Amid a series of positive craft beer industry legislation passed in Texas in 2013, there was a seedy poison pill law that also made the cut. This Texas state law prohibited breweries from selling their own distribution rights, which is a sentence you should probably read again to let it sink in. Imagine how it plays out: After a successful craft brewery grows enough to exceed 125,000 bbls a year, they could no longer self-distribute and had to sign on with a distributor to enter new markets. That’s not too uncommon a provision across the country, but that 2013 made it so once that distributor contract was signed, those rights (the rights of this now large, popular, proven product) were the sole ownership of the distributor. The craft brewery no longer was in charge of its own business outside its walls — and that distributor was free to sell those rights to another distributor, essentially profiting off of that craft brewery while the brewery had no say so and received no compensation.
I mean, wut?
It was insane and hopefully now a thing of the past. Several Texas craft breweries (Live Oak, Revolver, Peticolas) joined together to sue the state in 2014, claiming the law to be unconstitutional and last week Travis County Judge Karin Crump agreed.
From the KXAN, the NBC affiliate in Austin:
“The Texas Constitution prohibits the legislature from passing laws that enrich one business at the expense of another,” said Institute for Justice Senior Attorney Matt Miller, who represented the brewers in court. “This ruling is a victory for every Texas craft brewery and the customers who love their beer.”
For Live Oak Brewing owner Chip McElroy, the legal battle was about keeping what he believed was rightfully his. “This law took part of my business away from me and gave it to big distributors,” said McElroy in a statement. “Now I’ve got my business back.”
McElroy was able to sell his Houston distribution rights prior to the 2013 law but the other two plaintiffs had not.
The state has 30 days to appeal the ruling. Here is hoping Judge Crump will be hearing this Texas craft beer lawsuit as well. Cheer to Texas craft beer.