Alanna Madden

PORTLAND, Ore. (CN) — A settlement between Washington state breweries and the Oregon Liquor and Cannabis Commission on Monday has opened the door for out-of-state breweries to distribute their malt products directly to Oregon consumers.

That’s according to attorney Robert Epstein of Epstein Seif Porter Beutel, who said a favorable outcome had been reached in a lawsuit by three Washington breweries challenging Oregon’s direct-shipping ban on out-of-state distributors.

In 2022, Garden Path Fermentation, Mirage Beer and Fortis Brewing Company — also known as Fortside Brewing — sued the commission alongside former Oregon Governor Kate Brown and Oregon Attorney General Ellen Rosenblum over laws that prohibit out-of-state beer producers from selling to Oregon customers.

According to the breweries, Oregon’s regulatory schemes are unconstitutional because they violate the Constitution's commerce clause and discriminate against out-of-state beer producers engaged in interstate commerce.

“In the state of Oregon, a resident beer producer may sell, ship and deliver directly to Oregon consumers any beer that it produces under the direct shipper permit statute provided for in O.R.S. § 471.282 and O.A.R. 845-006-392,” the plaintiffs said in their original complaint, adding that while there is no license available for Washington breweries to distribute malt beverages in Oregon, there is such a certificate available for out-of-state wineries.

Currently, out-of-state breweries must use wholesaler entities at a premium cost to make their products available in Oregon, according to the lawsuit. Direct shipping, the plaintiffs say, would save them significant money.

In late March 2023, U.S. District Judge Michael H. Simon stayed proceedings to give the commission time to respond to the breweries’ amended complaint, which dropped claims against Brown and included specific state commissioners. Since then, it appears as though Oregon has taken the issue back to legislators, who may amend the discrepancy as soon as this session, according to Epstein.

If the issue isn’t resolved soon, however, Epstein says the breweries can take the matter back to court.

Epstein’s firm was one of the first in the country to do any litigation involving direct-to-consumer shipping, which went before the U.S. Supreme Court in 2005 for Granholm v. Heald — a very similar case involving Michigan and New York that held that, except for very narrow circumstances, states cannot enforce differential treatment of in-state and out-of-state economic interests that benefit one over the other.

Before Granholm v. Heald, Epstein said only four U.S. states allowed direct-to-consumer shipping. Now it’s allowed in 46 states.

“This is the first beer case that has been filed in the United States,” Epstein said in an interview, adding that there will be more to follow.

Attorneys for the commission did not immediately respond for comment regarding the settlement.