Court Allows Lawsuit Challenging N.C.'s Self-Distribution Cap To Proceed


R Street's Jarrett Dieterle has previously written about North Carolina's self-distribution cap for beer. The law holds that once a brewery reaches 25,000 barrels of annual production, it can no longer distribute its own beer to retailers but most work through a wholesaler. Breweries in North Carolina tried to repeal the law legislatively last year, but were thwarted in their efforts. They then turned around and filed a lawsuit, and as the Carolina Journal reports, a state court recently rebuffed the state's attempts to dismiss the suit:

A Wake County Superior Court has ruled against the state of North Carolina in a lawsuit seeking a permanent injunction against enforcement of the state’s distribution cap and franchise laws on breweries.

The complaint — filed last year by Craft Freedom LLC, The Olde Mecklenburg Brewery LLC, and NoDa Brewing Co. — says the distribution cap and franchise laws injure and threaten to impose additional damage on the brewers. They can produce no more than 25,000 barrels of beer each year without contracting with a distributor.

A subsequent motion filed by the state says the complaint should be dismissed with prejudice, and asserted the challenge, according to statute, must be heard by a three-judge panel of the Superior Court.

Superior Court Judge Allen Baddour, who heard the complaint March 20, issued the ruling Tuesday, May 15.

“We are pleased with the Court’s ruling, which rejected the State’s arguments for dismissal and held that we sufficiently alleged that these laws are unconstitutional,” Drew Erteschik and Bob Orr, lawyers for the brewers, said in a statement. “Our craft brewery clients, the entire craft beer community, and craft beer consumers across North Carolina can all share in this major victory.”

The ruling allows the lawsuit to proceed toward a trial...

Read the rest here.