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North Carolina craft brewers sue over distribution law

Craft beers have become all the rage in recent years. Many beer drinkers are switching from the famous beers that have been around since their parents' and grandparents' days to those produced by craft breweries, which are small, independent companies. According to the Brewers Association, craft beers made up 12 percent of the U.S. beer market in 2016.

A number of states, including North Carolina, have caps on the amount of beer a craft brewery can produce annually before it has to hand over the distribution rights to another company. Those caps vary by state. Here in North Carolina, breweries are required to turn over control of pricing and sales to wholesalers if they sell at least 25,000 barrels annually.

Owners of North Carolina craft breweries, some of which have gone out of business, contend that the law is unconstitutional and that it gives distributors power over what brands succeed and fail. Lawyers representing two Charlotte craft breweries filed court documents demanding documents and communications including emails between state legislators, lobbyists and beer wholesalers. They're also asking to see agreements between large brewing companies and wholesalers.

The head of the North Carolina Beer & Wine Wholesalers claims that the law is necessary to ensure effective collection of taxes. He says, "We think that current law is sound and responsible policy that maintains safeguards and accountability, and we are confident that upon a thorough legal review the court will come to the same conclusion."

A judge recently refused a request to dismiss the lawsuit by the craft brewers. A spokesperson for North Carolina Attorney General Josh Stein said the office is reviewing that ruling.

It's not unusual for small business owners to find themselves at the mercy of those in the same industry who may feel threatened by their success and who may have clout with political power brokers who can enact and change laws to work in their favor. Experienced North Carolina attorneys who handle business and commercial law cases can provide valuable guidance and work to protect the interests of small businesses.

Source: The Post and Courier, "North Carolina beer distribution law: Brewers' suit bubbling," Emery P. Dalesio, AP, May 15, 2018

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