Sunday, March 17, 2013

Anti-craft beer bill SB639 mars craft beer legislation

               Anti-craft beer bill 639 takes away rights of Texas craft beer brewers.  Specifically, the proposed bill prohibits a brewer from selling its territorial distribution rights.  Currently, Texas brewers have the right to self-distribute their beer.  A brewer willing to sell its self-distribution rights and a wholesaler willing to buy those rights can enter into an agreement whereby the wholesaler purchases the brewer's right to distribute beer in a specified territory.  Proposed anti-craft beer bill 639 renders such practice illegal.  In essence, anti-craft beer bill 639 is a legal constraint on the freedom of willing buyers and sellers to exercise their rights in the free market.
                While anti-craft beer bill 639 prohibits a brewer from selling its own distribution rights, it does not prohibit a wholesaler from selling those same rights to another wholesaler.  In other words, a brewer could not sell its territorial rights, but a distributor holding such rights could freely sell them to another distributor.  Further, once a brewer signs with a wholesaler, it arguably cannot break the distribution agreement without compensating such wholesaler for the fair market value of the brewer's distribution rights.  So under anti-craft beer bill 639, a brewer cannot receive payment from a wholesaler for the brewer's distribution rights, a wholesaler can receive payment from another wholesaler for a brewer's distribution rights, and a brewer may actually have to pay a wholesaler to buy back its own distribution rights.  The free market exists for wholesalers under anti-craft beer bill 639, but not brewers.   

We are against anti-craft beer bill 639.  Texas is notorious for its antiquated beer laws.  At a time when consumers are requesting more favorable beer legislation, anti-craft beer bill 639 pushes us in the opposite direction.  Are we headed down a slippery slope?  There is no guarantee that proposed 2015 legislation won't seek to go further and void additional brewer rights.  We cannot support any legislation that seeks to take away rights currently enjoyed by any brewer in Texas.   

How did anti-craft beer bill 639 come into being?  Approximately one year ago, Texas Senator Carona created working groups to debate and draft potential craft beer legislation.  Upon completion, the working groups submitted craft beer bills 515-518.  Without any prior discussion of anti-craft beer bill 639, Senator Carona sponsored 639 as craft beer bills 515-518 were submitted to the Business and Commerce committee.  Last Monday, the newest revision of anti-craft beer bill 639 included language expressly incorporating it as part of the remaining package of craft beers bills (515-518).

                We now find ourselves in an awkward position.  Craft beer bills 515-518 become law only if anti-craft beer bill 639 is also enacted.  Literally lose rights in exchange for other rights. Support or fight the entire package.  We are discussing the issues, educating ourselves and weighing options.  We'll eventually come down on one side or the other, but we remain focused on analyzing the scenario created for us just 6 days ago. 

Unfortunately, the Texas legislature has not passed any favorable craft beer legislation in the last 20 years.  Texas craft brewers' only recent statutory victories resulted from claims asserted in federal court.  Should anti-craft beer bill 639 become law, we hope to join with other similarly situated brewers to challenge the legality of this legislation. 

Law over beer once again...dang it!  Alfred Brown Peticolas would be pleased.

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