The Fight Over Massachusetts’ Alcoholic Beverage Franchise Laws

Massachusetts brewers descended on Beacon Hill last week to continue their almost decade-long fight to liberate their beer from the draconian franchise law holding them hostage. Pursuant to Massachusetts General Law Chapter 138 Section 25E, any brewery (or distillery or vineyard for that matter) that sells its product to a distributor for a six-month period is automatically entered into a business relationship (whether an explicit agreement exists or not) requiring the brewery to sell that particular product exclusively to that distributor, potentially for life. The inability to extricate their products from distributor relationships, particularly when the business relationship has deteriorated, has irked brewers for years. Meanwhile, Distributors suggest a change in the law would risk jobs and shutter businesses. Several bills are pending at the State House to do just that, but to fully understand the current situation it helps to have some background.

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A Not-So-Surprising Shift in the Massachusetts Brewing Industry

Night Shift Brewing, one of the more successful and entrepreneurial breweries in Massachusetts,  is set to launch their own beer distribution company. Based in in Everett, Night Shift has built their brand from the ground up. They developed an allegiance of customer support that travels near and far to their taproom in order to enjoy their wildly popular beers. In 2014 they moved into a 30,000 square foot facility in Everett with a large taproom. Their beers became so popular that they recently opened an expanded taproom area to accommodate the nightly influx of eager patrons. During this time, the brewery has always self-distributed its own product. Weary of the long-term relationship that is created once entering into a distribution arrangement with a wholesaler, they opted for full control with potentially less reach while building their brand. 

 

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Legislating Liquor Laws: The Fallout

The Massachusetts Legislature put forth a number of proposals that would have significantly impacted the alcoholic beverage industry over the past legislative session, from the Governor's attempt to give municipalities authority over their own liquor license quotas, easing the laws governing distribution agreements between brewers and distributors, to further regulating alternative proprietorship arrangements. Let’s take a look at what they did and did not do:

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