The Texas Beer Business For Beginners

Michael Peticolas doesn't want to be Al Capone. He just wants the right to distribute his beer.

Liquor haters gonna hate, and drinkers gonna drink—that, in a shot glass, was the realization reached by legislators in 1933 when they repealed Prohibition with the passage of the 21st Amendment. What they couldn’t take back, however, was the mob, which had thrived on bootleg booze like rum on molasses. In an attempt to control what had become a lawless industry, a three-tier system of alcohol distribution was put into place. The mob moved on to drugs and sex trafficking and fake handbags, and big beer manufacturers thrived. It would take more than a half-century for small-batch craft brewing to recover and come back into vogue.

But then, in 2013, the Texas Legislature got involved and passed S.B. 639. In its simplest terms, the law meant that successful, growing brands, like the Dallas-based Peticolas Brewing Company, were no longer allowed to sell the exclusive territorial right to distribute their beer in, say, Houston. They had to give those rights away for free, to one distributor, in perpetuity (that means forever). Meanwhile, the distributor had the freedom to sell its distribution rights, which they get for free from the brewery, to another distributor. For money.

Michael Peticolas, local craft brewer and former wrongful-death attorney, figured that wasn’t fair. So he teamed up with some other Texas brewers and lawyers and filed a lawsuit against TABC, claiming the law violated the due course of law provisions of the Texas Constitution, which is lawyer-speak for saying the law was stupid and served no useful purpose. In August, a Travis County judge agreed.

Now Peticolas, whose brewery is still small enough that he distributes all of his own beer, can decide to start bottling and canning and sell the exclusive territorial rights to a distributor to help him stock Kroger shelves in Houston and grow his business. Or not.

One thing is for sure. He’s not going back to practicing law.


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