HOUSE DOCKET, NO. 1319        FILED ON: 1/18/2017

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 183


The Commonwealth of Massachusetts



Alice Hanlon Peisch


To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act relative to craft brewers.






Date Added:

Alice Hanlon Peisch

14th Norfolk


Denise Provost

27th Middlesex


Marc T. Lombardo

22nd Middlesex


James R. Miceli

19th Middlesex


Donald H. Wong

9th Essex


Colleen M. Garry

36th Middlesex


Brian Murray

10th Worcester


Jason M. Lewis

Fifth Middlesex


Jay R. Kaufman

15th Middlesex


Danielle W. Gregoire

4th Middlesex


Ann-Margaret Ferrante

5th Essex


Timothy R. Whelan

1st Barnstable


Paul J. Donato

35th Middlesex


Jennifer L. Flanagan

Worcester and Middlesex


Chris Walsh

6th Middlesex


William C. Galvin

6th Norfolk


Aaron Michlewitz

3rd Suffolk


David M. Nangle

17th Middlesex


David Paul Linsky

5th Middlesex


Sarah K. Peake

4th Barnstable


Daniel J. Ryan

2nd Suffolk


Kay Khan

11th Middlesex


Sal N. DiDomenico

Middlesex and Suffolk


Richard J. Ross

Norfolk, Bristol and Middlesex


Cory Atkins

14th Middlesex


John J. Lawn, Jr.

10th Middlesex


Frank I. Smizik

15th Norfolk


Bradley H. Jones, Jr.

20th Middlesex


Jack Lewis

7th Middlesex


Kenneth I. Gordon

21st Middlesex


Kate Hogan

3rd Middlesex


Mike Connolly

26th Middlesex


Marjorie C. Decker

25th Middlesex


Angelo L. D'Emilia

8th Plymouth


Thomas M. Stanley

9th Middlesex


David M. Rogers

24th Middlesex


Natalie Higgins

4th Worcester


Ruth B. Balser

12th Middlesex


Brian M. Ashe

2nd Hampden


Bradford R. Hill

4th Essex


Cynthia Stone Creem

First Middlesex and Norfolk


Stephen Kulik

1st Franklin


James J. Dwyer

30th Middlesex


Steven Ultrino

33rd Middlesex


John W. Scibak

2nd Hampshire


Jay D. Livingstone

8th Suffolk


Paul W. Mark

2nd Berkshire


Linda Dorcena Forry

First Suffolk


Susan Williams Gifford

2nd Plymouth


Sean Garballey

23rd Middlesex


Joseph A. Boncore

First Suffolk and Middlesex


Byron Rushing

9th Suffolk


Todd M. Smola

1st Hampden


Lori A. Ehrlich

8th Essex


Elizabeth A. Malia

11th Suffolk


Jonathan Hecht

29th Middlesex


Michael J. Finn

6th Hampden


Bruce J. Ayers

1st Norfolk


Jeffrey Sánchez

15th Suffolk


Daniel Cullinane

12th Suffolk


Kimberly N. Ferguson

1st Worcester


William L. Crocker, Jr.

2nd Barnstable


Nick Collins

4th Suffolk


HOUSE DOCKET, NO. 1319        FILED ON: 1/18/2017

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 183

By Ms. Peisch of Wellesley, a petition (accompanied by bill, House, No. 183) of Alice Hanlon Peisch and others relative to small brewers of alcoholic beverages.  Consumer Protection and Professional Licensure.


SEE HOUSE, NO. 245 OF 2015-2016.]


The Commonwealth of Massachusetts



In the One Hundred and Ninetieth General Court



An Act relative to craft brewers.


Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Chapter 138 of the General Laws is hereby amended by striking out section 25E and inserting in place thereof the following section:

Section 25E. It shall be an unfair trade practice for any manufacturer, winegrower, farmer-brewer, importer or wholesaler of any alcoholic beverages, to refuse to sell, except for good cause shown, any item having a brand name to any licensed wholesaler to whom such manufacturer, winegrower, farmerbrewer, importer or wholesaler has made regular sales of such brand item during a period of six months preceding any refusal to sell.

