sanitized container that is filled or refilled and sealed for consumption off the premises and that identifies the permittee and the date the container was filled or refilled, and (iii) the holder of the permit to ship malt beverages in closed containers to individual purchasers inside and outside the State. The permit may be issued for any of the following:

a. Restaurants.

b. Hotels.

c. Eating establishments.

d. Food businesses.

e. Retail businesses.

f. The holder of a brewing, distillation, and fermentation course authorization under G.S. 18B‑1114.6. A school obtaining a permit under this subdivision is authorized to sell malt beverages manufactured during its brewing, distillation, and fermentation program at one noncampus location in a county where the permittee holds and offers classes on a regular full‑time basis in a facility owned by the permittee.

(3) On‑Premises Unfortified Wine Permit. – An on‑premises unfortified wine permit authorizes (i) the retail sale of unfortified wine for consumption on the premises, either alone or mixed with other beverages, (ii) the retail sale of unfortified wine in the manufacturer's original container for consumption off the premises, and (iii) the retail sale of unfortified wine dispensed from a tap connected to a pressurized container utilizing carbon dioxide or similar gas into a cleaned and sanitized container that is filled or refilled and sealed for consumption off the premises and that identifies the permittee and the date the container was filled or refilled. The permit also authorizes the permittee to transfer unfortified wine, not more than four times per calendar year, to another on‑premises unfortified wine permittee that is under common ownership or control as the transferor. Except as authorized by this subdivision, transfers of wine by on‑premises unfortified wine permitees, purchases of wine by a retail permittee from another retail permittee for the purpose of resale, and sale of wine by a retail permittee to another retail permittee for the purpose of resale are unlawful. In addition, a particular brand of wine may be transferred only if both the transferor and transferee are located within the territory designated between the winery and the wholesaler on file with the Commission. Prior to or contemporaneous with any such transfer, the transferor shall notify each wholesaler who distributes the transferred product of the transfer. The notice shall be in writing or verifiable electronic format and shall identify the transferor and transferee, the date of the transfer, quantity, and items transferred. The holder of the permit is authorized to ship unfortified wine in closed containers to individual purchasers inside and outside the State. Orders received by a winery by telephone, Internet, mail, facsimile, or other off‑premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision. The permit may be issued for any of the following:

a. Restaurants.

b. Hotels.

c. Eating establishments.

d. Private clubs.

e. Convention centers.

f. Cooking schools.

g. Community theatres.

h. Wineries.

i. Wine producers.

j. Retail businesses.

k. Sports and entertainment venues.

(4) Off‑Premises Unfortified Wine Permit. – An off‑premises unfortified wine permit authorizes (i) the retail sale of unfortified wine in the manufacturer's original container for consumption off the premises, (ii) the retail sale of unfortified wine dispensed from a tap connected to a pressurized container utilizing carbon dioxide or similar gas into a cleaned and sanitized container that is filled or refilled and sealed for consumption off the premises and that identifies the permittee and the date the container was filled or refilled, and (iii) the holder of the permit to ship unfortified wine in closed containers to individual purchasers inside and outside the State. The permit may be issued for retail businesses. The permit also authorizes the permittee to transfer unfortified wine, not more than four times per calendar year, to another off‑premises unfortified wine permittee that is under common ownership or control as the transferor. Except as authorized by this subdivision, transfers of wine by off‑premises unfortified wine permittees, purchases of wine by a retail permittee from another retail permittee for the purpose of resale, and sale of wine by a retail permittee to another retail permittee for the purpose of resale are unlawful. In addition, a particular brand of wine may be transferred only if both the transferor and transferee are located within the territory designated between the winery and the wholesaler on file with the Commission. Prior to or contemporaneous with any such transfer, the transferor shall notify each wholesaler who distributes the transferred product of the transfer. The notice shall be in writing or verifiable electronic format and shall identify the transferor and transferee, the date of the transfer, quantity, and items transferred. The permit may also be issued to the holder of a viticulture/enology course authorization under G.S. 18B‑1114.4. A school obtaining a permit under this subdivision is authorized to sell wines manufactured during its viticulture/enology program at one non‑campus location in a county where the permittee holds and offers classes on a regular full‑time basis in a facility owned by the permittee. The permit may also be issued for a winery or a wine producer for sale of its own unfortified wine during hours when the winery or wine producer's premises is open to the public, subject to any local ordinance adopted pursuant to G.S. 18B‑1004(d) concerning hours for the retail sale of unfortified wine. A winery obtaining a permit under this subdivision is authorized to sell wine manufactured by the winery at one additional location in the county under the same conditions specified in G.S. 18B‑1101(5) for the sale of wine at the winery; provided, however, that no other alcohol sales shall be authorized at the additional location. Orders received by a winery by telephone, Internet, mail, facsimile, or other off‑premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision.

