State Distribution Laws
Kentucky
License Needed to Self-Distribute: No
Statute: KRS § 243.157
Kentucky does allow brewers that hold a microbrewery license to sell and deliver up to 2,500 barrels of beer a year to a retailer, provided they registered the self-distribution with the state, and notify any wholesalers they have distribution agreements with of their self-distribution.
As for the distribution agreements themselves, they must be in writing and designate an exclusive territory for the wholesaler. Brewers are allowed to establish reasonable standards in their distribution agreements in order to preserve the quality of their brand so long as those standards are normal practice in the industry.
However, there are numerous things brewers are prevented from doing in their distribution agreements, including:
- setting resale prices for their distributors
- terminating or refusing to renew the distribution agreement without good cause, and without first giving the distributor 60 to 120 days to fix the problem. Good cause includes:
- distributor bankruptcy, dissolution, liquidation, insolvency or assignment to creditors
- failure to pay the brewer for beer
- failure of any owner of the distributor to transfer their ownership interest within 120 days after said owner is convicted of a felony (or the brewer learns of the conviction) which, in the judgment of the brewer, adversely affects the goodwill or interest of the distributor
- the distributor engages in fraudulent conduct in its dealings with the brewer
- the distributor’s license is revoked or suspended for more than 31 days, and
- the distributor sells beverages outside its exclusive territory
- unreasonably withholding their consent to the transfer of the distribution agreement, and
- requiring the distributor to arbitrate disputes with the brewer
Any brewer that violates these provisions may have to pay the distributor for reasonable damages the distributor incurs, as well as its costs and attorney’s fees involved in dealing with the brewer’s violation. If the brewer terminates (or doesn’t renew) the distribution agreement without good cause and doesn’t give the distributor a chance to fix the problem, the damages the distributor is entitled to are equivalent to the fair market value of its business.
