State Distribution Laws
Maryland
License Needed to Self-Distribute: Yes
Statute: MD Code, Alcoholic Beverages, § 2-308
Maryland allows businesses holding a brewer’s or microbrewer’s license that produce less than 45,000 barrels per year to apply for a limited beer wholesaler’s license, which allows them to self-distribute up to 5,000 barrels per year.
Additionally, Maryland has laws governing the relationship between brewers and their wholesalers. Brewers cannot:
- force wholesalers to accept beer they haven’t ordered
- fail to deliver beer the wholesaler ordered and has advertised for immediate sale
- license multiple wholesaler’s in the same territory
If a brewer wants to terminate or not renew their distribution agreement with a wholesaler, they must give the wholesaler 45 days’ written notice of their intent to terminate or not renew the agreement. The notice must state the reason the brewer wants to terminate or not renew the distribution agreement. If the brewer produces more than 20,000 barrels per year, they must give 180 days’ written notice, have good cause (which includes the wholesaler losing their license) for terminating or not renewing the agreement, and also give the wholesaler 180 days to correct the problem. This notice requirement is not required when the wholesaler becomes insolvent, bankrupt or assigns its interest to the benefit of creditors.
If a brewer that produces less than 20,000 barrels per year intends to terminate or not renew a distribution agreement, they must enter into a termination agreement with the terminated wholesaler. The termination agreement must compensate the wholesaler for the fair market value of the business lost and provide that the brewer will repurchase its products the wholesaler still has in its inventory. If the brewer and wholesaler can’t agree on what the compensation should be, the matter will go to arbitration. A wholesaler can bring a lawsuit for damages against a brewer that violates these laws.