(5) On‑Premises Fortified Wine Permit. – An on‑premises fortified wine permit authorizes the retail sale of fortified wine for consumption on the premises, either alone or mixed with other beverages, and the retail sale of fortified wine in the manufacturer's original container for consumption off the premises. The permit also authorizes the permittee to transfer fortified wine, not more than four times per calendar year, to another on‑premises fortified wine permittee that is under common ownership or control as the transferor. Except as authorized by this subdivision, transfers of wine by on‑premises fortified wine permittees, purchases of wine by a retail permittee from another retail permittee for the purpose of resale, and sale of wine by a retail permittee to another retail permittee for the purpose of resale are unlawful. In addition, a particular brand of wine may be transferred only if both the transferor and transferee are located within the territory designated bet ween the winery and the wholesaler on file with the Commission. Prior to or contemporaneous with any such transfer, the transferor shall notify each wholesaler who distributes the transferred product of the transfer. The notice shall be in writing or verifiable electronic format and shall identify the transferor and transferee, the date of the transfer, quantity, and items transferred. The holder of the permit is authorized to ship fortified wine in closed containers to individual purchasers inside and outside the State. Orders received by a winery by telephone, Internet, mail, facsimile, or other off‑premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision. The permit may be issued for any of the following:

a. ~~Restaurants;~~Restaurants.

b. ~~Hotels;~~Hotels.

c. Private ~~clubs;~~clubs.

d. Community ~~theatres;~~theatres.

e. ~~Wineries;~~Wineries.

f. Convention ~~centers.~~centers.

(6) Off‑Premises Fortified Wine Permit. – An off‑premises fortified wine permit authorizes the retail sale of fortified wine in the manufacturer's original container for consumption off the premises and it authorizes the holder of the permit to ship fortified wine in closed containers to individual purchasers inside and outside the State. The permit may be issued for food businesses. The permit may also be issued for a winery for sale of its own fortified wine. Orders received by a winery by telephone, Internet, mail, facsimile, or other off‑premises means of communication shall be shipped pursuant to a wine shipper permit and not pursuant to this subdivision. The permit also authorizes the permittee to transfer fortified wine, not more than four times per calendar year, to another off‑premises fortified wine permittee that is under common ownership or control as the transferor. Except as authorized by this subdivision, transfers of wine by off‑premises fortified wine permittees, purchases of wine by a retail permittee from another retail permittee for the purpose of resale, and sale of wine by a retail permittee to another retail permittee for the purpose of resale are unlawful. In addition, a particular brand of wine may be transferred only if both the transferor and transferee are located within the territory designated between the winery and the wholesaler on file with the Commission. Prior to or contemporaneous with any such transfer, the transferor shall notify each wholesaler who distributes the transferred product of the transfer. The notice shall be in writing or verifiable electronic format and shall identify the transferor and transferee, the date of the transfer, quantity, and items transferred.

(7) Brown‑Bagging Permit. – A brown‑bagging permit authorizes each individual patron of an establishment, with the permission of the permittee, to bring up to eight liters of fortified wine or spirituous liquor, or eight liters of the two combined, onto the premises and to consume those alcoholic beverages on the premises. The permit may be issued for any of the following:

a. ~~Restaurants;~~Restaurants.

b. ~~Hotels;~~Hotels.

c. Private ~~clubs;~~clubs.

d. Community ~~theatres;~~theatres.

e. Congressionally chartered veterans ~~organizations.~~organizations.

