FRAMINGHAM, Mass. | In the wee hours before the end of the 2020 legislative session, Massachusetts lawmakers voted to reform the state’s franchise laws.
This is a momentous occasion for Massachusetts craft brewers who since 2011 have been working to ease the historical constraints on terminating contracts with their wholesaler.
Members of the Mass Brewers Guild and the Massachusetts Wholesalers Association worked together to craft legislation Bill S.2841 which creates a new “qualified brewer” definition. This would allow any operation that produces fewer than 250,000 barrels annually a path forward to end their contract with their wholesaler. Under existing law, breweries are held in their contracts in perpetuity until they can prove “cause,” in the court of law – a long and costly process that a craft brewer would unlikely to survive. As a part of the three-tier system, wholesalers are largely responsible for distributing brewers’ products to restaurants, bars, grocery and convenience stores.
The barrelage cap will cover every craft brewery in the state apart from Boston Beer Co., makers of Samuel Adams. For the past 10-years Jim Koch, founder and head brewer of Samuel Adams, and founding member of the Mass Brewers Guild, has led the charge to change the state’s laws to give the hundreds of craft brewers in the Commonwealth the ability to grow their businesses. Wholesalers would not support the proposed legislation without exclusion of Boston Beer. In order to clear the way for the legislation to become law, Boston Beer agreed to be excluded from the benefits of the legislation that will now be enjoyed by all other Mass Brewers Guild Members.
“There is a long list of people who helped to make this ten-year effort a reality,” says Sam Hendler, co-founder of Jack’s Abby Craft Lagers and president of the Mass Brewers Guild. “More notably Senate President Spilka and House Speaker Mariano. Equally as important, we have to recognize past and present board members and members of our community who laid the groundwork of educating legislators, the countless legislators that championed our bill on Beacon Hill session after session and moved it forward, and our incredible craft beer fans who signed our petition and voiced their support on our behalf. It’s a great day for craft beer in Massachusetts.”
The state’s franchise laws were enacted in 1971 by state legislature to protect in-state distributors from large out-of-state and foreign brewers, at a time when small, independent craft brewers did not exist. As such, these laws provided un-waivable legal protections to beer distributors to protect the termination of their right to distribute a brand.
Today’s beer landscape looks much different as beer distributors have continued to grow and consolidate while hundreds of new craft breweries open each year. To date, there are roughly 30 beer Wholesalers in Massachusetts compared to 210 craft breweries across the Commonwealth, with 20 breweries expected to open before the close of 2021, and an additional 10 breweries in planning stages.
“With the unbelievable financial pressures that have come down on our industry due to the impacts of the coronavirus pandemic, there will be breweries whose existence is saved by gaining this flexibility to control their destiny,” says Hendler. “Combined with the increasing importance of wholesale distribution with the obvious challenges running tap rooms, we need strong relationships with our most valuable partner. This will help us get there. There’s a lot that we can accomplish together.”
The new measure now advances to Gov. Charlie Baker to sign or veto the bill, or allow it to become law without his signature.
Massachusetts will join New York, Maine, Washington and Vermont, states that have successfully reformed their franchise laws, with only an additional five states nationwide that have created an easier path to termination through legislation.
From the bottom of our beer glasses Massachusetts brewers thank the many people who helped us achieve this new state law. This herculean effort would not have been possible without the long-fought work of so many people.
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ABOUT THE MASS BREWERS GUILD:
Founded in 2007 by a group of committed and passionate brewers, the Mass Brewers Guild, is organized for the purposes of promoting craft brewing and protecting the interests of craft brewers across the Commonwealth. The association is membership based and open to all Massachusetts breweries licensed by the federal Tax and Trade Bureau and the Commonwealth’s Alcoholic Beverages Control Commission. The nonprofit creates a community of brewers while shining light on the broad range of breweries and styles offered throughout the state. Through industry and educational events, its mobile application beer trail map, and by providing resources and marketing support to brewers, the nonprofit works to highlight Massachusetts as a top travel destination for craft beer in the U.S. The board also continues its work at the legislative level, serving as the voice of craft brewers on Beacon Hill. The Massachusetts Brewers Guild is a 501(c)6 not-for-profit organization. For more information, visit MassBrewersGuild.org.