State Distribution Laws
Colorado
License Needed to Self-Distribute: Yes
Statute: C.R.S. 44-3-402; C.R.S. 44-3-417
In Colorado, brewers with a brewer’s license can brew beer, but can only self-distribute if they also get a wholesaler’s license. Brewers can apply for both licenses at the same time. Brewers who get a wholesaler’s license must still have a designated space for their wholesale operation where beer must be placed for inventory and tax purposes. City and County Brewpub licenses only allow 300,000 gallons (approximately 9,677.5 barrels) of self-distribution per year to licensed brewers.
Brewers must have written distribution agreements with their wholesalers that specify the territory and products they can distribute. These territories must be exclusive so no more than one wholesaler can be assigned to a specific area.
Colorado has additional regulations covering the brewer/wholesaler relationship, but these additional regulations don’t apply to brewers who produce less than 300,000 gallons (approximately 9,677.5 barrels) per year. Brewers who violate these regulations may owe damages to the wronged wholesaler.
These regulations prohibit a brewer from terminating a distribution agreement with a wholesaler unless:
1) the wholesaler fails to comply with provision of agreement;
2) the wholesaler receives written notice of this failure by certified mail, return receipt requested;
3) the wholesaler gets 60 days to cure the problem; and
4) the brewer sends a final notice if the wholesaler doesn’t fix the problem, stating their intent to terminate the agreement, their reasons for doing so, and the date it will take effect.
Brewers are allowed to terminate a distribution agreement immediately upon written notice, certified mail return receipt requested if:
1) the wholesaler fails to pay upon written demand;
2) the wholesaler declares bankruptcy, dissolution, insolvency, or assignment to benefit of creditors;
3) the wholesaler’s license to sell products is revoked for more than 14 days;
4) if an owner of the wholesaler is convicted of a felony that adversely affects goodwill of wholesaler or supplier (as judged by supplier) and fails to sell his or her shares within 120 days of conviction;
5) the wholesaler is convicted of a felony that materially affects its ability to do business;
6) the wholesaler transfers its business without obtaining prior approval from the brewer;
7) the wholesaler engaged in fraudulent conduct in its dealings with the brewer;
8) the wholesaler sells outside of its designated territory; or
9) the wholesaler ceases business for five consecutive business days.
Brewers are also allowed to terminate a distribution agreement at any time by sending 90 days’ notice (certified mail, return receipt requested) to the wholesaler, along with copies to all other wholesalers in all other states who have entered into the same distribution agreement with the supplier.