(8) Special Occasion Permit. – A special occasion permit authorizes the host of a reception, party or other special occasion, with the permission of the permittee, to bring fortified wine and spirituous liquor onto the premises of the business and to serve the same to his guests. The permit may be issued for any of the following:

a. ~~Restaurants;~~Restaurants.

b. ~~Hotels;~~Hotels.

c. Eating ~~establishments;~~establishments.

d. Private ~~clubs;~~clubs.

e. Convention ~~centers.~~centers.

(9) Limited Special Occasion Permit. – A limited special occasion permit authorizes the permittee to bring fortified wine and spirituous liquor onto the premises of a business, with the permission of the owner of that property, and to serve those alcoholic beverages to the permittee's guests at a reception, party, or other special occasion being held there. The permit may be issued to any individual other than the owner or possessor of the premises. An applicant for a limited special occasion permit shall have the written permission of the owner or possessor of the property on which the special occasion is to be held.

(10) Mixed Beverages Permit. – A mixed beverages permit authorizes the retail sale of mixed beverages for consumption on the premises. The permit also authorizes a mixed beverages permittee (i) to obtain a purchase‑transportation permit under G.S. 18B‑403 and 18B‑404, (ii) to obtain an antique spirituous liquor permit under subdivision (20) of this section, and (iii) to use for culinary purposes spirituous liquor lawfully purchased for use in mixed beverages. The permit may be issued for any of the following:

a. ~~Restaurants;~~Restaurants.

b. ~~Hotels;~~Hotels.

c. Private ~~clubs;~~clubs.

d. Convention ~~centers;~~centers.

e. Community ~~theatres;~~theatres.

f. Nonprofit ~~organizations; and~~organizations.

g. Political ~~organizations.~~organizations.

h. Sports and entertainment venues.

…."

INCREASE THE ABILITY OF NONPROFIT ORGANIZATIONS TO HOLD FUND‑RAISING RAFFLES AND AUTHORIZE REISSUANCE OF CERTAIN ONE‑TIME abc COMMISSION PERMITS

SECTION 5.(a) G.S. 14‑309.6 is amended by adding a new subdivision to read:

"(8) "Nonprofit organization" means an organization or association recognized by the Department of Revenue as tax exempt pursuant to G.S. 105‑130.11(a), or any bona fide branch, chapter, or affiliate of that organization."

SECTION 5.(b) G.S. 14‑309.15 reads as rewritten:

"§ 14‑309.15. Raffles.

(a) It is lawful for any nonprofit ~~organization or association, recognized by the Department of Revenue as tax‑exempt pursuant to G.S. 105‑130.11(a), or for any bona fide branch, chapter, or affiliate of such organization,~~ organization, candidate, political committee, ~~and for~~or any government entity within the State, to conduct raffles in accordance with this section. Each regional or county chapter of a nonprofit organization shall be eligible to conduct raffles in accordance with this section independently of its parent organization. Any person who conducts a raffle in violation of any provision of this section shall be guilty of a Class 2 misdemeanor. Upon conviction that person shall not conduct a raffle for a period of one year. It is lawful to participate in a raffle conducted pursuant to this section. It shall not constitute a violation of State law to advertise a raffle conducted in accordance with this section. A raffle conducted pursuant to this section is not "gambling". For the purpose of this section, "candidate" and "political committee" have the meaning provided by Article 22A of Chapter 163A of the General Statutes, who have filed organization reports under that Article, and who are in good standing with the appropriate board of elections. Receipts and expenditures of a raffle by a candidate or political committee shall be reported in accordance with Article 22A of Chapter 163A of the General Statutes, and ticket purchases are contributions within the meaning of that Article.

(b) For purposes of this section "raffle" means a game in which the prize is won by random drawing of the name or number of one or more persons purchasing chances.

(c) ~~Raffles shall be limited to two per nonprofit organization per year.~~A nonprofit organization may hold no more than four raffles per year.

