State Distribution Laws

Brewers in Texas who hold a brewer’s license and produce less than 125,000 barrels per year may also obtain a self-distribution license permitting them to self-distribute up to 40,000 barrels per year. Brewers who hold both a brewpub license as well as a wine and malt beverage retailer’s permit are permitted to self-distribute up to 1,000 barrels of beer per year to retail licensees. If the brewpub licensee operates multiple brewpub locations, this amount increases to 2,500 barrels per year for all locations combined.

Brewers who use wholesalers must enter into written agreements with those wholesalers and give them exclusive territories for the brands they are authorized to distribute. Additionally, brewers are not allowed to:

• Force wholesalers to accept beer they haven’t ordered
• Change the price they charge wholesalers based on the price at which the wholesaler resells their products
• 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
• Restrict the free association amongst wholesalers
• Unreasonably withhold their consent to the transfer of a wholesaler’s business

Brewers are not allowed to terminate or not renew their distribution agreements without first giving the wholesaler 90 days’ notice of their intent to terminate/not renew. Additionally, the brewer must have good cause, which means that the wholesaler failed to substantially comply with an essential, reasonable, and commercially acceptable term of the agreement and fails to correct the problem within 90 days of receiving notice from the brewer. However, brewers are permitted to terminate their distribution agreements with no prior notice when:

• The wholesaler’s license is revoked for more than 30 days
• The wholesaler becomes insolvent or declares bankruptcy
• The wholesaler does not pay the brewer upon receipt of a demand notice for payment
• The wholesaler is convicted or pleads guilty to violating a law that materially and adversely impacts its ability to continue in business

If a brewer terminates or doesn’t renew a distribution agreement without good cause, they must pay the wholesaler for the fair market value of the affected brands.