AB-22 – Beer Depletion Allowances
What suppliers and wholesalers must know about new limits on depletion allowance programs
Maryland enacted a new law that changes how depletion allowances can be offered, prohibiting suppliers from requiring wholesalers to participate in pricing or cost-sharing arrangements and ensuring that all wholesalers are treated fairly under these programs.
What you need to know
- Suppliers cannot require wholesalers to share in depletion allowance costs
- Participation cannot depend on retailer pricing
- All wholesalers must be given equal opportunity to participate
- Prior guidance allowing cost-sharing is no longer valid
Who This Applies To
This guidance applies to:
- Beer wholesalers
- Non-resident dealers
- Suppliers offering depletion allowance programs
What Changed
Maryland law now prohibits:
- Any depletion allowance program that depends on how a wholesaler prices products to retailers
Suppliers may no longer:
- Require wholesalers to reduce prices or share costs as a condition of participation
What Is NOT Allowed
Suppliers may not:
- Require wholesalers to participate in funding a depletion allowance
- Tie participation to retailer pricing or discounts
- Impose conditions that indirectly require cost-sharing
What Is Allowed
Suppliers may:
- Offer depletion allowances to wholesalers
- Suggest (but not require) participation in cost-sharing
Equal Access Requirement
If a depletion allowance is offered:
- All Maryland wholesalers must be given the opportunity to participate
Participation cannot be limited based on:
- Pricing practices
- Business relationships
- Other conditions
Impact on Previous Guidance
This law replaces part of prior guidance:
- Previous rules allowed suppliers to require cost-sharing
- This is no longer permitted
All other provisions that do not conflict with the new law remain in effect.
Effective Date
- The new law takes effect: October 1, 1998
All programs must comply by this date.
What This Means for Businesses
Businesses should:
- Review all depletion allowance programs
- Remove any required cost-sharing provisions
- Ensure equal access for all wholesalers
- Update agreements to comply with the new law
Important Notes
- Programs that do not comply must be revised
- Indirect requirements may still violate the law
- Compliance applies to both current and future programs
Need Help?
For questions about depletion allowances, contact the ATCC: 410-260-7314 ext. 2 or [email protected]