NC Planning

Alcohol Sales and Zoning

David W. Owens, Professor, Institute of Government, The University of North Carolina at Chapel Hill, CB# 3330, Knapp Building, UNC-CH, Chapel Hill, N.C. 27599-3330
May 1998

The state Alcoholic Beverage Control (ABC) Commission has the ultimate decision-making authority on the question of alcohol sales. G.S. 18B-901 allows the ABC Commission to issue all ABC permits, requires that notice be given to local governments before its decision, and requires local government objections to be considered. It also sets forth the factors to be considered by the commission in issuing all ABC permits, which include several land-use-related factors (the number of places already holding ABC permits within the neighborhood, parking and traffic, the kinds of businesses already in the neighborhood, the proximity of schools and churches, zoning, local government recommendations, and potential detriment to the neighborhood). While the state ABC Commission may consider local ordinances, but is not bound by them.[1]

Once an owner has secured a state ABC permit, he or she is for the most part exempt from local zoning restrictions. Restrictions on the location of the facility, limits on hours of operation, entertainment within the facility, and even signs advertising alcohol products are likely preempted by state regulation.[2]

Two North Carolina cases have examined local governments’ ability to impose restrictions on alcohol sales over and above the state’s permitting decisions. In the first case, Staley v. Winston-Salem,[3] a Winston-Salem ordinance restricting wine sales in a nonconforming restaurant in a residential zoning district was invalidated. In the second case, In re Melkonian,[4] the town of Havelock’s denial of a special use permit for a tavern that had secured an ABC license was invalidated.

An open question is the exact extent of the preemption of local zoning. Some contend that once an ABC permit is secured, the facility is exempt from all zoning requirements. However, a strong argument can be made that the exemption only extends to those matters directly addressed by the permit and the ABC regulations. This would include the location of the facility, hours of alcohol sales, and the like. It would not include a wide range of other zoning requirements such as height limits, landscaping, and off-street parking requirements.

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1. In 1994 the General Assembly amended G.S. 18B-901(c) to provide that the Commissions “shall” consider local zoning and related land use factors in making permitting decisions. 1994 N.C. Sess. Laws ch. 749. The statute had previously read that the Commission “may” consider zoning. This strengthened the weight that must be given by the state to local zoning, but does not mandate consistency.

2. State law limits advertising of alcoholic beverages. G.S. 18B-105(b)(7) authorizes the state Alcohol Beverage Control Commission to prohibit or regulate advertising of alcoholic beverages on signs. Commission rules limit the size and text of outdoor advertising of beer, wine and mixed beverages by permitees. 4 NCAC 2S .1008(b) and .1010(b). Industry groups may advertise beer and wine, but not liquor, on billboards. 4 NCAC 2S .1009, .1011.

3. 258 N.C. 244, 128 S.E.2d 604 (1962).

4. 85 N.C. App. 351, 355 S.E.2d 503, cert. denied, 320 N.C. 631, 360 S.E.2d 91 (1987). The 1989 General Assembly considered a bill (H. 1139) that would have required the ABC Commission to honor local zoning if the local government notified the commission of its objection while the ABC permit was being considered. In 1993 the statute was amended to provide the Commission shall consider (previously may consider) zoning in its permit deliberations. 1994 N.C. Sess. Laws ch. 749.