The North Carolina Retail Merchants Association is the go-to source when our members are facing any issue regarding alcohol sales.
NCRMA WINS FIGHT AGAINST SPLIT CASE FEES
NCRMA has a long track record of fighting for ABC permittees on the issues that matter to your bottom line. One example is our 20-year fight against split case fees.
Most recently, on January 1, 2023, two North Carolina wine wholesalers – Johnson Brothers Mutual Distributing and Empire Distributing – began charging split case fees on wine of $0.36 and $0.72 per bottle. NCRMA fought this all the way to Wake County Superior Court, arguing that a split case fee on wine constitutes an illegal quantity discount under the North Carolina Administrative Code and runs contrary to North Carolina statute, which states that splitting a case of wine is “not a thing of value.”
On September 16, 2024, Wake County Superior Cout Judge Paul Ridgeway issued an order stating that: regardless of form, a split case fee is a quantity discount in violation of the administrative rules of the North Carolina ABC Commission. The NC Beer and Wine Wholesalers Association and ABC Commission opted not to appeal the ruling, settling the issue that split case fees are not allowed.
Background: Split case fees have long been a contentious issue in the state. NCRMA has been fighting against these illegal fees since 2005, advocating for retailers, restaurants, bars, and consumers. In August 2022, NCRMA reignited its efforts when Johnson Brothers and Empire Distributing announced plans to impose new per-bottle fees. NCRMA submitted numerous letters of opposition, arguing that these fees violated the law and unfairly burdened the retail and hospitality industries while benefiting wholesalers.
Timeline of Events:
- December 21, 2022: NCRMA engaged attorney Hardy Lewis, who submitted a formal request for a declaratory ruling to the NC ABC Commission, asserting that split case fees are illegal quantity discounts.
- January 1, 2023: Johnson Brothers Mutual Distributing and Empire Distributing implemented split case fees of $0.36 and $0.72 per bottle.
- January 20, 2023: The NC ABC Commission denied NCRMA’s petition for a declaratory ruling, stating the issue should be addressed by the General Assembly.
- February 2023: Attorney Hardy Lewis filed a petition for judicial review in Wake County Superior Court. The Commission delayed its formal response and ultimately submitted a one-paragraph answer, deferring the matter to the legislature.
- June 27, 2023: NCRMA received the Attorney General’s brief on behalf of the ABC Commission, reiterating the decision to deny a declaratory ruling.
- August 28, 2023: Wake County Superior Court Judge Vince Rozier granted NCRMA’s motion to remand the issue back to the ABC Commission for a formal ruling.
- October 11, 2023: The NC ABC Commission ruled that while wholesalers may charge a fee to split a case to recoup operational costs, they may not charge a per bottle fee.
- October 12, 2023: The North Carolina Beer and Wine Wholesalers Association (NCBWWA) filed a Request for Clarification.
- November 8, 2023: The ABC Commission voted 2-1 to deny the NCBWWA’s request to reconsider the October 11 ruling. The Commission reaffirmed that only per case fees are allowed, not per bottle fees.
- November 10, 2023: Johnson Brothers and Empire Distributing discontinued charging split case fees.
- November 28, 2023: Both NCRMA and retail petitioners, as well as NCBWWA, filed Petitions for Judicial Review. NCRMA challenged the ruling that any split case fee is legal, arguing that all such fees are illegal quantity discounts. NCBWWA challenged the restriction on per bottle fees.
- January 29, 2024: The NC ABC Commission, represented by the NC Attorney General’s Office, filed identical responses to both appeals.
- March 28, 2024: NCRMA/Retailers and NCBWWA each filed reply briefs in Wake County Superior Court.
- September 9, 2024: Judicial review was held before Judge Paul Ridgeway.
- September 16, 2024: Judge Ridgeway issued an order granting the relief sought by NCRMA and the retailers. The ruling declared that any form of split case fee, whether per bottle or per case, is a quantity discount and violates administrative rules of the NC ABC Commission.
- October 1, 2024: Counsel for NCBWWA informed NCRMA that they would not appeal Judge Ridgeway’s ruling. The NC ABC Commission had until October 17, 2024, to appeal but ultimately did not.
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Many retailers are trying to navigate the uncharted territory we are in with the coronavirus and have shifted to curbside pickup or delivery of alcohol. Please note that the ABC Commission has specific rules that must be adhered to even during these uncertain times. In addition, there have been new rules proposed that have not yet been formally established but, in abundance of caution we have tried to lay all of the rules out as simply as we could.
- Do I need a delivery service permit?
- No: If you are a current ABC Permittee with an on or off-premise permit for malt beverages, unfortified wine or fortified wine or a wine shop – you do not have to obtain a delivery service permit to have your own employees deliver beer and wine or to have a third-party such as Instacart or Shipt deliver wine or malt beverages on your behalf.
- As an ABC permittee you are responsible for ensuring that the third-party vendor delivering the wine and malt beverage on your behalf has properly obtained the delivery service permit. Otherwise you will have committed a violation of North Carolina ABC law. Please check the NC ABC Commission website at this link to ensure the 3rd party delivery company you are utilizing has the appropriate permit – https://abc.nc.gov/Search/PermitSearch
- Yes: If you are not a current ABC Permittee with an on or off-premise permit for malt beverages, unfortified wine or fortified wine or a wine shop then you must obtain a delivery service permit in order to deliver wine and malt beverages in North Carolina on behalf of ABC permittees.
- No: If you are a current ABC Permittee with an on or off-premise permit for malt beverages, unfortified wine or fortified wine or a wine shop – you do not have to obtain a delivery service permit to have your own employees deliver beer and wine or to have a third-party such as Instacart or Shipt deliver wine or malt beverages on your behalf.
