Texas craft brewers take fight for their distribution rights to Texas Supreme Court

The endless court battle craft brewers in Texas have been fighting for their own distribution rights continues. The Texas Third Court of Appeals reversed a trial court decision that struck down a 2013 law that made it illegal for brewers to receive compensation for their distribution rights.

The law, enacted after beer distributors persuaded the Texas Legislature to force craft brewers to surrender their valuable distribution rights for free when contracting with distributors, has forced brewers to give up millions of dollars of value in the businesses they are trying to grow, while at the same time allowing distributors to sell those rights to another distributor. A group of Texas brewers teamed up to challenge the law in 2014, and they plan to appeal this most recent decision to the Texas Supreme Court.

“It is well established that the Texas Constitution protects economic liberties, and these rights do not cease to exist when the government begins licensing and regulating individuals and businesses,” said Arif Panju, managing attorney for the Institute for Justice’s Texas office, the group representing Austin-based Live Oak Brewing; Revolver Brewing, located in Fort Worth; and Peticolas Brewing in Dallas. “Every business in Texas should be concerned with the court’s ruling in this case. It is dangerous, and we will ask the Texas Supreme Court to reverse.”

“For the last 21 years, I’ve poured my life into this business,” said Chip McElroy, president of Live Oak Brewing. “I’m proud to have been part of the Texas craft beer Renaissance. When Texas passed this law, not only was I prohibited from sitting at a negotiating table to sell my own distribution rights — but it took my beer off the shelves in cities across Texas where Live Oak beer would otherwise be available.”

“Texas’s prohibition on selling distribution rights was written by distributors, for distributors, at the expense of brewers. That sort of naked wealth transfer is unconstitutional. We will be asking the Texas Supreme Court to reverse today’s decision and ensure that all business owners in Texas receive the constitutional protection they are entitled to.”