Illinois Self-Distribution Battle

Illinois Craft Brewers Guild sponsors legislation to save self-distribution for some craft brewers

Craft brewers battle with distributors and major brands may play out in the state legislature this month.

The dispute began when Anheuser-Busch made a move to secure full ownership of one of its wholesalers. AB already owned 30 percent of City Beverage of Chicago and went to buy the remaining 70 percent. But the Illinois Liquor Control Commission pointed out that this would violate the three-tier system, and wouldn’t allow the deal to go through.

AB pointed to the fact that in-state craft beer producers were allowed to get distribution licenses, circumventing the distribution requirement, and it argued that out-of-state producers were being discriminated against by not being afforded this right.

Judge Robert Dow, Jr. agreed with AB. He pointed out in his opinion two options: “extension” (allowing out-of-state brewers to distribute as well) or “nullification” (forbidding all brewers from distributing).

Nullification would be a blow to craft breweries who self-distribute. Judge Dow ultimately decided on nullification, but he gave an out: “the Court temporarily stays enforcement of its ruling to provide the General Assembly an opportunity to act definitively on this matter if it chooses to do so,” allowing the state legislature time to step in.

One piece of legislation written by the Illinois Craft Brewers Guild that has been introduced would allow any brewer that produces fewer than 60,000 barrels of beer a year to obtain a distributor’s license. Brewpubs would also be able to distribute under the legislation.

This would exclude even some of the larger craft brewers, such as Goose Island but it would protect the smaller breweries who would potentially be crippled by a requirement to use a third-party distributor.