State Distribution Laws
Idaho
License Needed to Self-Distribute: Yes
Statute: Idaho Code § 23-1003
A brewer’s license does not allow brewers to self-distribute in Idaho, but brewers are permitted to also obtain a wholesaler’s license in order to self-distribute.
Additionally, Idaho has a host of rules and regulations governing the supplier/wholesaler relationship. Brewers that enter into distribution agreements with wholesalers cannot terminate those agreements without good cause and must do so in good faith. Good cause means that: 1) the wholesaler has not substantially complied with an essential and reasonable requirement of the distribution agreement; 2) the brewer learned about this non-compliance less than 24 months ago; 3) the brewer has given the wholesaler written notice of non-compliance that includes specifics about the problem, the brewer’s intent to terminate or not renew the agreement if it continues, and the date such termination would take effect; AND 4) the brewer has given the wholesaler 30 days to come up with a plan to fix the non-compliance and 90 days after that to execute and implement the plan. Brewers can also, upon written notice, immediately terminate a distribution agreement with a wholesaler when:
- the wholesaler loses their license and cannot service their territory for more than 30 days
- the wholesaler becomes insolvent
- a 10% or more owner is convicted of a felony that adversely affects the goodwill of the wholesaler, unless the remaining owners buy out the convicted owner within 30 days of the conviction
- the wholesaler transfers its business without written notice to the brewer
- the wholesaler engaged in fraudulent conduct in its dealings with the brewer
- the wholesaler fails to pay for ordered and delivered beer within 5 days of receiving notice and demand for payment from the brewer
- a wholesaler sells outside their designated territory
If a brewer terminates the distribution agreement, the wholesaler is entitled to the laid-in cost of the brewer’s inventory. If the brewer acts in bad faith or terminates a distribution agreement without good cause, the wholesaler is also entitled to compensation for the fair market value of its business related to the distribution of the brewer’s products, and for the good will of the business. Idaho defines fair market value as the highest dollar amount a wholesaler would sell the rights for, and that a buyer would be willing to buy given all relevant information. Brewers can also amend a wholesalers distribution agreement to remove a particular brand of beer if the brewer provides the wholesaler 30 days’ written notice, and the brewer is otherwise discontinuing that particular brand.
In addition to the restrictions on terminating, amending and not renewing their distribution agreements, brewers also cannot:
- force wholesalers to accept beer they haven’t ordered or cancelled. Breweries can impose good faith reasonable inventory requirements on their wholesalers
- require wholesalers to fix their resale prices
- require wholesalers to purchase one product as a condition of purchasing another product
- restrict the wholesaler’s ability to distribute other brands
- require the wholesaler to submit financial reports regarding the sale of other products as a condition of continuation or renewal of the agreement
- require the wholesaler to replace a manager or not approve a new manager unless that manager does not meet reasonable standards and qualifications for his or her position
Wholesalers have much fewer restrictions, the main one being that they cannot transfer a distribution agreement without first giving the brewer 30 days’ written notice, and in some cases, obtaining the brewer’s written consent to the transfer (which it generally cannot unreasonably withhold).