Any manufacturer, importer or wholesaler shall forward a notice in writing to the wholesaler, to whom it has sold any brand item, prior to discontinuing sales to such wholesaler of such brand item and shall forward a copy of said notice to the commission. The notice of discontinuance of sale shall be furnished by the manufacturer, importer or wholesaler to the wholesaler being discontinued at least 120 days before the effective date of such discontinuance. The notice shall state the specific grounds for such discontinuance. Either party may appeal to the commission for a hearing on the notice of discontinuance and the commission shall make a determination after hearing on the issue of good cause for discontinuance. Upon application by the wholesaler to the commission, the commission shall order the manufacturer, importer or wholesaler giving notice of refusal to sell to continue to make sales in the regular course to such wholesaler pending determination by the commission on the merits of said appeal. The commission shall after notice to all parties and hearing, make a determination on the issue of good cause and grant such relief as may be appropriate under the circumstances. Good cause as used herein shall be limited to the following conduct:

(a) disparagement of the product so as to impair the reputation of the brand owner or the brand name of any product,

(b) unfair preferment in sales effort for brand items of a competitor,

(c) failure to exercise best efforts in promoting the sale of any brand item,

(d) engaging in improper or proscribed trade practices, or

(e) failure to comply with the terms of sale agreed upon between the supplier and wholesaler.

The preceding two paragraphs of this section shall not apply to a small brewer relationship, which may be discontinued as established by contract or through the process described below. For purposes of this paragraph, a small brewer relationship shall mean any relationship between a manufacturer of malt beverages licensed under this chapter, a farmer-brewer licensed under this chapter, or a manufacturer of malt beverages located outside of the Commonwealth that holds a certificate of compliance permitting it to sell malt beverages to wholesalers in this state collectively such manufacturer or farmer-brewer referenced as a supplier below and a wholesaler if  the sales of products to the wholesaler by the supplier do not exceed 20% of the wholesalers total sales in the prior calendar year preceding any refusal to sell. In calculating a suppliers annual global sales and sales to wholesalers, the sales of a controlled group, as such term is defined in 26 U.S.C. 5051(a)(2)(B) or a successor provision, shall count as the sales of a single entity. Any dispute concerning whether a supplier-wholesaler relationship is or is not a small brewer relationship within the meaning of this Section 25E shall be determined by final binding arbitration, which either the supplier or the wholesaler in the relationship may request within thirty (30) days of either party claiming rights under a small brewer relationship. The arbitration shall be conducted in accordance with arbitration process established below. Nothing in this section shall be construed to expand or diminish the rights or obligations established by contract in a small brewer relationship provided, however, that a supplier in a small brewer relationship also may elect at any time to refuse to sell to any wholesaler in accordance with the following paragraph.

To initiate a suppliers non-contractual right to refuse to sell as established under the immediately preceding paragraph, the supplier in a small brewer relationship shall provide the wholesaler with not less than thirty (30) days written notice of the refusal to sell, which written notice shall identify the successor wholesaler who will begin servicing the affected territory (the successor wholesaler). Upon any refusal to sell under this paragraph, the successor wholesaler shall compensate the affected wholesaler in an amount equal to the fair market value of the suppliers distribution rights granted to the wholesaler in the terminated wholesalers territory. Suppliers refusal to sell may take effect following the notice period in suppliers notice, which shall not be less than 30 days, regardless of whether the successor wholesaler has compensated the affected wholesaler. If the successor wholesalers and the affected wholesaler cannot agree to the fair market value compensation due to the affected wholesaler within the thirty (30) days following the suppliers notice of its refusal to sell, either the affected wholesaler or any successor wholesaler may request that the amount of compensation be determined by final binding arbitration conducted in accordance with the arbitration process established below.

Arbitrations under this section shall be conducted before a single impartial arbitrator selected by the parties or, if they cannot agree to an arbitrator within 30 days, selected by the nearest office of the American Arbitration Association or its successor organization. The commercial arbitration rules of the American Arbitration Association or its successor organization shall govern the arbitration. The arbitration proceeding shall conclude not later than 90 days after the date of the notice of intent to arbitrate is transmitted to the other party, unless the parties agree to extend the time by mutual agreement or the arbitrator extends the time for good cause shown. An arbitrators award in any arbitration held pursuant to the immediately preceding paragraph with regard to fair market value shall be monetary only and shall not enjoin or compel conduct. Any arbitration held pursuant to this section shall be in lieu of all other remedies and procedures. The costs of the arbitrator and any other costs of the arbitration shall be equally divided by the parties engaged in the arbitration. Each party shall bear all other expenses related to the arbitration, provided that the arbitrator may award the prevailing party in the dispute as to whether a small brewer relationship exists its costs and reasonable attorneys fees for good cause shown. The arbitrator shall render a written decision not later than 30 days after the conclusion of the arbitration proceeding, unless the parties agree to extend the time by mutual agreement or the arbitrator extends the time for good cause shown. The arbitrators decision shall be final and binding and may be enforced by commencing a civil action in any court of competent jurisdiction. Any party duly notified of an arbitration involving its rights that fails to participate in an arbitration proceeding held pursuant to this paragraph waives all rights it would have had in the arbitration and is considered to have consented to the determination of the arbitrator."

SECTION 2. This Act shall apply to all small brewer relationships existing as of the effective date of this act and all agreements and relationships entered into after the effective date.