On November 14, 2019, an Alcohol Law Enforcement agent seized a few bottles of liquor from Mystic Farm & Distillery during a compliance check.
It was the second time that month an agent had shown up, according to Mystic owner Jonathan Blitz. The first time, nothing happened. But on this visit, when the agent—who had brought along a college intern—reached the kitchen, he pointed to a bottle of Southern Star whiskey, which Blitz was using as a reference sample, and said it wasn’t allowed.
The problem? Nowhere in the rules did it say that. The ABC’s powers are granted by the North Carolina legislature, which just a few months before had passed a law allowing distillers to sell bottles and mixed drinks directly from their facilities, a freedom breweries and wineries have enjoyed for some time. But even before this, distillers frequently had samples of others’ products on site to use as taste references.
Blitz believed he was being penalized for an unwritten policy the ALE had no authority to enforce. So he fought back. But instead of dropping the case, the ABC Commisssion sued him, and the very same day pushed out a new set of rules prohibiting “unauthorized spirits.”
The problem? The ABC Commission doesn’t have the power to write its own laws.
Blitz filed his own lawsuit against the commission, and in response, the courts issued an indefinite stay against the agency on August 31, prohibiting them from enforcing the policy.
A representative from the ABC Commission declined to comment, saying it would be “inappropriate” as they have yet to receive a formal injunction.
“Furthermore, the ABC Commission is working continuously with interested parties, both industry and the public, to produce rules and guidelines to clarify North Carolina’s alcohol laws,” ABC spokesman Jeff Strickland told the INDY via email.
Since 2018, the commission has cited four permit holders for “unauthorized spirits.” The first among them was Pittsboro’s Fair Game Beverage Company. Owner Lyle Estill has a globe-shaped bar in his office, within which are about a dozen dusty bottles of vermouth. At some point, Estill had considered creating his own vermouth; he bought an array of products to sample before nixing the idea.
That exploratory process is critical, Estill says, and everyone does it in some form or another.
“It’s impossible to run a distillery without being able to sample other people’s products,” Estill told the INDY.
According to the law, distillers must have a mixed beverage permit in order to sell other people’s liquor. However, in both Estill and Blitz’s cases, nothing was being sold—the bottles seized were reference samples.
“As a craft distiller, I find it shocking that the commission found nothing better to do during an economic collapse than to issue and try to enforce illegal rules against our struggling industry,” Blitz says. “It’s one thing to be completely out-of-touch with people desperately trying to save their businesses and keep their staff employed, but for the commission to break the law in the process shows that there really is a crisis of leadership in an agency that regulates more than $2 billion in commerce in our state.”
This is far from the first time the ABC system has been the focus of criticism, including revelations from a 2018 audit that the agency had wasted nearly $14 million in taxpayer funds due to mismanagement. North Carolina is one of just 17 alcohol-control states left in the country, and some legislatures think the ABC system should be abolished in favor of a privatized one. But because the current system provides protections for distillers that a completely free-market system would not, permittees don’t want to throw out the baby with the bathwater and would prefer to work with the regulatory agency on reforms.
For Blitz, that starts with expanding the three-person commission to include representatives from the industries they regulate. Beyond that, Blitz wants the agency to stop acting like a meter maid who is making up the rules as they go.
“My goal is simply to reset the relationship and have the agency follow the law and have respect for us,” Blitz says.
Follow Raleigh News Editor Leigh Tauss on Twitter or send an email to ltauss@indyweek.com.
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