Texas craft brewers sue for freedom from distributors

R Street's Josiah Neeley writes:

During its last session nearly two years ago, the Texas Legislature passed groundbreaking reforms to allow the state’s craft breweries greater freedom to operate. But thanks to a little-noticed provision slipped into the bill, that freedom may soon hit a roadblock.

Ever since the repeal of Prohibition, Texas law has required a separation between producers, distributors and retailers of alcoholic beverages. Under this so-called “three-tier” system, breweries over a given size must contract with a distribution company to sell their booze to retailers.

The 2013 reforms prohibit alcohol manufacturers from receiving compensation from distributors as inducement for a territorial distribution agreement. That’s significant, because Texas law requires distribution agreements to be both geographically exclusive (for example, a given brewer can only distribute through a single distributor in Houston) as well as irrevocable....

Read more at http://www.rstreet.org/op-ed/texas-craft-brewers-sue-for-freedom-from-distributors/