AUSTIN, Texas — A craft beer battle is brewing in Texas.
An Austin-area brewery is in the middle of a legal fight with the state over a 2013 law, regulating distribution.
Live Oak Brewing Company, along with two others in the state filed suit against the state’s Alcoholic Beverage Commission in 2014. Chip McElroy has been brewing beer for nearly two decades His Live Oak pilsners and Hefeweizen are all brewed, canned and kegged in Austin.
While that part of the process is fine, it is the other side of his business, distribution, which McElroy said state lawmakers are messing with. For years distributors paid for the right to distribute his products, but that changed in 2013.
"They made a law saying we have to give it to them for free," said McElroy.
A Senate Bill passed during that year made it illegal for brewers to charge for those rights, which is money he said he's losing out on.
"It's a very valuable business," said McElroy.
That's why he's suing the Texas Alcoholic Beverage Commission along with two other Texas breweries. They argued their case in court on Monday. Proponents say the law protects the state's 3-tier alcohol sales system, where brewers brew, distributors distribute, and bars and retailers sell it to the consumer. All independent arms of the same system.
Keith Strama is the general council for the Wholesale Beer Distributors in Texas. They support the law.
"That system has created the most competitive, most diverse consumer offering in any product you could buy at the grocery store," said Strama.
He said distributors who have to pay for the rights to sell a particular product undermines the independence of the current system.
"[It] fundamentally disrupts that independence and in the end is a problem for the state and a problem for the consumer," said Strama.
The judge who heard the case on Monday is expected to rule in the next few weeks.