Mass. Law Pretty Much Locks Brewers into Perpetual Contracts with Distributors, Says Local Brewery Owner

The way the Republican of
Springfield, Mass. explains it, the struggle of Antonio Rizos,
owner of Opa Opa  Brewing in Western Massachusetts is akin to
Curt Flood fighting for free agency in Major League Baseball.

Via the Republican:

In Massachusetts, brewers need to contract with
wholesalers for the distribution of their products to bars and
package store. Rizos can sell as much beer as he wants at his own
two restaurants, Opa Opa Brewery and Steakhouse in Southampton and
the Brewmaster’s Tavern in Williamsburg, but he needs a wholesaler
if he wants to deliver a case to a package store down the
street.

Rizos’ issue with the law, Massachusetts General Laws Chapter 138,
section 25E, is that once a brewer has a relationship with a
wholesaler lasting six months or more, the wholesaler gains
distribution rights indefinitely regardless of performance. And
that, he said, is bad business.

Distributors, naturally, deny the characterization. If Rizos
doesn’t like the arrangement, after all, he can try to sever the
relationship if he thinks he has “good cause.” Then all he has to
do is give 120 days-notice and wait for years of appeals to work
through the state’s alcohol commission. Then he can go find another
distributor for his wares. A
statement from Rizos’ distributor claims that “Opa Opa chose to
trade their proprietary rights to use other distributors in
exchange for providing exclusivity to” the distributor. If you can
parse that claim, let me know in the comments.

Rizos and the brewer’s guild say in such situations brewers are
forced by economic realities to stop producing the beer they don’t
think their distributor is distributing appropriately, costing
jobs. The invocation of “jobs” has gotten the state involved. Is
lawmakers’ solution to permit producers to enter into any kind of
contract with distributors and retailers that they can negotiate
with them? The repeal of prohibition came with the proviso that
states could control alcohol in their states any way they pleased,
so perish the thought. The state, naturally, wishes to keep its
controls on alcohol in place. A proposed bill to “fix” the problem
of breweries being forced into indefinite contracts with
distributors only provides an exemption for small breweries, like
Rizos’, from the state law. The brewers’ guild supports that “small
brewer relationship” exemption. The president of the guild
explained to the Republican that when the original law,
referred to as 25E, was passed, there were only about a dozen
breweries in Massachusetts but 60 wholesalers. Those numbers have
now pretty much been reversed.

Since the end of Prohibition, every state has had some form of a
“three
tier system,” separating, regulating, and sometimes relegating
to state ownership the production, distribution, and retail of
alcoholic beverages. In 2011, Washington state became, via ballot
initiative, the first state to fully privatize the alcohol
industry. Since that law was implemented, DUI arrests have
fallen, the opposite of what opponents of the initiative
claimed before its passages. Privatization did not lower prices,
something supporters
actually steered clear of claiming. Higher prices can actually
be partly attributed to the initiative, not because it privatized
the industry, but because it
added  new fees on retailers and distributors on top of
some of the highest liquor taxes in the country.

Related:
It gets better, slowly.

h/t John M.