SB 15 — AN ACT relating to microbreweries.

UNOFFICIALCHAPTER COPY34 211 RSCHAPTER 34 ( SB 15/GA15 ) AN ACT relating to microbreweries.

Page 1 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA 1.

(b) Sell malt beverages produced on the premises of the microbrewery for on-on-premises premises purposes without having to transfer physical possession of those malt beverages to a licensed distributor provided:

and PageLegislative 2Research ofCommission 12PDF SB001510.100Version -ACTS 802OF -THE XXXXGENERAL GAASSEMBLY UNOFFICIAL COPY 21 RS SB 15/GA 2.

and (c) Sell malt beverages produced on the premises of the microbrewery for off-off-premises premises purposes without having to transfer physical possession of those malt beverages to a licensed distributor provided that:

(5) (a) A microbrewery selling malt beverages in accordance with subsection (1)(f) or[subsection] (3)(b) and (c) of this section shall pay all wholesale sales taxes Page 3 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA due under KRS 243.884.

(2) Every distribution agreement providing for and specifying the rights and duties of a microbrewer and distributor with and in regard to the sale of the products of Page 4 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA the microbrewer within the Commonwealth of Kentucky shall be in writing.

CHAPTER 34 3 (b) Except as set forth in subsection (4) or (9) of this section, permit a microbrewer or distributor to terminate a distribution agreement without first giving written notice of any alleged deficiency and giving the other party a reasonable opportunity to cure the alleged deficiency.

Page 5 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA (4) A microbrewer may terminate a distribution agreement according to the terms of the agreement or in any of the following instances:

or (g) In the case of a microbrewer whose products represent five percent (5%) or Page 6 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA less of a distributor’s gross annual sales, the giving of a forty-five (45) day notice of termination and the payment to the distributor of reasonable compensation, which shall be equivalent to the fair market value of the distributor's total investment in the microbrewer's products being terminated.

A microbrewer terminating an agreement under this paragraph may do so not more than once in a thirty-thirty-six six (36) month period and shall not be deemed to be in violation of subsection (5)(b) of this section.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (a) Unreasonably discriminate or retaliate against the other party in the application or performance of the terms of a distribution agreement;

A microbrewer's request to a distributor to pay or contribute any sum of money for or toward the cost of marketing the product or products of the microbrewer so long as the money contributed by the distributor is spent by the microbrewer in a manner and at such times as agreed Page 7 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA to in writing by the microbrewer and the distributor;

This subsection shall not apply to contracts entered into prior to January 1, 2004, or future renewals of those contracts to the extent the existing contract and the future renewal allow different distributors to sell some but not all of the Page 8 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA brewer's or importer's brands or brand extensions within the same territory or area at the same time.

CHAPTER 34 5 (e) Without distributor consent, the microbrewer effectuates a change in ownership or possession of ownership interests, establishes a trust or other Page 9 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA ownership interest, enters into buy-sell agreements, or grants an option to purchase an ownership interest;

(1) If the parties fail to reach an agreement not later than thirty (30) days after the Page 10 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA distributor receives the microbrewer's written notice to terminate, the distributor or microbrewer may send a written notice to the other party and the American Arbitration Association, or its successor in interest, declaring the party's intention to proceed with final and binding arbitration administered by the American Arbitration Association under the American Arbitration Association's Commercial Arbitration Rules.

(2) Notice of intent to arbitrate shall be sent, as provided in paragraph (1) of this section, not later than thirty-fivethirty- five (35) days after the distributor receives written notice to terminate.

Any arbitration held Page 11 of 12 SB001510.100 - 802 - XXXX GA UNOFFICIAL COPY 21 RS SB 15/GA pursuant to this subsection shall be instead of all other remedies and procedures.

Legislative Research Commission PDF Version ACTS OF THE GENERAL ASSEMBLY (8) A party who fails to participate in the arbitration hearings in any arbitration held pursuant to this subsection waives all rights the party would have had in the arbitration and is considered to have consented to the determination of the arbitrator.

PageSigned 12by ofGovernor 12March SB001510.10017, -2021. 802 - XXXX GA