State Distribution Laws
Mississippi
License Needed to Self-Distribute: No
Statute: Miss. Code Ann. § 67-3-46
Mississippi does not allow brewers (or other manufacturers) to act as their own wholesalers, meaning that self-distribution is not allowed.
Mississippi also has several rules governing the relationship between brewers and their wholesalers. First, the state requires the distribution agreements between the brewers and wholesalers to be in writing, and to provide the wholesalers with an exclusive territory. Brewers are prohibited from doing several things, including:
- setting resale prices for their wholesalers
- requiring wholesalers to accept products they haven’t ordered (though this does not prevent brewers from imposing reasonable inventory requirements)
- adding provisions to their agreement which would impair the wholesaler’s ability to successfully distribute other brands
- requiring the wholesaler to purchase one product as the condition of purchasing another
- requiring a wholesaler to provide audited financial statements as a condition of renewing the distribution agreement
- requiring wholesalers to contribute to an advertising fund
- requiring or prohibiting a change in management of the wholesaler (unless the rejected manager doesn’t meet the brewer’s reasonable qualifications)
- unreasonably interfering with the transfer of the wholesaler’s business
- restricting free association amongst wholesalers
Additionally, brewers cannot modify, terminate, or not renew a distribution agreement unless they have good cause to do so, and have provided the wholesaler with proper notice. A brewer has good cause when the wholesaler fails to comply with a reasonable and material provision of the distribution agreement, the brewer has learned about this failure within the past two years, and the wholesaler was given 30 days to come up with a plan to fix the problem and another 90 days to implement the fix. There are a few situations where the brewer can immediately terminate the distribution agreement upon written notice to the wholesaler, including when:
- the wholesaler becomes insolvent or files for bankruptcy
- the wholesaler’s license is suspended or revoked for more than 31 days
- the wholesaler, or one of its owners who owns more the 10% interest, is convicted of a felony which adversely affects the good will of the wholesaler or brewer (though the brewer must give the other owners a chance to buy out the convicted owner before terminating the agreement)
- the wholesaler sells outside of its territory
- the wholesaler transfers its business without first notifying the brewer
- the wholesaler engages in fraudulent conduct in its dealings with the brewer.
If a brewer modifies, terminates, or fails to renew a distribution agreement, it must compensate the affected wholesaler for the diminished value of the wholesaler’s business. If the brewer and wholesaler cannot agree to compensation, the matter will go to arbitration. Additionally, if the brewer breaks any of the rules outlined above, it may be subject to a civil action brought by the wholesaler, who may be entitled to damages.
