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Washington brewers sue Idaho over "discriminatory" alcohol distribution rule

The lawsuit challenges the constitutionality and fairness of the state's rules regarding out-of-state brewers.

BOISE, Idaho — In Idaho, getting brews from small breweries to retailers is just about as simple as tapping a keg. That only applies, however, if your brewery is located in Idaho.

"There might not be a discriminatory intent behind these laws, but there's still a discriminatory impact," said Justin Leigh, co-owner of Dwinell Country Ales

Right now under Idaho law, small out-of-state beer producers (producing 30,000 barrels or less a year) must go through a wholesaler to sell to bars, restaurants, and other consumers. Similarly-sized Idaho brewers can self-distribute for free. 

Leigh is joining another central Washington brewery, Varietal Beer Company, and two Idaho beer enthusiasts in suing the State of Idaho over the rule.

Leigh says they just want to get the same treatment Idaho's breweries do.

"The right to self-distribute in Idaho, yeah," he said.

Chris Baum with Varietal says going through a third-party distributor can complicate things; he's fighting for more control for their small business.

"Being able to represent our brand more fully," Baum said.

They're also fighting to keep costs lower for their Idaho customers. Baum says wholesalers often take a large chunk of their profits while also asking for prices to be lowered, which can mean markups to the end customer.

"We take a big cut," Baum said of working through wholesalers. "The sort of rule of thumb is 30%."

"We have no bargaining power when we come to the distributor and they say we're taking 30%, take it or leave it," Leigh said. "Also they make it really onerous and difficult for small brewery to get out of that contract."

That's the situation he went through recently trying to distribute in Idaho. He also went through a similar lawsuit in another northwest state last year.

"I helped organize an almost identical lawsuit, we got a bunch of Washington breweries together and sued the State of Oregon," Leigh said.

In both lawsuits, the breweries claim the state's differing rules for in and out-of-state producers are discriminatory and violate the dormant Commerce Clause.

"They're treating their in-state breweries more favorably and in a sense discriminating economically against out-of-state breweries. And courts have found that's a violation against the Commerce Clause," Leigh said.

Oregon eventually settled in last summer's case, drafting a new law to allow craft brewers to self-distribute. That law takes effect next month.

The Idaho suit specifically names Attorney General Raul Labrador and Rocky Gripton, the chief of Idaho State Police's bureau of Alcohol Beverage Control. ISP declined to comment on the pending litigation. 

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