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As alc bev distribs increasingly brought intoxicating hemp bevs aboard their trucks, it was only a matter of time before a termination dispute emerged. And while some have moved beneath the surface, now one's cropped up in the courts. Chicago-based distrib Louis Glunz Beer sued a leading hemp bev brand, Wynk, and its parent co Canvas in Illinois US District Ct last Fri, alleging that Canvas wrongfully terminated their agreement and failed to pay the full fair mkt value while also disseminating the distrib's trade secrets. Glunz asks to be made whole via compensatory damages of what it sees as proper FMV payment, which it believes should be in excess of the 3x gross profit "floor" for trailing 12 mos of a brand it helped build. Among other damages, Glunz also seeks injunctive relief to protect its confidential info. Questions surrounding franchise law and FMV are of course nothing new for beer distribs playing in other bev categories. Plenty have been burned by lower multiples and lack of franchise protections on those products, particularly energy drinks prone for the plucking. Notably, INSIGHTS has often heard of hemp bev brands agreeing to GP multiples more akin to beer than wine, spirits or NA bevs. Yet as the leading association for wine and spirits distributors cozies up to hemp (see yesterday's issue), big questions remain not just on the category's long-term viability, but also on the structure of said distribution agreements. FMV "Shall Not Be Less" Than 3x GP for Trailing 12 Mos Glunz signed a contract to become Wynk's exclusive distributor in the Chicago area back in Oct 2023, according to the filing. Agreement stipulates that parent co Canvas can terminate without good cause by providing 60 days notice, in which case it's obligated to pay the distrib FMV for its distribution rights, "which shall not be less" than 3x the distrib's 12-month trailing GP on sales of its products within the territory. Absent those conditions, suit adds, the contract "prohibits termination of Glunz's exclusive rights or appointment of a successor distributor." But Fair Value "Materially Exceeds" 3x "Floor," Sez Glunz As filing makes clear, Glunz believes FMV "materially exceeds" the 3x "floor given the brand's growth, established approvals, and market comparables." So even tho Canvas issued a termination notice without cause on Aug 28, 2025 and in "late October" tendered an amount that it "claimed to be equal to the contractual three‑times trailing gross‑profit floor and completed the inventory and paid‑POS buyback at laid‑in cost," it "did not pay the full fair‑market value owed," as far as Glunz is concerned. Instead, it paid just "a small fraction." The distrib argues Canvas hadn't yet satisfied the conditions required to appoint or sell thru successors, which, along with its alleged misuse of Glunz's confidential info, marked a breach of contract. Suit claims Canvas "accessed, used, and disclosed Glunz's confidential trade secrets—including its account-level sales data and retailer roadmap—to enable the new distributors to step into Glunz's position." The agreement "further protects" those figures, per filing, including "retailer contacts, sales levels, depletion amounts, retailer purchasing information, pricing ladders, promotion cadence, feature/reset calendars, and sales programs." How We Got Here Much of the FMV discrepancy centers around Glunz's claim that it "played a pivotal role in launching and scaling the brand from inception," resulting in "explosive growth under Glunz's stewardship." When Glunz first took on the brand, Wynk "had no distribution network, negligible sales, and no brand recognition" in Illinois. Parent co Canvas specifically sought out Glunz "for its deep experience, strong retailer relationships, and proven ability to build new and niche brands in the competitive Chicagoland market," the distrib contends. And in the ensuing period, Glunz "invested substantial time, money, and resources to create a market for WYNK that did not previously exist." The distrib claims to have built the brand to the point where "Canvas personnel repeatedly recognized Glunz as the number-one WYNK wholesaler nationally," adding that it serviced more than 1K active retail doors with strong velocity and broad chain penetration. But after it "built the brand from minimal sales to a category leader in its territory," Canvas issued a notice to terminate "without good cause and orchestrated a transition to new distributors in violation of its contractual and statutory obligations," Glunz asserts. Notably, co claims it requested a face-to-face meeting as well as "sent multiple texts and emails and requested calls" for more than 2 wks before Canvas sent the termination notice, after "credible market rumors indicated Canvas had targeted a significant chain placement and contemplated a departure." But the supplier allegedly declined to engage. Confusion and Confidential Info Amid Distrib Transition Following its decision to terminate, Canvas allegedly "commenced onboarding or sales via one or more successor distributors and communicated with retailers in a manner that caused confusion about Glunz's authorization and status and took advantage of Glunz's confidential information by allowing Canvas and the successor distributors to target the accounts Glunz had placed Wynk in." Multiple buyers including Binny's, D'Agostino's and Gas N Wash reported that Canvas and its new partners instructed retailers to "hold or reroute orders, which caused immediate confusion and delays," per suit. So Canvas' allegedly improper conduct includes "withholding retailer activations" and "diverting new accounts from Glunz" for its own benefit, in addition to fundamental FMV disputes.

Hemp Termination Suit in Chicagoland Spotlights Big Questions for Category at Large

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