Maine Lawmakers Vote to Reform Self-Distribution and Franchise Laws
In the waning hours of the 2019 Maine legislative session last week, lawmakers voted to reform the state’s self-distribution and franchise laws.
Maine’s craft brewers and wholesalers worked together to craft the legislation (L.D. 1761), which creates a new “small brewery” definition, expands the amount of beer those companies can self-distribute and eases the constraints on terminating distribution contracts.
Now, the measure advances to Gov. Janet Mills, who has until July 2 to sign or veto the bill, or allow it to become law without her signature. Barring a veto, the new law will go into effect on September 19, 2019.
Under L.D. 1761, a “small brewery” is defined as an operation that produces fewer than 30,000 barrels annually. Previously, a small brewer was defined as making fewer than 1,600 barrels of beer annually. Under the existing law, companies that produce more than 1,600 barrels are required to sign contracts with wholesalers.
Currently, there are only two of Maine’s more than 140 licensed craft breweries above the 30,000-barrel threshold: Shipyard (99,500 barrels) and Allagash (96,140 barrels).
The new proposal would increase the self-distribution cap to 30,000 barrels annually, and enable companies under the 30,000-barrel cap to more easily exit their distribution contracts, so long as their brand accounts for less than three percent of their distributor’s sales and hasn’t sold more than 10,000 case equivalents (approximately 725 barrels) during the previous 12-month period.
Breweries looking to break contracts will be required to give 90 days’ notice and pay “fair market value,” which is calculated as 1x gross profits for brands whose sales have declined during the previous 12-month period or 2x gross profits for brands that have increased sales.
In an email to members of the Maine Brewers Guild, executive director Sean Sullivan called passage of the legislation “a major accomplishment” that “puts Maine on the leading edge of creating one of the best possible regulatory environments for breweries in the country.”
Speaking to Brewbound, Sullivan said the bill also allows breweries terminating their contracts to either immediately begin self-distributing their products or reassign their distribution rights to another wholesaler.
“It’s a huge win for our smaller brewers and the majority of Maine brewers,” Sullivan said. “It really just gives them more flexibility in how they grow their businesses.”
Connecticut Governor Signs Alcohol Reform Law
During a bill signing ceremony today at Milford, Connecticut-based Tribus Beer Company, Gov. Ned Lamont officially signed into law Senate Bill 647, which immediately increases the amount of beer a craft brewery can sell daily to consumers for off-premise consumption from nine liters (one case of 12 oz. cans) to nine gallons (four cases).
“I’ve signed a new law that will allow locally owned breweries to sell more of their product to customers for at-home consumption,” Lamont posted on Twitter. “The reason? Connecticut beer is just better. This law is long overdue and will support our small businesses.”
The legislation also consolidates the state’s four beer manufacturing permits into one, creates a “Craft Café” permit that allows the holder to sell all types of alcohol manufactured in the state and enables alcohol producers to hold multiple manufacturing permits in order to make other types of alcoholic beverages at a single facility.
North Carolina Lawmakers Pass Bill to Allow Alcohol Sales at College Sporting Events
Public universities and colleges such as the University of North Carolina and North Carolina State could soon begin selling beer and wine at sporting events after lawmakers passed House Bill 389 last week, according to the News & Observer.
The legislation now goes to Gov. Roy Cooper, whose signature could make alcohol sales a reality by this fall’s college football season.
According to the New & Observer, lawmakers view the measure as a way to increase revenue for the universities, as well as a way to keep fans who filter out of stadiums at halftime to tailgate in their seats for the second half of games.
Pennsylvania Brewery Sales Tax Bill Advances
Pennsylvania lawmakers are considering legislation that would lower an impending sales tax on beer sold in taprooms, tasting rooms and brewpubs, according to the Philadelphia Inquirer.
The Pennsylvania Department of Revenue (DOR) is scheduled to begin collecting a 6 percent sales tax for every dollar of beer sold directly to consumers at brewery locations. That tax would be in addition to the $2.48 per barrel state excise tax that Pennsylvania beer companies already pay.
However, House Bill 1549, sponsored by Rep. Natalie Mihalek, would allow breweries to assess a sales tax on 25 percent of the retail price of a pint instead of the 6 percent tax on every dollar. The legislation is now under consideration in the Senate Finance Committee.
As Brewbound reported earlier this month, the Brewers of Pennsylvania sent an email to members saying it had reached an agreement for a lower sales tax on direct-to-consumer sales.
“At this rate, a $6 pint of beer sold at a PA brewpub or taproom would be assessed a $0.09 cent sales tax,” the guild explained at the time. “That same tax as originally proposed by the Department of Revenue a year ago would have been $0.36 cents per pint.”
The Pennsylvania legislative session resumes this week.