Craft brewers sue Texan government

Three craft breweries are involved in a constitutional challenge in Texas over a recently-passed law that prohibits alcohol producers from selling distribution rights.

The law stops producers from selling distribution rights or supplying direct to retailers (Photo: Wiki)

The three breweries have thrown in their weight to the challenge alongside the Institute for Justice as they take on Senate Bill 639 – authored by state senator John Corona, who left the legislature after losing his seat at the latest elections.

The bill enforces the traditional, post-prohibition “three-tier” system, by which producers, distributors and retailers are kept distinctly separate businesses.

According to the bill, this is important in guaranteeing the “state’s ability to exercise oversight over the alcohol industry and collect taxes while providing large and small manufacturers access to multiple markets.”

However, Matt Miller, managing attorney for the Institute for Justice’s Texas office, is quoted by law magazine Legal Insurrection saying, “It is unconstitutional for Texas to force brewers to give distributors property that they never earned and don’t deserve.”

The lawsuit claims that the law contravenes articles in the Texan constitution, most notably that which “protects economic liberty – the right to earn an honest living free from unreasonable government interference.”

One of the brewers challenging the law, Live Oak Brewing’s Chip McElroy, told the magazine: “When Texas passed this law, not only did it give away part of what my employees and I built – it took my beer off the shelves in Dallas-Fort Worth, San Antonio and other parts of Texas where Live Oak beer would otherwise be available.”

The Institute for Justice, which is leading the suit, is a non-profit libertarian law firm.