Beer Law: The Distribution Problem For Craft Brewers In Nevada

November 7, 2016

By: Bryan J. Ure

Murchison & Cumming Blog: Post 85

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For Nevada brewers, the largest obstacle to profiting from their product is the frustrating inability to distribute it without the help of a commercial distributor. This frustration is compounded by the fact that it is counter-intuitive to the nature of brewing which often times can be a labor intensive and a grass-roots process. Many brewers would be more than willing to load up their trucks with kegs and sell the product themselves, but simply cannot in light of current Nevada law. Obtaining rights to a commercial distributor is not an easy answer either. It is a costly and often times nearly insurmountable task for a microbrewery, except for those already in the game. The irony is that many of the major craft beer producers today who use commercial distributors attained the ability to do so only because they were successful as self-distributors very early on. Despite the current self-distribution legal stranglehold in Nevada, there are some solutions.

Nevada’s law against self-distribution is only one sentence long, and is codified as Nev. Rev. Stat. Ann. § 369.382:

Except as otherwise provided in NRS 369.386 and 369.415, a supplier shall not engage in the business of importing, wholesaling or retailing alcoholic beverages in this State.

For purposes of this statute, a brewer who makes beer in Nevada is considered a “supplier”. A supplier cannot sell beer unless they have an agreement for distribution with a state-licensed distributor (369.386 and 369.415). As one might imagine, a distributor holds the power, and obtaining the rights to use them can be a cost-prohibitive endeavor. Most mircobreweries likely do not have the production volume or expenses to compete in a market dominated by the large breweries in this country. In short, this means good luck getting your beer on your local grocer’s shelf space.

The above prohibition raises an obvious question, can Nevada brewers sell their product to the public in a cost-effective manner without the use of a commercial distributor? The answer is yes, and effectively so. In fact, the manner in which sale of craft beer is permitted in Nevada is ideally suited to the craft beer consumer and current trends. If you would like further information on how to legally retail beer in Nevada, or need legal counseling on starting or running your brewery, our attorneys can help.