(d) Except as provided in subsection (g) of this section, the maximum cash prize that may be offered or paid for any one raffle is one hundred twenty‑five thousand dollars ($125,000) and if merchandise is used as a prize, and it is not redeemable for cash, the maximum fair market value of that prize may be one hundred twenty‑five thousand dollars ($125,000). The total cash prizes offered or paid by any nonprofit organization ~~or association~~ may not exceed ~~one hundred twenty‑five~~ two hundred fifty thousand dollars ~~($125,000)~~($250,000) in any calendar year. The total fair market value of all prizes offered by any nonprofit ~~organization or association,~~organization, either in cash or in merchandise that is not redeemable for cash, may not exceed ~~one hundred twenty‑five~~ two hundred fifty thousand dollars ~~($125,000)~~($250,000) in any calendar year.

(e) Raffles shall not be conducted in conjunction with bingo.

(f) As used in this subsection, "net proceeds of a raffle" means the receipts less the cost of prizes awarded. No less than ninety percent (90%) of the net proceeds of a raffle shall be used by the nonprofit organization ~~or association~~ for charitable, religious, educational, civic, or other nonprofit purposes. None of the net proceeds of the raffle may be used to pay any person to conduct the raffle, or to rent a building where the tickets are received or sold or the drawing is conducted.

(g) Real property may be offered as a prize in a raffle. The maximum appraised value of real property that may be offered for any one raffle is five hundred thousand dollars ($500,000). The total appraised value of all real estate prizes offered by any nonprofit organization ~~or association~~ may not exceed five hundred thousand dollars ($500,000) in any calendar year.

(h) Notwithstanding any other subsection of this section, it is lawful for a credit union to conduct a savings promotion raffle under G.S. 54‑109.64."

SECTION 5.(c) G.S. 18B‑308 reads as rewritten:

"§ 18B‑308. Sale and consumption at bingo games.

It shall be unlawful to sell or consume, or for the owner or other person in charge of the premises to allow the sale or consumption of, any alcoholic beverage in any room while a ~~raffle or~~ bingo game is being conducted in that room under Part 2 of Article 37 of Chapter 14 of the General Statutes."

SECTION 5.(d) Article 9 of Chapter 18B of the General Statutes is amended by adding a new section to read:

"§ 18B‑903A. Reissuance of certain permits.

(a) Reissuance. – Notwithstanding G.S. 18B‑902(b) or G.S. 18B‑903, if a nonprofit organization has received a limited special occasion permit pursuant to G.S. 18B‑1001(9) or a special one‑time permit pursuant to G.S. 18B‑1002(a)(2) or (a)(5) within the previous 18 months, the Commission shall reissue the permit to the nonprofit organization if the same individual representing the organization requests reissuance of the permit for the same location. The Commission shall require only the following information in order to reissue the permit:

(1) The street address of the location where the event will take place.

(2) The county in which the event will take place.

(3) The date of the event.

(4) A description of the event.

(5) The name, address, date of birth, and contact information of the individual representing the nonprofit organization.

(b) Duration. – Once issued, a reissued limited special occasion permit shall be valid for 48 hours before and after the occasion for which the permit was issued and a reissued special one‑time permit shall be valid only for the period stated on the permit.

(c) Reissuance Fee. – Application for reissuance of a limited special occasion permit or a special one‑time permit shall be on a form provided by the Commission. The application fee shall be the same as the initial fee set in G.S. 18B‑902. A reissuance fee shall not be refundable.

(d) Investigation. – The Commission, with the assistance of the ALE Branch, shall not investigate the applicant and the premises for which the reissuance is requested more than once every three years. The Commission may request the assistance of local ABC officers in investigating applications. An applicant shall cooperate fully with the investigation.

(e) False Information. – Knowingly making a false statement in an application for a permit reissuance pursuant to this section shall be grounds for denying, suspending, revoking, or taking other action against the permit as provided in G.S. 18B‑104 and shall also be a Class 1 misdemeanor."

SECTION 5.(e) G.S. 18B‑1002(a)(5) reads as rewritten:

"§ 18B‑1002. Special one‑time permits.

