State Distribution Laws
Virginia
License Needed to Self-Distribute: Yes
Statute: Va. Code Ann. § 4.1-208
Virginia currently does not permit breweries to self-distribute their beer to retailers, BUT, the Virginia legislature just passed a house bill setting forth the framework that would allow Virginia brewers to self-distribute up to 500 barrels per year.
Brewers using a wholesaler to distribute their products must comply with Virginia’s Beer Franchise Act. One requirement is that brewers must designate exclusive territories for their wholesalers and report those territories to the state. Additionally, among other things, the Act prohibits brewers from:
- Forcing wholesalers to accept beer they haven’t ordered
- Discriminating between wholesalers
- Setting the resale price for their products
- Raising the price a wholesaler must pay for their product without first giving them 30 days’ notice and sending a copy of that notice to the state
- Restricting a wholesaler from selling or distributing another brand of beer
- Requiring or prohibiting a wholesaler from changing its manager unless the manager doesn’t meet the brewer’s reasonable qualifications
- Restricting the free association amongst wholesalers
- Unreasonably withholding their consent to the transfer of a wholesaler’s business
Brewers cannot modify, terminate, or not renew their distribution agreements without good cause, and without first providing the wholesaler with 90 days’ notice. This notice must also be sent to the state, and the wholesaler has the opportunity to fix the issue within 60 days of receiving the notice. Notice is not required, and the brewer can terminate the agreement immediately, if the wholesaler is bankrupt, makes an assignment for the benefit of creditors (other than for creating a security interest to secure financing), or the wholesaler’s license is revoked. Other than these scenarios, good cause also includes the wholesaler failing to substantially comply with a reasonable and material requirement of the distribution agreement, which includes, but isn’t limited to:
- Failing to maintain proper sales volumes
- Failing to provide comparable quality of service as other wholesalers
- Transferring its business without the brewer’s consent
