The state-by-state battle to expand sales of ready-to-drink (RTD) cocktails continues as spirits advocates celebrated a win in North Carolina this week.
On Thursday, the North North Carolina Senate passed SB 527, a bill that contains a number of bev-alc related measures including lowering the tax rate for spirits-based RTD cocktails, allowing delivery and cocktails to-go, and permitting sales on major holidays. The bill now heads to Governor Roy Cooper for his signature.
The bill defines a “pre-mixed cocktail” as having a maximum ABV of 13%, exempting these products from the state’s mixed beverage tax of $20 per four liters that is paid by the on-premise “mixed beverage permit” holders.
Reducing the tax rates and broadening availability for spirits-based RTDs have been legislative priorities for the Distilled Spirits Council of the U.S. (DISCUS) since the category has become a growth driver of the wider spirits industry. In 2023, premixed cocktails including spirits RTDs were up +26.8% to $2.8 billion (+$599 million), according to DISCUS.
In 2021, Michigan and Nebraska cut taxes on spirit-based RTDs and trade groups have faced off over the impact on consumers. In 2022, Vermont also lowered its excise tax on spirits-based RTDs and allowed for wider distribution.
But facing opposition from the beer industry, that momentum slowed last year. In Nebraska, legislators voted down a proposed rollback of the tax reduction on spirits-based RTDs, while Nevada’s Clark County allowed on-premise beer and wine licenses to sell spirit-based products. In 2023, bills were introduced in Arizona, Washington, California, Texas, Alabama, North Dakota, and Ohio, with some still floating in committee but none yet passed into law.
In Pennsylvania earlier this month, however, the state’s House Liquor Control Committee passed SB 688, which would legalize the sale of spirits-based RTDs under 12.5% ABV in certain retail outlets that already sell beer and wine products with the same or lower alcohol content. The bill now heads to the full House for consideration.
The North Carolina bill also allows Alcohol Beverage Control (ABC) stores to open on New Year’s Day, Fourth of July, and Labor Day, at the discretion of the local ABC board. ABC stores would still be closed on a New Year’s Day or Fourth of July that falls on a Sunday.
The North Carolina bill would also revive single-serve drinks to-go and by delivery at on-premise locations, breweries, wineries and distilleries; a pandemic-era law authorizing cocktails-to-go sunset in June 2021. In May, Colorado became the 28th state to permanently allow cocktails-to-go.