Assembly committee advances bill to protect beer wholesalers when breweries are sold

The California State Assembly Governmental Organization Committee voted to send Assembly Bill 344 by Assemblymember Valencia to the Committee on Appropriations, the secretary announced after a roll call.

AB 344 updates and clarifies the definition of “successor beer manufacturer” so that wholesalers retain fair-market protections when a brewery they distribute for is sold, the bill’s author said. The bill’s supporters told the committee that a recent court ruling narrowed the statute, creating a loophole that could let non-brewing buyers avoid paying wholesalers for distribution rights.

Kevin Lucky, executive director of the California Family Beer Distributors, said AB 344 “reaffirms the original intent of California’s alcohol laws” and argued the bill is needed because a 2007 statute and longstanding practice protected wholesalers’ investments. “This undermines long standing business practices, disrupts market stability, and threatens investments wholesalers have made in building brands and expanding consumer access,” Lucky said.

Lucky told the committee the issue stems from a court decision in Harb Distributing v. Main Street Capital that, in his description, held the existing statute applied only to beer manufacturers and not to non-brewing entities that acquire breweries. He and other supporters said AB 344 would close that gap and align California with protections in other states.

Chris Walker of the California Craft Brewers said the code section is “very, very critical” to both distributors and manufacturers and said craft brewers are negotiating with the sponsor. “Any changes that are done to this code section have to be balanced,” Walker said, adding the group was taking a neutral position based on commitments from the bill’s sponsor.

A representative identified in the transcript as Dental Slope spoke in support on behalf of the California beer and beverage distributors.

A motion to pass AB 344 to the Committee on Appropriations carried on the committee roll call. The secretary announced the bill had 14 votes in favor and that the roll would remain open for absent members.

The bill’s author told the committee the amendment process and conversations with stakeholders would continue as the measure moves through the legislative process.

Votes at a glance: AB 344 (Valencia) — Passed by the Governmental Organization Committee, due to be considered by the Committee on Appropriations; roll call recorded 14 yes votes and the roll left open for absent members.

Further action: The bill will proceed to the Assembly Appropriations Committee.