An Act To Assist Small Beer Manufacturers
Maine Legislature, Session 129, LD 1761
Committee: Veterans and Legal Affairs
Sponsors: LUCHINI, GIDEON, HICKMAN, SCHNECK
Amends: 28-A MRSA §2, 28-A MRSA §1355-A, 28-A MRSA §1455, 28-A MRSA §1457

Legislative Document
No. 1761
S.P. 593
In Senate, May 21, 2019
An Act To Assist Small Beer Manufacturers
Reference to the Committee on Veterans and Legal Affairs suggested and ordered printed.
DAREK M. GRANT
Secretary of the Senate
Presented by Senator LUCHINI of Hancock.
Cosponsored by Speaker GIDEON of Freeport and
Representatives: HICKMAN of Winthrop, SCHNECK of Bangor.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  28-A MRSA §2, sub-§2-B is enacted to read:
2-B.  Barrel.  "Barrel" means 31 United States gallons.
Sec. 2.  28-A MRSA §2, sub-§29, as amended by PL 1993, c. 730, §12, is further 
amended to read:
29.  Small brewery.  "Small brewery" means a facility that is brewing, lagering and 
kegging, bottling or packaging its own malt liquor, not to exceed 50,000 gallons 30,000 
barrels per year.
Sec. 3.  28-A MRSA §2, sub-§29-C is enacted to read:
29-C.  Small beer manufacturer.  "Small beer manufacturer" means a small 
brewery or out-of-state brewer that is brewing, lagering and kegging, bottling or 
packaging its own malt liquor, not to exceed 30,000 barrels per year.
Sec. 4.  28-A MRSA §1355-A, sub-§3, ¶¶A and B, as enacted by PL 2011, c. 
629, §22, are amended to read:
A.  A holder of a brewery license may produce more than 50,000 gallons 30,000 
barrels of malt liquor per year.
B.  A holder of a small brewery license may produce not more than 50,000 gallons 
30,000 barrels of malt liquor per year.
(1)  Upon application by a holder of a small brewery license whose brewery that 
has produced malt liquor in an amount that exceeds 50,000 gallons 30,000 barrels 
in one year, the bureau may renew that holder's small brewery license for only 
one additional year.
(2)  A holder of a small brewery license may sell or deliver its products to 
licensed retailers or wholesalers.  The licensee may sell, on the premises for 
consumption off the premises, malt liquor produced at the licensed premises by 
the bottle, by the case or in bulk to licensed retailers, including, but not limited 
to, off-premises retail licensees, restaurants and clubs.  Notwithstanding section 
1361, the holder of a small brewery license may sell its products directly to a 
retail licensee under this paragraph without selling to a wholesale licensee.
Sec. 5.  28-A MRSA §1455, sub-§1, as enacted by PL 1987, c. 45, Pt. A, §4, is 
amended to read:
1.  Written notice.  Before any termination procedure initiated by the certificate of 
approval holder, the certificate of approval holder shall give the wholesale licensee 
written notice of any claimed deficiency existing in his the wholesale licensee's territory 
and the certificate of approval holder shall give the wholesale licensee reasonable time or, 
if the certificate of approval holder is a small beer manufacturer, at least 30 days to 
correct the claimed deficiency or deficiencies.  After this reasonable time has elapsed, the 
certificate of approval holder shall provide the wholesale licensee at least 90 days prior 
with written notice of any the certificate of approval holder's intent to amend, cancel, 
terminate, cancel or not refuse to continue, refuse to renew any or cause the wholesale 
licensee to resign from an agreement.  The notice must state all the reasons for the at least 
days prior to the effective date of the intended amendment, cancellation, termination, 
cancellation refusal to continue, refusal to renew or nonrenewal causing of resignation.  
