Committee advances bill to bar brewers from mandating ecommerce platforms, clarify successor-brewer rules

The House Industry, Business and Labor Committee on Thursday voted to advance Senate Bill 21‑36, a measure supporters say will strengthen wholesaler independence in North Dakota27s three‑tier alcohol distribution system and close a loophole that some private equity buyers have used to avoid successor‑brewer obligations.

The bill27s prime sponsor in the Senate, Sen. Jerry Klein, told the committee he was introducing the measure on behalf of the North Dakota Beer Distributors Association to address “a couple of issues that are cropping up across the country.” The bill was amended before the committee vote and passed on a voice and later roll call vote.

Why it matters: Supporters said the bill preserves wholesalers27 ability to choose the business‑to‑business ecommerce platform that best serves their retail customers, and it prevents purchasers of breweries from dodging state successor‑brewer rules by claiming they are not 22brewers.22 Backers said the change protects long‑standing distribution relationships that wholesalers have built with brands over decades.

Wholesalers27 case and the ecommerce provision Denis Patheroff, a lobbyist for the GA Group representing the North Dakota Beer Distributors Association, told the committee wholesalers are being pressured by manufacturers to adopt or avoid particular ecommerce platforms that let retailers browse catalogs and place orders. "Mandating or prohibiting the use of a specific platform undermines wholesaler independence," Patheroff said. He added wholesalers can be caught between manufacturers that require different platforms or threaten termination.

Hunter Jerome, general manager of Jerome Distributing and president of the North Dakota Beer Wholesalers Association, told the committee the industry operates under the three‑tier system established after repeal of national Prohibition: "wholesaler, brewer, retailer" are separate tiers under the 21st Amendment structure, and ecommerce tools are increasingly part of wholesaler operations. Jerome said about one‑third of North Dakota wholesalers use a brewer‑sponsored platform, one‑third use a third‑party platform and one‑third use no ecommerce platform.

The bill27s ecommerce language, as amended, states that a brewer may not "require a wholesaler to use or prohibit a wholesaler from using a business‑to‑business electronic commerce platform," language supporters said preserves choice and protects smaller wholesalers and craft‑brand distribution.

Successor‑brewer change Patheroff and Jerome also described episodes in other states where private‑equity buyers purchased a brewing company and asserted they were not "brewers" for purposes of successor‑brewer statutes, then terminated distribution contracts. The bill removes wording that could be read to apply only to a buyer that is a brewer and instead says the purchaser of a brewer shall be obligated to the existing terms and contracts in effect on the date of purchase.

Support and opposition Anheuser‑Busch filed written support and the committee heard testimony from an attorney who said the company supported the bill as amended. The North Dakota Brewers Guild (craft brewers) also supported the bill, saying it protects local brands and the distributors that serve them.

Vote and next steps The committee adopted an amendment by voice vote and later approved a motion to pass the bill as amended on a roll call; the committee then discussed who would carry the bill to the House floor. Representative Brown volunteered to carry the bill.

Asked for details, supporters supplied economic figures: Patheroff told the committee North Dakota27s 16 family‑owned distributors employ more than 500 people, pay about $32 million in annual wages and contribute roughly $1 million annually to charities and local events.

Ending Senators and witnesses said the changes align North Dakota with similar statutory language used in other Midwestern states and aim to prevent a disruption of long‑standing distribution relationships if breweries change ownership.