(a) Kinds of Permits. – In addition to the other permits authorized by this Chapter, the Commission may issue permits for the following activities:

…

(5) A permit may be issued to a unit of local government, or to a nonprofit organization or a political organization to serve wine, malt beverages, and spirituous liquor at a ticketed event held to allow the unit of local government or organization to raise funds. For purposes of this subdivision "nonprofit organization" means an organization that is exempt from taxation under Section 501(c)(3), 501(c)(4), 501(c)(6), 501(c)(8), 501(c)(10), 501(c)(19), or 501(d) of the Internal Revenue Code or is exempt under similar provisions of the General Statutes as a bona fide nonprofit charitable, civic, religious, fraternal, patriotic, or veterans' organization or as a nonprofit volunteer fire department, or as a nonprofit volunteer rescue squad or a bona fide homeowners' or property owners' association. For purposes of this subdivision "political organization" means an organization covered by the provisions of G.S. 163‑96(a)(1) or (2) or a campaign organization established by or for a person who is a candidate who has filed a notice of candidacy, paid the filing fees or filed the required petition, and been certified as a candidate. The issuance of this permit ~~will~~ shall also allow the issuance of a purchase‑transportation permit under G.S. 18B‑403 and 18B‑404 and the use for culinary purposes of spirituous liquor lawfully purchased for use in mixed beverages. The issuance of this permit shall also allow a nonprofit organization to offer alcoholic beverages in the manufacturer's original closed container as a prize in a raffle or sell alcoholic beverages in the manufacturer's original closed container at auction at the ticketed event to allow the nonprofit organization to raise funds."

SECTION 5.(f) Subsection (d) of this section becomes effective December 1, 2018, and applies to offenses committed on or after that date. The remainder of this section becomes effective October 1, 2018.

ALLOW SALE OF BRANDED MERCHANDISE AT ALCOHOLIC BEVERAGE TASTINGS

SECTION 6.(a) G.S. 18B‑1114.1 reads as rewritten:

"§ 18B‑1114.1. Authorization of winery special event permit.

(a) Authorization. – The holder of an unfortified winery permit, a limited winery permit, a viticulture/enology course authorization, or a wine producer permit may obtain a winery special permit allowing the winery or wine producer to give free tastings of its ~~wine,~~wine; to sell branded merchandise such as glassware, cups, signs, t‑shirts, hats, and other apparel; and to sell its wine by the glass or in closed containers, at trade shows, conventions, shopping malls, wine festivals, street festivals, holiday festivals, agricultural festivals, farmers markets, balloon races, local fund‑raisers, and other similar events approved by the Commission.

(b) Limitation. – A winery special event permit is valid only in a jurisdiction that has approved the establishment of ABC stores or has approved the sale of unfortified wine."

SECTION 6.(b) G.S. 18B‑1114.5 reads as rewritten:

"§ 18B‑1114.5. Authorization of malt beverage special event permit.

(a) Authorization. – The holder of a brewery permit, a malt beverages importer permit, a brewing, distillation, and fermentation course authorization, or a nonresident malt beverage vendor permit may obtain a malt beverage special event permit allowing the permittee to give free tastings of its malt ~~beverages~~beverages; to sell branded merchandise such as glassware, cups, signs, t‑shirts, hats, and other apparel; and to sell its malt beverages by the glass or in closed containers at trade shows, conventions, shopping malls, malt beverage festivals, street festivals, holiday festivals, agricultural festivals, balloon races, local fund‑raisers, and other similar events approved by the Commission. Except for a brewery operating under the provisions of G.S. 18B‑1104(a)(8), all malt beverages sampled or sold pursuant to this section must be purchased from a licensed malt beverages wholesaler.

(b) Limitation. – A malt beverage special event permit is valid only in a jurisdiction that has approved the establishment of ABC stores or has approved the sale of malt beverages. A malt beverage special event shall not be used as subterfuge for malt beverages suppliers to ship directly to retail permittees unless otherwise authorized by law."

SECTION 6.(c) G.S. 18B‑1114.7 reads as rewritten:

"§ 18B‑1114.7. Authorization of spirituous liquor special event permit.

(a) Authorization. – The holder of a supplier representative permit, brokerage representative permit, or distillery permit issued under G.S. 18B‑1105 may obtain a spirituous liquor special event permit allowing the permittee to give free tastings of its spirituous liquors at trade shows, conventions, shopping malls, street festivals, holiday festivals, agricultural festivals, balloon races, local fund‑raisers, and other similar events approved by the Commission.