The written notice must state all of the reasons for the intended amendment, cancellation, 
termination, refusal to continue, refusal to renew or causing of resignation.  The notice 
provisions of this section do not apply if the reason for the intended amendment, 
cancellation, termination, cancellation refusal to continue, refusal to renew or nonrenewal 
causing of resignation is:
A.  The bankruptcy or insolvency of the wholesale licensee;
B.  An assignment for the benefit of creditors or similar disposition of the assets of 
the wholesale licensee's business;
C.  Revocation of the wholesale licensee's license; or
D.  Conviction or a plea of guilty or no contest to a charge of violating a law relating 
to the business that materially affects the wholesale licensee's ability to remain in 
business.
Sec. 6.  28-A MRSA §1457, as enacted by PL 1987, c. 45, Pt. A, §4, is amended to 
read:
§1457.  Compensation
1.  Reasonable compensation; certificate of approval holder.  Any Except as 
otherwise provided in this section, if a certificate of approval holder which amends, 
cancels, terminates or, refuses to continue or, refuses to renew any agreement, or causes a 
wholesale licensee to resign from an agreement, unless for good cause shown, as defined 
described in section 1454, from an agreement or a certificate of approval holder 
unreasonably withholds its consent to any assignment, transfer or sale of a wholesale 
licensee's business, that certificate of approval holder shall pay the wholesale licensee 
reasonable compensation for the fair market value of the wholesale licensee's business 
related to the terminated brand or brands of the certificate of approval holder.  The fair 
market value of the wholesale licensee's business related to the terminated brand or 
brands of the certificate of approval holder includes inventory and other tangible assets 
and its good will goodwill.
1-A.  Reasonable compensation; small beer manufacturer.  The following 
provisions apply only to a small beer manufacturer.
A.  Notwithstanding any provision of this Title to the contrary or the terms, 
conditions or other provisions of any agreement, a small beer manufacturer shall pay 
a wholesale licensee reasonable compensation for the fair market value of the 
wholesale licensee's business related to a terminated brand or brands of the small beer 
manufacturer if:
(1)  The small beer manufacturer amends, cancels, terminates, refuses to 
continue, refuses to renew or causes the wholesale licensee to resign from an 
agreement, unless for good cause shown, as described in section 1454, or the 
small beer manufacturer unreasonably withholds its consent to any assignment, 
transfer or sale of a wholesale licensee's business; and
(2)  During the 12-month period immediately preceding the date on which the 
small beer manufacturer provides the wholesale licensee with written notice of 
the small beer manufacturer's intent to amend, cancel, terminate, refuse to 
continue, refuse to renew or cause the wholesale licensee to resign from an 
agreement, if required under section 1455, or the small beer manufacturer 
unreasonably withholds its consent to any assignment, transfer or sale of the 
wholesale licensee's business, the wholesale licensee's total number of case 
purchases as computed in 24 12-ounce-equivalent units of the terminated brand 
or brands of the small beer manufacturer that are distributed by the wholesale 
licensee represents no more than 3% of the wholesale licensee's total number of 
case purchases as computed in 24 12-ounce-equivalent units of all of the brands 
of certificate of approval holders, including, without limitation, the terminated 
brand or brands of the small beer manufacturer, that are distributed by the 
wholesale licensee.
The fair market value of the wholesale licensee's business related to the 
terminated brand or brands of the small beer manufacturer includes inventory and 
other tangible assets and its goodwill.
B.  Notwithstanding any provision of this Title to the contrary, for purposes of this 
subsection, reasonable compensation for the fair market value of the wholesale 
licensee's business related to the terminated brand or brands of the small beer 
manufacturer is an amount equal to:
(1)  The wholesale licensee's total gross profits with respect to the terminated 
brand or brands of the small beer manufacturer during the 12-month period 
described in paragraph A if the wholesale licensee's total gross profits with 
respect to the terminated brand or brands of the small beer manufacturer during 
the 12-month period described in paragraph A are equal to or less than that 
wholesale licensee's total gross profits with respect to the terminated brand or 
brands of the small beer manufacturer during the 12-month period immediately 
preceding the 12-month period described in paragraph A; or
(2)  Twice the wholesale licensee's total gross profits with respect to the 
terminated brand or brands of the small beer manufacturer during the 12-month 
period described in paragraph A if the wholesale licensee's total gross profits with 
respect to the terminated brand or brands of the small beer manufacturer during 
the 12-month period described in paragraph A are greater than that wholesale 
licensee's total gross profits with respect to the terminated brand or brands of the 
small beer manufacturer during the 12-month period immediately preceding the 
12-month period described in paragraph A.
