Since Prohibition, Kentucky brewers have not been allowed to own their own distributors. Like many states throughout the United States, Kentucky implemented a three-tier system that separates the alcohol industry into manufacturers, distributors and retailers.

Notwithstanding this in-state brewery and distributor ownership prohibition, the current law in Kentucky does allow Anheuser-Busch and other out of state breweries to own distributors. In fact, Anheuser-Busch owns two distributors in Kentucky, one in Owensboro and one in Louisville; but, this may be about to change.

A bill passed the House yesterday by a vote of 67-31 that would disallow Anheuser-Busch from owning these two distributors and prohibit out of state breweries from owning distributors in Kentucky. This bill was prompted by a court decision last fall that allowed Anheuser-Busch to own the distributor in Owensboro.

There was some debate on whether to include a grandfather provision in the bill, but this amendment failed during the debate Tuesday evening. While this is a big win for the craft beer segment of the industry, the legislation will not be signed into law unless it is also passed by the Senate.