By: Kris Gardner, Tharrington Smith, LLP
January 6, 2021
The beverage alcohol industry has always been a leader in marketing and product innovation. Remember powdered alcohol, which was banned here in North Carolina in 2015? More recently the market has exploded in the seltzer category. Each year manufacturers find new and innovative ways to introduce alcohol in consumer products. You may have recently noticed, however, a new delivery method. Alcohol is now a primary ingredient in many products such as gelatin ‘shots’, gummies, ice pops, and ice cream. One little-known secret in the beverage alcohol industry is that these products do not fall within the scope of any of North Carolina’s ABC laws. The reason is simple: these products are solids, not liquids. Under state law, an alcoholic beverage is defined as any beverage containing at least 0.5% alcohol by volume. As such, none of the ABC laws governing the manufacture, sale, consumption, possession, or distribution of beverage alcohol apply to these products. They remain completely unregulated in the world of ABC law. Anyone can buy them, sell them, consume them, and so on.
In 2020, the legislature attempted to address this unregulated loophole in HB 1082 by creating a new product category – the “alcohol consumable”. Industry members and regulators worked together and formed a common sense, consensus bill that essentially treated these products like their malt, wine, and spirits based counterparts in liquid form. Subsequent amendments to the bill limited regulation of alcohol consumables to ice cream, ice pops, and gelatin-based products – those products that are currently in the market. The bill quickly passed the North Carolina House but stalled in the Senate as the legislature addressed other priorities related to the pandemic. This has not slowed the growth of these products, though, and retail outlets across the state carry them now more than ever. Many of these products, particularly gelatin-based products that are sold in shot-sized containers, are often 25 proof or greater (12.5% alcohol by volume). Since these products are currently unregulated in North Carolina (e.g. there are no age restrictions for purchase), legislation was recently re-introduced to bring these products within the realm of existing ABC law.
(Kris is a partner at Tharrington Smith, LLP in Raleigh. His practice area includes beverage alcohol control law, local government, and litigation. This summary is for informational purposes only, is not intended to serve as legal advice, and does not create any attorney-client privilege.)