C.  Notwithstanding section 1462, nothing in this chapter limits or prohibits a 
wholesale licensee from limiting or waiving its right to receive reasonable 
compensation for the value of the wholesale licensee's business related to the 
terminated brand or brands of a small beer manufacturer under this section upon the 
terms and conditions set forth in an agreement between the wholesale licensee and 
the small beer manufacturer.
D.  Notwithstanding any provision of this Title to the contrary or the terms, 
conditions or other provisions of any agreement and regardless of whether a small 
beer manufacturer and a wholesale licensee have agreed upon, or a small beer 
manufacturer has paid to a wholesale licensee, reasonable compensation for the fair 
market value of the wholesale licensee's business related to the terminated brand or 
brands of the small beer manufacturer, if a small beer manufacturer amends, cancels, 
terminates, refuses to continue, refuses to renew or causes a wholesale licensee to 
resign from an agreement, unless for good cause shown, as described in section 1454, 
or a small beer manufacturer unreasonably withholds its consent to any assignment, 
transfer or sale of a wholesale licensee's business, that small beer manufacturer may 
immediately:
(1)  If the small beer manufacturer is a small brewery, sell the terminated brand 
or brands of the small beer manufacturer directly to retail licensees in the 
terminated wholesale licensee's territory under section 1355-A without selling the 
brand or brands to a wholesale licensee;
(2)  Appoint one or more new wholesale licensees to sell the terminated brand or 
brands of the small beer manufacturer in all or any portion of the terminated 
wholesale licensee's territory; or
(3)  Take any combination of actions described in subparagraphs (1) and (2), if 
applicable.
2.  Neutral arbitrator; certificate of approval holder.  If Except as otherwise 
provided in this section, if the certificate of approval holder and the wholesale licensee 
are unable to agree on the reasonable compensation to be paid for the fair market value of 
the wholesale licensee's business, as defined in subsection 1 related to the terminated 
brand or brands of the certificate of approval holder, they shall submit the matter to a 
neutral arbitrator selected by the parties, or, if they cannot agree, by the Chief Justice of 
the Supreme Judicial Court.  The costs of the arbitration shall must be paid 1/2 by the 
wholesale licensee and 1/2 by the certificate of approval holder or otherwise the 
arbitration proceeding shall must be governed by the Maine Uniform Arbitration Act.