- Training: Your employees that are delivering alcohol must have completed either the free on-line training program found here (https://abc.nc.gov/Training/Driver/RegisterUser) or have completed a company training program that has been approved by the North Carolina ABC Commission (see this link for required content of a company training program https://portal.abc.nc.gov/Web%20Documents/Sections/Education/Required%20Content%20for%20Alcohol%20Delivery%20Service.pdf).
- *A physical or electronic copy of the certificate, including a picture of the certificate, must be in the individual’s possession whenever making deliveries.
- Package Labeling Requirement: If alcohol is being delivered by either an ABC permittee or a delivery service permittee, and the manufacturer’s original package is obscured by a bag or package (as example, a six pack of beer is placed in a bag) the bag or package must have a sticker or label affixed to it in 26-point type or larger stating “CONTAINS ALCOHOLIC BEVERAGES; AGE VERIFICATION REQUIRED.”
- Order and Payment: You should take steps to ensure that the person making the alcohol order is at least 21 years of age and that you as the ABC permittee are accepting payment for the sale of the wine and malt beverages. Payment may be made in-person, online or over the phone but it CANNOT be made at the delivery site. Except for tips, delivery people may not handle cash or process credit cards.
- Age Verification: You must ensure the person receiving the delivery is at least 21 years of age and takes immediate and actual possession of the alcohol at the time of delivery. The individual delivering alcoholic beverages should verify the age of the recipient of the alcohol. In other words, alcohol should not be left on the doorstep but must instead be physically handed to a person who is at least 21 years of age. We recommend checking the ID of ANYONE receiving an alcohol delivery.
- Delivery Radius/Parameters: You may not deliver alcohol further than 50 miles from your store. The alcohol must pulled from existing inventory and may not be delivered to another ABC permittee.
- Legal Sales Areas: Alcohol can only be delivered to areas of North Carolina where the sale of malt beverages and/or unfortified wine and fortified wine is legal – in other words, malt beverages and wine cannot be delivered to a “dry” area.
- Legal Sales Hours: Alcohol can only be delivered during the time for lawful sales which is generally from 7:00 am until 2:00 am Monday through Saturday and from noon until 2:00 am on Sunday. However, note that a number of jurisdictions allow for the sale of malt beverages and wine beginning at 10:00 am on Sunday (View here: https://bit.ly/10amsundaysales_ncrma)
- Violations: Note also that violations of the alcohol delivery law will be treated like other ABC violations. However, you should also be very careful with regards to any deliveries near or around college campuses. If a violation of the alcohol delivery law occurs while delivering to a residence hall on an institution of higher education, you could be subject to a fine of up to one thousand dollars ($1,000) for the first violation; up to one thousand five hundred dollars ($1,500) for a second violation within three years of the first violation; and up to two thousand dollars ($2,000) for a third or subsequent violation within three years of the first violation.
Please note that while this document is intended to help you comply with North Carolina law, it is in no way intended to serve as legal advice. Please consult a licensed attorney to address more specific questions that may arise concerning this issue.
Today, Representatives Chuck McGrady, Jason Saine, Jon Hardister and Pricey Harrison introduced HB 971 – Modern Licensure Model for Alcohol Control.
NCRMA, along with the North Carolina Restaurant and Lodging Association, have partnered in support of House Bill 971, as a continued effort to modernize the state’s Alcoholic Beverage Control (ABC) system and have issued a joint press release.
The legislation aims to improve the longstanding government management of the sale, storage, and distribution of spiritous liquor in order to implement a more efficient and effective system. NCRMA President and General Counsel Andy Ellen along with NCRLA President and CEO Lynn Minges are working to underscore the bill’s significance and encourage North Carolina residents to take action to help #FreeTheSpirits.
Go now to: FreeTheSpiritsNC.com to find out more. There, you will also have the opportunity to contact your legislator via email and Twitter to express your support for the bill.
Retailers – if you would like to receive updates on this important legislation, please fill out the information below and we will add you to the email list.
Earlier this year, the largest wine wholesaler in North Carolina announced that on June 1, 2019 it would begin implementing a $2.16 split case fee any time a retailer or restaurant orders less than a full case of wine.
This would have had significant negative effects, for all ABC permittees and consumers.
The North Carolina Retail Merchants Association was opposed to this proposed split case fee as we felt it ran afoul of North Carolina law and was punitive to North Carolina retailers that sell wine. NCRMA spent a tremendous amount of time discussing the issue with members of the North Carolina General Assembly and the North Carolina Alcoholic Beverage Control Commission. We are happy to report that the wine wholesaler has now decided to not pursue the split case.
Previous Successes:
- NCRMA wrote the Growler Bill and worked the bill through the Legislature, the ABC Commission, and helped develop the sanitation rules with the Division of Public Health
- NCRMA worked for the passage of the wine tasting bill
- NCRMA worked for the passage of the malt beverage tasting bill
- NCRMA ensured that beer and wine wholesalers had to continue to service all retailers to whom they distributed alcohol
- NCRMA worked with the ABC Commission to allow retailers to use coupons and wine clubs over the strong objections of the religious right
- NCRMA worked to include the retail sale of wine/beer and at establishments other than restaurants (taprooms/tasting rooms) in the Brunch Bill (Senate Bill 155) allowing sales to begin at 10:00 am on Sundays rather than noon. *Each municipality and county must pass a local government referendum approving the earlier sale.
- NCRMA worked to negate the necessity of a separate wine shop permit in some locations. *This change in the law lets a retailer replace their Wine Shop Permit with an On-Premises Unfortified Wine Permit, provided the local government referendum approving the on-premise sale of wine in the jurisdiction does not require the retailer also qualify as a restaurant.