Alabama law severely limits the ability for brewers to terminate or amend their distribution agreements, while also requiring them to enter into these exclusive agreements to place their products in bars, restaurants, and stores. Licensed wholesalers, on the other hand, are free to transfer these distribution agreements with little recourse available to their suppliers. The 1988 law that enables this imbalance was clearly designed to favor licensed wholesalers. While such protectionism for wholesalers may be justified against multinational brewers, it puts an undue burden on small and independent craft breweries. The state should allow small breweries to terminate their distribution agreements more easily.
Current Alabama law requires retail licensees to purchase beer and wine from licensed wholesalers. Breweries and wineries are prohibited from self-distributing their products and from having a financial interest in a licensed wholesaler. This system was put in place to prevent large national and multi-national alcohol manufacturers from dominating the retail market. It does not make sense for small local and regional breweries and wineries. The state should allow small manufacturers to self-distribute beer and wine to retailers.
Alabama’s craft breweries are not only producing world-class beer. Their tasting rooms have also become community centers and destinations for visitors. Many craft brewers have on-site restaurants, offer tours of the production area, and host events for local organizations. However, current law only allows them to serve their guests alcohol that was produced on-site. To maximize how these businesses can operate and serve their guests, the state should allow small manufacturers to hold retail-class licenses to purchase beer and wine from licensed wholesalers, and liquor from the ABC Board, for resale to the public. In 2014, Alabama was unable to compete for a $74 million facility for Stone Brewing Co’s Eastern US site in part because Alabama lacks the ability for craft manufacturers to do these types of operations.