{"id":3376,"date":"2011-05-11T17:12:42","date_gmt":"2011-05-11T22:12:42","guid":{"rendered":"http:\/\/www.guysdrinkingbeer.com\/?p=3376"},"modified":"2018-02-06T14:25:21","modified_gmt":"2018-02-06T20:25:21","slug":"save-the-craft-the-a-b-empire-strikes-back","status":"publish","type":"post","link":"https:\/\/www.guysdrinkingbeer.com\/save-the-craft-the-a-b-empire-strikes-back\/","title":{"rendered":"The A-B Empire Strikes Back"},"content":{"rendered":"

On Friday, May 6th, Anheuser-Busch’s attorney’s filed a motion<\/strong> in federal court asking Judge Robert Dow Jr. to extend the stay on his decision regarding a lawsuit over distribution rights in Illinois.\u00a0 A-B will formally present this motion on May 27th<\/strong>.<\/p>\n

You are probably sick of reading the background on this issue, but just in case this is the first you’re hearing of it we’ll recap things again.\u00a0 Last year A-B tried to buy its remaining stake in a Chicago area beer distributor.\u00a0 The Illinois Liquor Control Commission said A-B couldn’t do that because out-of-state breweries aren’t allowed to self-distribute their beer in Illinois.\u00a0 But because breweries in Illinois could<\/em> self-distribute, A-B sued the ILCC claiming discrimination and the judge agreed.\u00a0 His ruling in the case was to end self-distribution rights for all breweries in Illinois as opposed to extending the right to self-distribute to out-of-state breweries.\u00a0 The judge, though, stayed his decision until March 31st to give the Illinois legislature an opportunity to find a compromise.\u00a0 By mid-March negotiations had hit a wall and no deal was in sight so the judge extended his stay until May 31st, which happens to be the end of the legislative session.\u00a0 A-B’s motion aims to extend the stay while the appeal process shakes out.<\/p>\n

Less than a month (October 1st, 2010) after the judge issued his initial ruling A-B filed an appeal.\u00a0 If you aren’t familiar with how the appeals process works in federal court, well, you aren’t alone.\u00a0 We don’t know much either, but judging from A-B’s affidavit the process is not a fast one.\u00a0 A little over three months (January 11th, 2011) after A-B said they would appeal, they filed their opening brief.\u00a0 The defendants, in this case the Illinois Liquor Control Commission (ILCC), have until May 25th (five months later) to respond.\u00a0 A-B then has another 20 days to respond to the ILCC’s response.<\/p>\n

A-B’s endgame all along has been to buy out the rest of City Beverage and to self-distribute in Illinois.\u00a0 Obviously, the judges original ruling would prevent that.\u00a0 Speculation is that A-B will appeal the judge’s decision ad nauseam to try and gain self-distribution rights in the state.<\/p>\n

But A-B’s motion doesn’t just give us a peek at their strategy.\u00a0 It also shows a few new twists in this issue.\u00a0 The first is that A-B claims that if no bill is passed by the legislature and if the stay is not extended then the ILCC has threatened to force A-B to divest its 30 percent stake in City Beverage OR not renew the distributors license.<\/p>\n

The much larger bombshell, though, was news regarding Two Brothers Brewing and Windy City Distribution.\u00a0 A signed affidavit from Jason Ebel, co-founder of Two Brothers Brewing in Warrenville, outlined how the brewery started including the fact that they self-distributed their beer after failing to find a distributor that would take their product.\u00a0 Self-distribution eventually grew to distributing beer from other craft breweries that had the same issues in finding a distributor.\u00a0 According to Ebel, Windy City Distribution “is a separate legal entity from Two Brothers but shares common family ownership.”\u00a0 The ILCC told Ebel at the time that, “a separate legal structure between Windy City and Two Brothers with common family ownership would be legal.”<\/p>\n

But that could change.<\/p>\n

According to Ebel’s affidavit the chief legal counsel for the ILCC informed him that, “after the law changes in connection with this lawsuit, the ILCC would view the common family ownership relationship between Windy City and Two Brothers as in violation of the Illinois Liquor Control Act and Windy City would have to be sold to an unrelated third party.”<\/strong><\/p>\n

But that only pertains to the judge’s ruling ending self-distribution rights in Illinois.<\/p>\n

What A-B is not acknowledging in their motion, and I am sure that is by choice, is Senate Bill 754.\u00a0 The legislation, as it’s written and as we understand it, would not impact the Ebel brothers, Two Brothers or Windy City.\u00a0 It would allow breweries in Illinois to self-distribute up to 7,500 barrels of their own beer.\u00a0 And, it would allow brewpubs to self-distribute, although they would have to have a second location in order to do so.\u00a0 Now, we know that portion of the bill isn’t ideal and completely agree with the ICBG that they should be allowed to self-distribute up to a certain number of gallons or barrels.<\/p>\n

Remember our friend Marika<\/a> who is trying to open a brewpub in southern Illinois and was counting on self-distribution to get people in the door?\u00a0 Well, that makes things tougher on her.\u00a0 But in a recent email exchange she acknowledged, “It would have unquestionably been a step back if the state had either let the issue drop (and by default kept production breweries from self-distributing), or ruled against it entirely. It is a thousand times better that we will have beer from independent craft production breweries, than if those breweries had been forced to close because the law didn’t support them.”\u00a0 SB754 also keeps A-B from self-distributing in Illinois.<\/p>\n

Also worth considering is what happens to craft beer in Illinois if the judge extends his stay?\u00a0 Well, right now craft beer growth in Illinois is frozen.\u00a0 A-B’s suit and the subsequent stays by Judge Dow have brought small brewer licensing to a standstill.\u00a0 Rolling Meadows Brewery<\/a> in Springfield has had their plans put on hold for months.\u00a0 They want to self-distribute but the current law won’t allow them to.\u00a0 The stay in the ruling – essentially one giant legal “pause button” – only allows Big Muddy and Argus to self-distribute.\u00a0 So they sit and wait.<\/p>\n

Let’s look at the possible outcomes:<\/p>\n