State Distribution Laws
Louisiana
License Needed to Self-Distribute: No
Statute: La. R.S. 26:273
Louisiana does not permit holders of a microbrewery or manufacturers permit to hold a wholesale license. So, brewers in Louisiana must work with a wholesaler to distribute their products.
Louisiana requires brewers to provide their wholesalers with a written distribution agreement that grants them an exclusive sales territory. Additionally, brewers are prohibited from:
- fixing the resale price the wholesaler must sell their beer at
- requiring wholesalers to accept beer they haven’t ordered (though they can impose reasonable inventory requirements), or requiring the wholesaler to purchase a specific beer or brand as a condition of purchasing another beer or brand
- restricting the wholesaler from selling other brands
- requiring the wholesaler to submit audited financial statements as a condition of renewing the distribution agreement
- requiring the wholesaler to participate in an advertising fund
- unreasonably preventing a wholesaler from transferring its business, and
- restricting wholesalers from associating with other wholesalers
On the flip side, wholesalers must:
- devote appropriate efforts to selling and distributing their products
- adhere to only selling in their exclusive territory, and
- provide their suppliers with notice prior to transferring their business
Louisiana also restricts under what conditions a brewer can modify, terminate or not renew a wholesaler’s distribution agreement. Brewers can only take one of those actions if they have good cause, and provide the wholesaler with 30 days’ written notice. The notice needs to state what the brewer intends to do, the reason why, and the date it will take effect. The brewer also must provide the wholesaler with 30 days to submit a plan to correct the problem, and an additional 90 days to actually correct it. Louisiana considers good cause to be when the wholesaler fails to comply with a reasonable and material provision of the distribution agreement. There are also a few exceptions where a brewer can terminate the distribution agreement immediately with written notice, such as:
- the wholesaler’s bankruptcy/insolvency
- revocation of the wholesaler’s license for more than 31 days
- a 10% or more owner of the wholesaler is convicted of a felony that adversely affects the wholesaler’s goodwill, and the owner does not transfer that interest prior to the conviction
- the wholesaler engages in fraud in dealing with the brewer
- the wholesaler sells outside its exclusive territory
- the wholesaler doesn’t pay the brewer within two business days after receiving a written request for payment for products delivered
- the wholesaler transfers its business without giving the brewer proper notice; and
- the wholesaler shutting down its business, except for certain instances of force majeure
If a brewer modifies, terminates or fails to renew a distribution agreement in violation of any of the above provisions, it needs to compensate the wholesaler for the diminished value of the wholesaler’s business. If the brewer and wholesaler cannot agree on reasonable compensation, the dispute will go to arbitration.
