Okla. Stat. tit. 37A, § 37A-3-108

brewers or cider manufacturers - Rights to distribute low-point beer

- Assignment to distribute beer brand - Brand extensions.

A. The provisions of this section shall be in effect except as

otherwise provided in Article XXVIII-A of the Oklahoma Constitution.

Oklahoma Statutes - Title 37a. Alcoholic Beverages Page 105

B. Subject to the provisions of subsection D of this section,

every licensed brewer or cider manufacturer authorized to sell its

beer or cider in this state shall:

1. Enter into a distributor agreement with a licensed

distributor, as defined herein, to sell the designated brands,

including brand extensions, of the brewer or cider manufacturer.

The agreement shall designate the sales territory of that licensed

distributor and the designated brands to be sold by the licensed

distributor. All such distributor agreements shall specifically

authorize this sale of the designated brands by a licensed

distributor within that sales territory. All such distributor

agreements shall further provide that the licensed brewer or cider

manufacturer who desires to sell a brand extension of a low-point

beer in Oklahoma must assign the low-point beer brand extension to

the licensed distributor to whom the licensed brewer or cider

manufacturer granted the exclusive sales territory to the low-point

beer brand from which the brand extension resulted;

2. Sell its registered and approved designated brands only to a

licensed distributor with whom that brewer or cider manufacturer has

a distributor agreement designating the sales territory of the

licensed distributor and the designated brands to be sold by the

licensed distributor;

3. Authorize only one licensed distributor for each designated

sales territory. Such licensed distributor shall be the only

licensed distributor for the designated brands of the authorizing

brewer or cider manufacturer within that designated sales territory;

and

4. Designate who is responsible for the distribution of its

designated brands.

C. Subject to the provisions of subsection D of this section,

any and all licensed distributors possessing the rights to

distribute a low-point beer brand in a specific territory prior to

the introduction of that low-point beer's correlating beer brand

extension in that specific territory shall retain the right to

distribute the low-point beer from which the brand extension

resulted.

D. 1. No later than August 2, 2018, a brewer shall assign the

exclusive right to distribute a beer brand, including brand

extensions thereof, to the low-point beer distributor who was, prior

to October 1, 2018, assigned the exclusive distribution rights to

the low-point beer from which the brand extension arose without

charge or payment of compensation, unless the low-point beer

distributor is, on October 1, 2018, a brewer of beer or low-point

beer and has therefore been distributing low-point beer pursuant to

a license to so distribute, subject to the provisions of subsection

E of this section. This subsection shall not apply to a small

brewer as defined in Section 1-103 of this title.

Oklahoma Statutes - Title 37a. Alcoholic Beverages Page 106

2. With respect to brand extensions which arise after October

1, 2018, the brewer or cider manufacturer shall assign the exclusive

right to distribute the brand extension to the distributor who has

been assigned the exclusive distribution rights to the beer or cider

from which the brand extension arose, without charge or payment of

compensation.

3. With respect to a brand of beer or cider which was, prior to

April 15, 2017, distributed in this state only as strong beer or

cider pursuant to the Oklahoma Alcoholic Beverage Control Act then

in effect, if a low-point version of the brand is introduced after

April 15, 2017, no later than August 2, 2018, the brewer or cider

manufacturer shall assign the exclusive rights to distribute the

low-point version of the brand to the distributor who was,
or to

April 15, 2017, distributed in this state only as strong beer or

cider pursuant to the Oklahoma Alcoholic Beverage Control Act then

in effect, if a low-point version of the brand is introduced after

April 15, 2017, no later than August 2, 2018, the brewer or cider

manufacturer shall assign the exclusive rights to distribute the

low-point version of the brand to the distributor who was,

immediately prior to the introduction of the low-point version of

the brand, assigned the exclusive distribution rights to the strong

version of the brand without charge or payment of compensation.

4. No later than August 2, 2018, with respect to dual strength

beer, the brewer thereof shall assign the exclusive right to

distribute the brands represented by the dual strength beer to

either the low-point beer distributor or the nonresident seller who

had theretofore been assigned the exclusive distribution rights in

the territory to either version of the dual strength beer; provided,

however, whichever party is selected by the brewer must compensate

the party that was not selected by the brewer for the loss of the

distribution rights with respect to that particular territory.

Whichever party is selected shall obtain the requisite distributor

license and shall be subject to the provisions of the Oklahoma

Alcoholic Beverage Control Act.

5. Compensation for the purposes of this provision shall be the

fair market value of the party losing its distribution rights with

respect to the beer within that specific territory. Fair market

value shall be determined as set forth in Section 3-111 of this

title and shall take into account all aspects of brand valuation,

including but not limited to:

a. the diminished value of the distribution of one

version of beer as a consequence of the subsequent

introduction of the other version,

b. the expected annual sales and earnings of the

distributor agreement,

c. the length of time the existing distributor held in

the distribution sales agreement, and

d. any other relevant items of value, such as goodwill

and going concern.

E. If a brewer, whether directly or through an affiliate,

maintained one or more licenses to distribute low-point beer in this

state prior to October 1, 2018, then up to two of the brewer's low-

point beer distribution licenses shall automatically convert to beer

Oklahoma Statutes - Title 37a. Alcoholic Beverages Page 107

distribution licenses on October 1, 2018, and such brewer shall be

permitted to continue to distribute beer in two territories within

which it currently distributes without the appointment of a

distributor for such period of time as determined by the Legislature

and consistent with the Constitution of the State of Oklahoma;

provided however, it shall not be permitted to distribute beer

outside of the territory unless it enters into a distributor

agreement with an independent licensed distributor as provided in

paragraph 1 of subsection B of this section. This section shall not

apply to small brewers that have elected to self-distribute.

F. If, on October 1, 2018, a licensed distributor possesses

inventory of a brand that it is no longer authorized to distribute

within this state, such inventory shall be sold to a licensed

distributor authorized to distribute such brand, at a price not to

exceed the total of the actual purchase price of the selling

distributor plus the cost of inbound and outbound shipping to the

purchasing distributor. The provisions of this paragraph shall not

apply to inventory purchased on or after September 15, 2018.