State Distribution Laws
Massachusetts
License Needed to Self-Distribute: Yes
Statute: ALM GL ch. 138, § 19
In Massachusetts, holders of a farmer brewery or alcohol manufacturers license are permitted to sell their products to anyone holding a valid license in Massachusetts for the sale of alcoholic beverages in the state. However, brewers that only possess a pub brewery license are not permitted to self-distribute. Brewers are not permitted to discriminate between wholesalers and retailers with regards to pricing, must ensure their product and pricing schedules are on file with the state before selling anything to their wholesalers or retailers.
Massachusetts also has several laws regulating a brewer’s relationship with wholesalers. For instance, brewers cannot start refusing to sell and deliver products to a wholesaler they have regularly been selling those products to for the preceding 6 months. In order to do so, the brewer must first provide the wholesaler and the state with at least 120 days’ written notice of its intent to stop delivering those products. The notice needs to provide the grounds on which the brewer is discontinuing selling those products to the wholesaler. The state commission may also hold a hearing on whether there is good cause for the brewer discontinuing those sales. In Massachusetts, good cause is limited to:
- the wholesaler’s disparagement of the product that impairs the brewer’s or their product’s reputation
- the wholesaler unfairly giving preferential treatment to their sales efforts for brand items of a competitor
- the wholesaler’s failure to exercise best efforts in promoting the sale of any of the brewer’s products
- the wholesaler engaging in improper or prohibited trade practicesor
- the wholesaler’s failure to comply with the terms of sale agreed upon between the brewer and the wholesaler
If a brewer wants to terminate a distribution agreement without good cause, it must first provide the wholesaler with 30 days’ written notice, re-purchase the wholesaler’s inventory of the brewer’s products, and compensate the wholesaler for the fair market value of the affected business. If the brewer and wholesaler cannot agree on compensation, the wholesaler can request that the matter go to arbitration.