(b) Limitations. – Any consumer tasting is subject to the following limitations:

(1) The permit holder or the permit holder's authorized agent shall conduct the consumer tasting and the permit holder shall be solely responsible for any violations of this Chapter occurring in connection with the consumer tasting.

(2) The spirituous liquor shall be poured only by either (i) the permit holder conducting the consumer tasting or (ii) an employee or authorized agent of the permit holder conducting the consumer tasting who is at least 21 years of age.

(3) Each consumer shall be limited to one 0.25 ounce tasting sample of any product made available for sampling at the consumer tasting, and the total amount of the tasting samples offered to and consumed by each consumer shall not exceed 1.0 ounce of spirituous liquor in any calendar day.

(4) The permit holder shall not offer tasting samples to, or allow consumption of tasting samples by, any consumer who is visibly intoxicated.

(5) The permit holder shall not offer tasting samples to, or allow consumption of tasting samples by, any consumer under the legal age for consuming spirituous liquor. The person pouring the spirituous liquor shall be responsible for verifying the age of the consumer being served by checking the identification of the consumer.

(6) The permit holder shall not charge a consumer for any tasting sample.

(7) A venue allowing tastings shall designate a tasting area within the venue that enables the permit holder to ensure that the consumer tasting is being conducted in compliance with this section. Consumers shall only be allowed to consume tasting samples within the designated tasting area.

(8) A consumer tasting shall not be allowed unless the venue is located in a jurisdiction that has approved the sale of mixed beverages.

(9) The permit holder may provide point‑of‑sale advertising materials and advertising ~~specialties~~ specialties and may sell branded merchandise such as glassware, cups, signs, t‑shirts, hats, and other apparel to consumers at the consumer tasting.

(10) The permit holder shall maintain for a period of at least one year a record of each consumer tasting conducted. The record shall include the date of the consumer tasting, the time of the consumer tasting, an identification of the venue at which the consumer tasting was held, an identification of the spirituous liquor that was provided for tasting at the consumer tasting, and the name of any person who poured spirituous liquor at the consumer tasting. The permit holder shall allow the ABC Commission to inspect those records at any time."

WHOLESALER CHANGES

SECTION 7.(a) G.S. 18B‑1307 reads as rewritten:

"§ 18B‑1307. Transfer or merger of wholesaler's business.

(a) Right of Transfer to Designated Family ~~Member upon Death.~~Member. – ~~Upon the death of a wholesaler, that~~An individual's interest in ~~the~~ a wholesaler business, including the rights under the franchise agreement with the supplier, may be transferred or assigned to a designated family member. The transfer or assignment shall not be effective until written notice is given to the supplier, but the supplier's consent is not required for the transfer or assignment. "Designated family member" means the ~~deceased~~ wholesaler's spouse, child, grandchild, parent, ~~brother or~~brother, sister, ~~who is entitled to inherit the deceased wholesaler's ownership interest under the terms of the deceased wholesaler's will or other testamentary device or under the laws of intestate succession.~~ niece, or nephew. With respect to an incapacitated individual having an ownership interest in a wholesaler, the term "designated family member" also means the person appointed by the court as the conservator of such individual's property. The term also includes the appointed and qualified personal representative and the testamentary trustee of a deceased wholesaler.

(b) Approval of Certain Transfers and Mergers. – Upon notice to and approval by the supplier, an individual owning an interest in a wholesaler may sell, assign or transfer that interest, including the wholesaler's rights under its franchise agreement with the supplier, to any qualified person. Likewise, a wholesaler may merge with another wholesaler in the State, transferring to the new wholesaler entity the merging wholesaler's existing franchise rights. Within 30 days of receipt of notice of the intended sale, assignment, transfer, or merger, the supplier shall request any additional relevant, material information reasonably necessary for deciding whether to approve the transaction. The supplier shall have 30 days from receipt of that information to object to the sale, assignment, transfer, or merger. The supplier may object only if the proposed transferee, or the wholesalership resulting from the merger, fails to meet qualifications and standards that are nondiscriminatory, material, reasonable and consistently applied to North Carolina wholesalers by the supplier. The burden shall be upon the supplier to prove that the proposed transferee or merged wholesaler is not qualified. In determining whether the proposed transferee or merged wholesaler is a qualified person, the supplier shall consider, but is not limited to, the following factors:

(1) Whether the proposed transferee has the financial capacity to purchase the wholesaler or the specified interest upon terms that will not jeopardize the future operation of the business, or whether the new entity resulting from a merger will have such financial capacity to operate successfully, and whether under such ownership the wholesaler will be able to provide financial support necessary to the successful operation of the business, including market spending, capital expenditures, and any equity capitalization or refinancing requirements.

