You may remember that some time last year Craft Freedom, The Olde Mecklenburg Brewery and NoDa Brewing filed a suit against the state of North Carolina.
As a refresher:
The suit claims that the franchise law is unconstitutional because once a brewery has sold more than 25,000 barrels in a year, they’re forced to give up pricing and sales control of their products to distributors forever. Brewers hitting that cap have to sell everything to a wholesaler, which then sells to stores or taverns.
This law is clearly ridiculous and it speaks to the lobbying efforts by distributors that it’s had to come to this.
The Seattle Times has a quote regarding a failed NC Brewer who pegs the cause of their failure directly on this law.
Beer Army Combat Brewery, started by a former Marine at North Carolina’s Camp Lejeune, suffered at the whim of a distributor that decided to punish the start-up for also signing a second distributor to sell its IPAs and ales outside North Carolina, founder Dustin Canestorp said in a sworn affidavit filed as part of the lawsuit.
In a similar dispute with any business other than a distributor, Beer Army would have simply terminated its contract and “the parties would have gone their separate ways,” Canestorp said.
“Under North Carolina law, however, the relationship between a brewery and a distributor is different” because the beer-maker must buy back distribution rights at a price the distributor sets, Canestorp said.
On Tuesday, a North Carolina Superior Court judge denied the motion to dismiss the case by the State, meaning the suit can now proceed in court. As a result, lawyers representing the North Carolina brewers issued several subpoenas to various distributors. The subpoenas request any and all communications between the distributors and lobbyists.
The Charlotte Business Journal had this quote from Olde Mecklenburg Brewery’s owner, John Marrino.
“We are grateful for the Court’s ruling today. Today’s victory upholds the basic principle that the government cannot enrich one group of private parties at the expense of another”. He adds that small craft breweries have been punished as well-connected business owners “have greased the skids for years.”
Off course not everyone was happy the lawsuit was allowed to move forward. North Carolina Beer & Wine Wholesalers Association Executive Director Tim Kent said “We think that current law is sound and responsible policy that maintains safeguards and accountability, and we are confident that upon a thorough legal review the court will come to the same conclusion”.Kent also said that North Carolina distributors ensure on beer are collected and the beer is only sold according to law. Which, clearly, only wholesale distributors can be trusted to sell beer lawfully.
There’s a long road ahead for this lawsuit, but at least there’s still a road.