Vermont Reforms Beer Franchise Laws, But Do They Go Far Enough?


State franchise laws often make it difficult for brewers to end relationships with distillers, creating a legal restraint that can impact the growth of craft breweries. (R Street's Jarrett Dieterle discussed franchise laws in this past piece for The Federalist). According to Brewbound, Vermont has passed legislation that makes it easier for brewers to terminate their contracts with wholesalers:

On Monday, Vermont Gov. Phil Scott approved House Bill 710, which will allow beer companies making fewer than 50,000 barrels annually, and whose business accounts for three percent or less of a wholesaler’s total annual sales, to break their franchise agreements.

Beer makers who want to terminate their wholesalers will be required to provide compensation for inventory as well as five times the average annual gross profits earned by the wholesaler on the brewery’s products during the previous three fiscal years. For newer beer companies, they must pay for the period of time they’ve been in business.

The regulations are slated to take effect in 2022...

More here. Some brewers in the state, however, feel that the reforms didn't go far enough, as reported by Vermont Public Radio:

[T]he proposed changes to the law only make minor adjustments to that relationship, according to Sean Lawson, co-owner of Lawson’s Finest Liquids.

“I’m a little disappointed that the bill doesn’t go a little further,” Lawson says. “It’s a small step in the right direction of allowing small brewers the freedom to do business without the undue government interference, but there are a number of provisions that were concessions to the concerns of wholesalers and distributors.”

Lawson says brewers are disappointed that the new rules won’t fully start until 2022.

And the new law will only affect the smallest breweries — once a craft beer gets popular, and grows, there's a chance that it will not benefit from the new rules.

Under the new law craft brewers will be able to get out of contract, but they will have to buy their way out, another rule which Lawson says doesn’t sit well with craft brewers...

Read the rest here.