State Distribution Laws
Utah
License Needed to Self-Distribute: Yes
Statute: Utah Code Ann. § 32B-11-503
In Utah, small brewers (brewers that brew less than 60,000 barrels per year) are permitted to self-distribute to licensed retailers.
Brewers who use wholesalers (and do not qualify as a small brewer) must enter into written distribution agreements with their wholesalers, giving them exclusive territories for the brands they are authorized to distribute. Brewers are permitted to refuse delivery to wholesaler if the wholesaler does not pay the brewer in accordance with their agreement or if there are force majeure reasons outside of the brewer’s control that prevent delivery. Aside from that, brewers are not allowed to:
- Force wholesalers to accept beer they haven’t ordered
- Discriminate between wholesalers
- Change the price they charge wholesalers based on the price at which the wholesaler resells their product
- Require wholesalers to purchase one brand of beer as a condition of purchasing another
- Restrict a wholesaler from selling or distributing another brand of beer
- Require a wholesaler to participate in an advertising fund that is not used for advertising in the wholesaler’s territory
- Require a wholesaler to change its manager without good cause
- Refuse to deliver products within a reasonable time after the wholesaler orders it
- Restrict the free association amongst wholesalers
- Unreasonably withhold their consent to the transfer of a wholesaler’s business
Brewers are not allowed to terminate or not renew their distribution agreements without first giving the wholesaler 90 days’ notice of their intent to modify/terminate/not renew. Additionally, the brewer must have good cause, which means that the wholesaler failed to substantially comply with an essential, reasonable, and lawful term of the agreement, and subsequently failed correct the problem within 90 days of receiving notice from the brewer. However, brewers are permitted to terminate their distribution agreements with no prior notice when:
- The wholesaler’s license is revoked for more than 31 days
- The wholesaler becomes insolvent or declares bankruptcy
- The wholesaler engages in fraudulent conduct in its dealings with the brewer
- A 10% or more owner of the wholesaler is convicted or pleads guilty a felony that materially and adversely affects the goodwill of the brewer, except in situations where that owner’s interest is bought out within 90 days of the conviction or plea
If a brewer terminates or doesn’t renew a distribution agreement without good cause or without giving proper notice, the brewer must pay the wholesaler for the laid-in cost of the wholesaler’s inventory for the affected brand and for the fair market value of the wholesaler’s diminished business. However, brewers are allowed to terminate or not renew distribution agreements upon 30 days’ notice if it does not violate the terms of the agreement and they discontinue selling those brands of beer throughout the state.
