State Distribution Laws
Rhode Island
License Needed to Self-Distribute: No
Statute: R.I. Gen. Laws § 3-6-1
Brewers in Rhode Island are not permitted to self-distribute their products and must use wholesalers for that process. Brewers must provide those wholesalers with a written distribution agreement and exclusive territories for the brands they distribute. Additionally, among other things, brewers are prohibited from:
- Forcing wholesalers to accept beer they haven’t ordered
- Preventing wholesalers from selling other brands or products
- Discriminating between wholesalers
- Setting the resale price for their products
- Requiring or prohibiting a wholesaler from changing its manager unless the brewer has good cause to do so
- Restricting the free association amongst wholesalers
- Unreasonably withholding their consent to the transfer of a wholesaler’s business
Brewers also cannot terminate or not renew their distribution agreements without good cause. Good cause is when the wholesaler fails to substantially comply with a reasonable term of its distribution agreement. The brewer must also provide the wholesaler with at least 90 days’ written notice of termination, and that notice must state the reasons they are terminating, when the termination will occur, what the wholesaler must do to remedy the situation, and the timeframe in which they must do it. However, brewers are allowed to immediately terminate their distribution agreements when:
- The wholesaler becomes insolvent or bankrupt
- The wholesaler has its license revoked which impairs its ability to continue business
- The wholesaler is convicted of a violation of law that impairs its ability to continue business
If a brewer terminates its distribution agreement without good cause or without giving proper notice, the wholesaler is entitled to compensatory damages, equitable relief, or possibly both. Compensatory damages include reasonable compensation for the affected value of the wholesaler’s business.