3.  Neutral arbitrator; small beer manufacturer.  Subject to subsection 1-A, and 
notwithstanding any provision of this Title to the contrary or the terms, conditions or 
other provisions of any agreement, if the small beer manufacturer and the wholesale 
licensee are unable to agree on the reasonable compensation to be paid for the fair market 
value of the wholesale licensee's business related to the terminated brand or brands of the 
small beer manufacturer within 7 days of the date on which the small beer manufacturer 
amends, cancels, terminates, refuses to continue, refuses to renew or causes the wholesale 
licensee to resign from an agreement or the date on which the small beer manufacturer 
unreasonably withholds its consent to any assignment, transfer or sale of the wholesale 
licensee's business, the small beer manufacturer and the wholesale licensee shall submit 
the matter to final and binding arbitration before a neutral arbitrator selected by the 
parties or, if the parties are unable to agree on the arbitrator within an additional 7 days, 
by the Chief Justice of the Supreme Judicial Court, and the arbitration proceeding must 
be governed by the Uniform Arbitration Act, as modified by the terms and conditions set 
forth in this subsection.  The arbitration proceeding must commence within 10 days of the 
date on which the arbitrator is selected by the parties.  Each of the parties shall, at least 7 
days before the date of the commencement of the arbitration proceeding, submit to the 
arbitrator and the other party the party's final offer as to the amount of reasonable 
compensation to be paid for the fair market value of the wholesale licensee's business 
related to the terminated brand or brands of the small beer manufacturer, together with 
any relevant evidence in support of that amount.  The arbitrator shall choose which of the 
final offers from the parties is the amount of reasonable compensation to be paid for the 
fair market value of the wholesale licensee's business related to the terminated brand or 
brands of the small beer manufacturer.  If a party fails to submit its final offer as to the 
amount of reasonable compensation to be paid for the fair market value of the wholesale 
licensee's business related to the terminated brand or brands of the small beer 
manufacturer at least 7 days before the date of the commencement of the arbitration 
proceeding, except for reasonable excuse or delay by the party, the arbitrator shall choose 
the other party's final offer and the other party's final offer must serve as the arbitrator's 
decision on the matter.  If the parties reach an agreement as to the amount of reasonable 
compensation to be paid for the fair market value of the wholesale licensee's business 
related to the terminated brand or brands of the small beer manufacturer before the 
arbitrator issues the arbitrator's decision on the matter, the parties may submit a joint final 
offer, which the arbitrator shall accept, and the parties' joint final offer must serve as the 
arbitrator's decision on the matter.  The arbitrator may hold hearings and administer 
oaths, examine witnesses and documents, take testimony and receive evidence and issue 
subpoenas to compel the attendance of witnesses and the production of records.  A person 
who fails to obey the subpoena of the arbitrator may be punished for contempt of court on 
application by the arbitrator to the Superior Court for the county in which the failure 
occurs.  The arbitrator may use other information in addition to that provided by or 
elicited from the parties.  The arbitrator shall issue a decision on the matter within 15 
days of the date of commencement of the arbitration proceeding.  The costs of the 
arbitration must be paid by the nonprevailing party, and the arbitrator may award the 
prevailing party its reasonable attorney's fees and costs.
SUMMARY
This bill changes the definition of "small brewery" by increasing the amount of malt 
liquor a small brewery may brew from 50,000 gallons to 30,000 barrels per year.  It 
defines a "small beer manufacturer" as a small brewery or out-of-state brewer that is 
brewing, lagering and kegging, bottling or packaging its own malt liquor, not to exceed 
30,000 barrels per year.  If a small beer manufacturer terminates its distribution 
relationship with a wholesale licensee, unless for good cause, causes a wholesale licensee 
to resign from an agreement, unless for good cause, or unreasonably withholds its consent 
to any assignment, transfer or sale of a wholesale licensee's business and that small beer 
manufacturer's brands make up no more than 3% of the wholesale licensee's business, the 
bill sets the maximum amount of the termination fee that the wholesale licensee is 
entitled to receive from that small beer manufacturer in connection with the termination.  
The bill amends the laws governing certain notice requirements that the small beer 
manufacturer must satisfy in connection with the termination, provides expedited 
arbitration proceedings for a small beer manufacturer and a wholesale licensee in 
connection with a dispute regarding the amount of the termination fee and provides that, 
regardless of whether the terminated wholesale licensee has received payment of the 
termination fee from the small beer manufacturer, upon written notice of the termination 
to the wholesale licensee, the small beer manufacturer may appoint a new wholesale 
licensee to distribute the relevant products in the terminated wholesale licensee's territory 
or, if the small beer manufacturer is a small brewery, sell the terminated brand or brands 
of the small beer manufacturer directly to retail licensees in the terminated wholesale 
licensee's territory without selling the brand or brands to a wholesale licensee.  Lastly, 
this bill allows a wholesale licensee and a small beer manufacturer to agree upon or limit 
the amount of a termination fee pursuant to a distribution agreement as long as that 
termination fee does not exceed the maximum amount of the termination fee, as set forth 
in the bill.