You Should Be Paid For Your Self-Distribution Rights – and Texas Agrees!
In 2013, distributors lobbied and won a concession as part of a generally positive group of reforms supporting the craft brewing industry in Texas. The provision they slipped into the 2013 amendments to Texas craft brewing laws prohibited brewers from getting value for their self-distribution rights. The entirety of sales driven profits, the law said, had to be handed over to a distributor without the brewer receiving anything for the blood, sweat, and tears they’d put into building their brand one sale at a time.
That all changed recently when a Texas trial court overturned that portion of the law, holding that it violated the state of Texas’ constitutional provision. The constitutional provision cited prohibits the state legislature from enriching a business at the expense of another through legislation. Prior to the law’s passage, Texas brewers had the right to sell their self-distribution rights to distributors and were fairly compensated when they did. The state could still appeal the ruling, but for now, a big win for the rights of craft brewers and potentially some good case law to follow should an appeal occur with a similar result.
The finding is definitely persuasive and great reminder that brewers who develop a sales network and self-distribution channels shouldn’t just sign away those rights in other states. They should demand and receive fair compensation.