Small brewers challenging the constitutionality of North Carolina’s beer distribution laws likely feel refreshed this week, as their lawyers have obtained a recording of a beer distributor caught on tape using the leverage afforded by the state’s laws to put the squeeze on a former brewer.
Craft brewers are challenging a law that forces them to hand over their distribution to a middleman if they sell more than 25,000 barrels a year, about enough to fill an Olympic-sized swimming pool. (You’re welcome for that image.) They’re also fighting a law that makes it very difficult for brewers to terminate contracts with distributors.
Dustin Canestorp, founder of Beer Army Combat Brewery, says he inked a deal with Freedom Beverage Co., which paid him $25,000 for the right to distribute his beer in North Carolina. But after he picked another company to distribute his beer elsewhere, his local beer sales went flat. Canestorp suspected FBC was retaliating against him and asked to terminate the contract. He says FBC agreed to do so—but only if he paid the company $400,000.
Canestorp met with FBC’s CEO, Tim Booras, in 2014, and secretly recorded the conversation. On the tape, Canestorp asks if FBC was punishing him, to which Booras laughed and said “absolutely” and the move was “definitely punitive,” explaining that “I’m a mercurial guy, you know? My temperature goes hot and cold.”
The existence of the tape was first reported by Carolina Journal and confirmed to Lawyers Weekly by Drew Erteschik of Poyner Spruill, one of the brewers’ lawyers. (He does not represent Canestorp.) He said the tape shows how state laws encourage and reward “disgusting” behavior by distributors toward brewers.
A superior court judge last month refused to dismiss the lawsuit, clearing the way for a trial. Canestorp’s tape will surely add a bit of kick to the plaintiffs’ evidence.