State Distribution Laws
Tennessee
License Needed to Self-Distribute: Yes
Statute: Tenn. Code Ann. § 57-5-101 (g)
In Tennessee, a brewer who brews less than 25,000 barrels of beer per year can self-distribute within their county. Those brewers can also self-distribute to retailers outside their county, but only if the total amount of beer they self-distribute is less than 1,800 barrels per year.
If a Tennessee brewer uses a wholesaler to distribute their products, they must follow Tennessee’s rules governing those relationships. To begin with, brewers are not allowed to:
- Allow multiple wholesalers to distribute the same brand in the same territory
- Force wholesalers to accept beer they haven’t ordered (although they are allowed to impose reasonable inventory requirements on the wholesalers)
- Withhold the delivery of beer or change the quota of beer if it isn’t done in good faith
- Require wholesalers to purchase one brand of beer as a condition of purchasing another
- Restrict a wholesaler from selling or distributing another brand of beer
- Require wholesalers to submit audited financial statements to the brewer
- Require wholesalers to participate in an advertising fund controlled by the brewer
- Require or prevent a wholesaler from changing managers without just cause
- Unreasonably withhold their consent to the transfer of a wholesaler’s business
Brewers are not allowed to modify, terminate, or not renew their distribution agreements without first giving the wholesaler 90 days’ notice of their intent to modify/terminate/not renew. The brewer must have good cause, which means that the wholesaler failed to comply with an essential and reasonable term of the agreement, the brewer learned about it less than 2 years before taking action, the brewer specified what the problem is to the wholesaler in the notice, and the brewer gives the wholesaler 30 days to submit a plan to correct the problem, as well as an additional 90 days after that to correct it. This notice and cure requirement does not apply in certain situations, and brewers are allowed to immediately terminate a distribution agreement upon written notice when:
- The wholesaler’s license is revoked for more than 60 days
- The wholesaler becomes insolvent or declares bankruptcy
- The wholesaler engages in fraud in its dealings with the brewer
- The wholesaler does not pay for delivered products within 5 days of receiving a written notice from the brewer that payment is late
- The wholesaler intentionally distributes outside its territory
Additionally, brewers are allowed to terminate distribution agreements upon 30 days’ written notice when a wholesaler’s owner is convicted of a felony, unless another owner notifies the brewer within 30 days of the conviction that they will buy out the convicted owner’s interest. If a brewer violates any of these provisions, a wholesaler can file a civil suit against them seeking actual damages and court costs.
