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Rep. Leo Daughtry's beer and wine distribution company is fighting a bill to allow specialty beers in North Carolina, prompting some angry customers to cut him off

Beer bill coming to a head 

Rep. Leo Daughtry's beer and wine distribution company is fighting a bill to allow specialty beers in North Carolina, prompting some angry customers to cut him off

The General Assembly's battle over beer is getting frothy. A bill that would allow higher alcohol specialty beers to be sold in the state moved to the House floor Tuesday after it was passed by the House ABC Committee--despite efforts by a key legislator's business interests to kill the proposal. State Rep. Leo Daughtry, R-Johnston, is a large shareholder in Mutual Distributing Company, one of the state's largest wholesalers of beer and wine. He is also a member of the House ABC Committee, where House Bill 392 was debated and passed Tuesday. The bill would raise the cap on the amount of alcohol beer can have from 6 percent alcohol by volume to 15 percent. Restaurants, bars and beer aficionados are pushing it because it would allow the sale of a variety of specialty and foreign brews not now available in North Carolina.

The beers would compete with Mutual Distributing's products, and the company has been lobbying to include an amendment that would require higher alcohol beers to be taxed at a higher rate, like fortified wines. Alcohol is taxed in categories, with beer having the lowest taxes and liquor having the highest.

The amendment would likely kill the bill, and Mutual's support for it has made at least one restaurant group so angry they've stopped buying the company's products.

"We've got to stand up for what we feel is right," said Kent Hodges, owner of the Mellow Mushroom restaurants in Raleigh, Durham and Chapel Hill. "If that law doesn't pass, we're not going back to Mutual."

Hodges said his restaurants have stopped serving beers such as Amstel, Cottonwood Low Down Brown Ale and Carolina Brewing Company. They have reordered all of their wine through another distribution company, he said.

Other local restaurants have expressed their opposition to Mutual's push to include specialty beers in a higher tax bracket but have not yet decided to boycott.

"Everyone in the restaurant business is talking about this," said Ken Rosatie, beverage director for George's hospitality group, which own six restaurants in the Triangle, including George's Garage in Durham and Spice Street in Chapel Hill. "Boycotting is a very, very big step. The repercussions are not just toward Mutual and the one owner who sits in the legislature, but to everyone in the industry."

The fight over the amendment came to a head Tuesday in the ABC Committee. The bill passed the committee without a taxation amendment, but not without changes.

Daughtry did not participate in the in the debate or vote. "It seems unethical for me to vote on this bill," he said beforehand. "I'm not going to vote."

Rep. Edgar Starnes, R-Caldwell, moved across the room to sit next to Daughtry and proposed the taxation amendment--though Starnes says he has never discussed the bill with Daughtry.

The proposal was never voted on. The chairman of the committee, Rep. Pryor Gibson, D-Anson, said the taxation amendment did not belong on House Bill 392 but should be debated in the House Finance Committee, where Starnes has already introduced a bill to raise the tax on higher alcohol beer.

Supporters of the beer bill saw that decision as a victory.

"I'm happy that (taxation) is being considered as a completely separate bill," said Sean Wilson, co-founder of Pop the Cap, a non-profit working to bring specialty beers to the state.

However, Starnes was successful in passing an amendment in the ABC Committee. He proposed that beer over 6 percent should disclose the alcohol content on their labels. The amendment was passed, followed by the bill. Starnes voted for the amendment, but against the bill.

"I know the bill is going to pass," Starnes said. "I just want to see that we have the best bill possible."

Wilson said the labeling would probably not affect big breweries. John McMillan, lobbyist for Anheuser-Busch, told the committee he knew no reason why his company would oppose the requirements. However, Wilson said some smaller breweries might choose not to sell their products in North Carolina if they cannot afford to change their labels.

"I think it's still good for us because California requires (these labels) and some other states require it," Wilson said. "It's kinda already done."

The bill will be heard on the House floor this week. If it passes, it will move on to the Senate.

Representatives for Mutual give a variety of reasons for opposing the bill. At a March 30 House Commerce Committee meeting, where the bill made its first stop, then-Mutual lobbyist Rebecca Gray made one case. She displayed Mike's Hard Lemonade and other malt beverages for state lawmakers. The message: If this bill is passed, great-tasting malt liquor drinks could become more potent and lead to underage drinking problems.

Wilson said it was unlikely that North Carolina would see a rise in the alcohol content of malt beverages.

"It's just scare tactics," he said. "They did it for one reason--they wanted to kill the bill."

A spokesman for Mutual Distributing had a different theory.

"We just thought it was in the best interest to put (high-alcohol beer) in the correct category," said a spokesman at Mutual's main office in Raleigh, who declined to give his name. "I personally think the big breweries want a price advantage."

Mutual Distributing's spokesman and Wilson agree on one thing: If the higher tax passes, big breweries that are currently neutral about the bill will actively oppose it.

Wilson said Pop the Cap is hopeful the bill will pass this session.

"It's annoying, it's frustrating--they're living in the past," Wilson said. "But we can overcome all that. I think it's time for them to turn around and embrace change."

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