Beer Distribution Law - September 2013

by Lewitt Hackman


The beer industry is one of the most highly regulated industries in the United States. Every state oversees the sale and distribution of beer, and the differences among the states' regulatory processes result in a maze that can be difficult to navigate for brewers, distributors and retailers and the attorneys who advise them. 




A "growler" is a refillable/re-sealable glass container that typically holds a half-gallon of fresh beer. Under current California law, any beer sold in California must be in a container with a label indicating, among other things, the name of the manufacturer and bottler. Manufacturers, importers and wholesalers may not fill or refill any container labeled otherwise. This past month, however, AB 647, a bill that was strongly supported by the California Craft Brewers Association (CCBA), passed the California legislature and, when signed by the Governor, will allow beer manufacturers to refill growlers originally filled and labeled by another brewer, as long as the refilling brewery removes or completely obscures any prior labels and re-labels the growler with its own label, properly identifying the beer. California retailers may only sell growlers originally filled and properly labeled by a licensed beer manufacturer, but may not refill growers under current law. The CCBA believes that a bill may be forthcoming in 2014 to allow on-premise and off-premise retailers to refill growlers.




Groups representing craft brewers and beer distributors have come together to support some important changes to Michigan's Liquor Control Code of 1998. HB 4710 would, among other things, amend the definition of "Micro Brewer" to mean any brewer that produces less than 60,000 barrels of beer per year, which would double the amount of beer a brewer can produce and sell directly to consumers for consumption on or off its licensed brewery's premises. 



Texas has radically changed its beer distribution landscape. SB 515-518 and SB 639 changed Texas law to, among other things, allow breweries the right to sell beer to consumers for on-site consumption, breweries that produce less than 125,000 barrels a year to self-distribute their beer, and brewpubs (restaurants, pubs or other similar establishments that produce their own beer for on-site sales and consumption) the right to self-distribute up to 1000 barrels a year and to sell their beer through wholesalers. The new laws also protect the three-tier system by strengthening the Texas law that prohibits a beer manufacturer from setting/fixing the price at which a distributor may resell its beers, banning breweries from selling or charging a fee to a distributor for the right to distribute its beers, and denying breweries the right to sell beer to consumers for off-premises consumption.



In August 2013, Illinois doubled the amount of beer a brewer may manufacture and still be considered a craft brewer from 15,000 barrels to 30,000 barrels. In June 2011, Illinois created a craft brewer license and an exemption to allow craft brewers that manufacture no more than 15,000 barrels of beer annually to self-distribute up to 7,500 barrels and to allow brew pubs to simultaneously own a craft brewer's license, provided the brew pub intends to transition to being a craft brewer. Due to the popularity of craft beers over the past two years, craft brewers in Illinois will now be allowed to manufacture up to 30,000 barrels and continue to self-distribute 7,500 barrels.



The makers of the energy drink Red Bull announced in August 2013 that they will not proceed with a legal challenge against a UK brewery using the name "Redwell" on its beer. Red Bull had earlier sent a letter to Redwell Brewing, which employs 8 people, stating that the brewery's mark was "highly similar" to Red Bull's trademark, "Red", and that "Redwell" and "Red Bull" looked and sounded so similar that it was likely that Red Bull's customers would perceive the brewery's products as an "imitation". Red Bull warned Redwell that legal action would follow if the matter was not resolved quickly, but following adverse publicity, Red Bull relented stating: "There is no dispute here. Red Bull has long been willing to allow Redwell to maintain its mark for beer so long as they do not use it for energy drinks."



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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