BOSTON — Craft brewers will have more flexibility to switch distributors under a bill signed by Gov. Charlie Baker, effectively ending a decade-long battle.
Brewers who produce under 250,000 barrels of beer a year are now allowed to end their relationship with their distributor with 30 days notice and without having to show cause. The law, which takes effect immediately, allows distributors to recoup some of the losses from those severed relationships.
Craft brewers welcomed the governor’s approval of the settlement, which caps a 10-year fight over distribution rights.
“This levels the playing field,” said Steve Sanderson, founder and co-owner of Riverwalk Brewing Company in Newburyport. “It puts brewers and wholesalers in the same boat, just like any other business relationship.”
Sanderson credits beer wholesalers, who initially fought the proposal, for negotiating the deal.
“This law reflects an agreement reached with the Massachusetts Brewers Guild and will facilitate further growth and promote the health of the beer industry,” Bill Kelley, president of the Beer Distributors of Massachusetts, said in a statement. “We are extremely grateful to the leadership of the Massachusetts Brewers Guild and everyone involved in the persistent effort to reach this agreement.”
The state’s franchise law was intended to protect dozens of small beer distributors who were grappling for a piece of the industry, which then served Budweiser, Coors and other major brands. But as beer selections have grown, the opposite has happened among wholesalers, who’ve consolidated into a dozen regional outlets.
“And there were some serious vested interests involved in keeping the status quo in place,” Sanderson said.
Last year, the sides reached an agreement to give small brewers more flexibility and backed a proposal to establish what they say is a fairer process of resolving disputes.
The coronavirus outbreak delayed legislative approval of the agreement, and lawmakers waited until the end of the legislative session to sign off on it.
Massachusetts is the birthplace of the craft-beer revolution and now boasts more than 200 microbreweries, including local companies such as Ipswich Ale, Riverwalk Brewing in Newburyport and Notch Brewing in Salem.
Craft beer purveyors have fought for years for independence from strict provisions of a 50-year-old law binding them to distribution agreements.
Under the state’s three-tier alcohol distribution system, beer funnels from supplier through wholesaler to the shelves of package stores. Brewers are locked into franchise agreements with wholesalers after six months of doing business.
Under the previous law, brewers who wanted to sever those distribution relationships were required to give 120 days notice before appealing to the state Alcoholic Beverages Control Commission and showing “good cause” for ending the deal.
The state doesn’t require brewers to use a wholesaler, but many choose to do so given the challenges of breaking into an already crowded beer market.
Under the new deal, breweries that produce fewer than 250,000 barrels of beer in a year are allowed to terminate their wholesaler contracts by giving a month’s notice and paying “fair market value” for their brand rights.
Brewers will be required to buy back the wholesaler’s inventory and promotional materials, among other requirements.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group newspapers and websites. Email him at [email protected].