(2) Whether the proposed transferee, or the new entity resulting from a merger, has the proven business experience to hire and maintain a management team to successfully operate the business.

(3) If the proposed transferee does not have experience in the beer business, whether the transferee has other experience to enable it to operate a distributorship successfully and whether the transferee is willing to participate in training provided by the supplier.

(4) Whether the proposed transferee, or a party to the merger, already is a wholesaler for the supplier in a different territory and, if so, whether sufficient time and attention can be devoted to an additional market area.

In determining whether a proposed transferee, or the entity resulting from a merger, is a qualified person, a supplier must consider the business on its own merits and may not designate a specifically identified person as the only purchaser who will be approved. Nothing in this subsection is intended to or should be construed to ~~interfere with a supplier's right~~authorize a supplier to match and reassign to a designee the right to purchase the ownership interest, subject to the designee purchasing the ownership ~~interest at the price and on the conditions applicable to the purchase proposed by the transferee.~~interest. Provided, however, a supplier may match and reassign to a designee the right to purchase the ownership interest, subject to the designee purchasing the ownership interest at the price and on the conditions applicable to the purchase proposed by the transferee, if the total annual gross sales of the supplier's malt beverages sold by the selling wholesaler total no more than five percent (5%) of the selling wholesaler's total annual gross sales of wine and malt beverages in dollars.

…."

SECTION 7.(b) G.S. 18B‑1119 reads as rewritten:

"§ 18B‑1119. Supplier's financial interest in wholesaler.

(a) A supplier or an officer, director, employee or affiliate of a supplier may financially assist a proposed purchaser in acquiring ownership of a wholesaler's business by participation in a limited partnership arrangement in which the supplier, officer, director, employee, or affiliate is a limited partner and the proposed purchaser seeking to acquire ownership of the wholesaler's business is a general partner. Such limited partnership arrangement may exist for no longer than eight years. If the general partner defaults in the agreement with the limited partner, and the limited partner acquires title to the general partner's interest, the limited partner must divest itself of the general partner's interest within 180 days.not acquire, possess, or otherwise maintain an ownership interest in a wholesaler except as expressly authorized by this Chapter.

~~(b)~~ A supplier or an officer, director, employee or affiliate of a supplier may financially assist a proposed purchaser in acquiring ownership of a wholesaler's business by making a business loan and taking as security the assets of the wholesaler's business. The business loan may exist for no longer than eight years. If the wholesaler defaults on the loan and it is necessary for the supplier to take title to the assets of the business, the supplier may operate the business for a period not to exceed 180 days, by which time the supplier must divest itself of the business. The supplier may make the subsequent purchaser a business loan, taking as security the assets of the wholesaler's business. It shall also be permissible for the wholesaler and supplier to agree on the sale of the wholesaler's business to the supplier, provided that the supplier shall divest itself of the wholesaler's business within 180 days.

(c) A supplier or an officer, director, employee or affiliate of a supplier may have a security interest in the inventory or property of its wholesaler to secure payment for such inventory or other loans for other purposes."

SEVERABILITY CLAUSE AND EFFECTIVE DATE

SECTION 8.(a) If any provision of this act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this act which can be given effect without the invalid provision or application, and, to this end, the provisions of this act are declared to be severable.

SECTION 8.(b) Except as otherwise provided, this act is effective when it becomes law.

In the General Assembly read three times and ratified this the 15^th day of June, 2018.

s/ Bill Rabon

Presiding Officer of the Senate

s/ David R. Lewis

Presiding Officer of the House of Representatives

This bill having been presented to the Governor for signature on the 15^th day of June, 2018 and the Governor having failed to approve it within the time prescribed by law, the same is hereby declared to have become a law. This 26^th day of June, 2018.

s/ Karen Jenkins

Enrolling Clerk