Ohio lawmakers are sounding the alarm about what they call an outdated alcohol law they say hurts small businesses, like craft brewers.

The Ohio House and Senate have been working to amend the 1974 Alcohol Franchise Law. 21 News looked into how the language affects microbreweries and also heard from breweries in the Mahoning Valley on their take on the Law.

"This law was created to protect small businesses and now it's having the opposite effect," explained Mary MacDonald, Executive Director of the Ohio Craft Brewers Association. 

Ohio's Alcoholic Beverages Franchise Act celebrates its 50th birthday this year but a lot has changed in the alcohol industry since, including craft breweries that continue to pop up across the Buckeye State.

"If a small brewery finds itself trapped in a relationship with a wholesaler who's not adequately representing their brand in the market, they're kind of stuck unless the wholesaler decides to let them go," MacDonald explained.

The 1974 statute does not allow any manufacturers or distributors to cancel an agreement with a franchise without the prior consent of the wholesaler, meaning it's tricky to get out of an agreement.

Earlier this month, The Buckeye Institute released its latest policy brief titled, Brewing Freedom: Ensuring the Freedom to Contract for Ohio’s Craft Brewers. The brief urges Ohio lawmakers to "free small craft brewers from the state’s anti-competitive alcohol franchise law that disproportionately empowers distributors to the detriment of small craft brewers.”

Author Greg Lawson cites three specific problems with current Ohio law, stating the law undermines a would-be competitive market, negates the market benefits of competition and limits the freedom of brewers to act in their own best business interests.

"When small brewery signs with a wholesale beer distributor, they are now in the same kind of contract that an Anheuser Busch or Molson Coors is," MacDonald explained. "Which comes with that automatic renewal of contracts and the same just cause needed to leave the relationship."

That's why there's legislation going through the House and Senate to exempt breweries that produce less than $250,000 barrels of beer from Franchise Law and let them negotiate arms-length contracts instead.

"Back in 1974, there were 116 breweries in the United States," MacDonald added. "We have over 9,000 breweries across the United States including 430+ in Ohio. These changes would allow for shorter contract agreements that better suit microbrewries."

"Breweries that we knew told us about bad relationships they had or it was hard to get out of if they didn't want to get out of it," explained Aspasia Lyras-Bernacki, Co-Owner of Penguin City Brewing Company. "So that kind of prevented us from moving forward with a distributor."

Penguin City is the only brewery in the region big enough to work with a distributor. Spots like Noble Creature in Downtown Youngstown told 21 News they simply don't use a distributor to avoid getting caught up in the hiccups of the current Franchise Act.

"We probably should have signed with a distributor years ago," Lyras-Bernacki said. "But because of that hesitation and not knowing what was going on, that's why we waited so long."

Lyras-Bernacki said tweaking the language would simply modernize the Franchise Act. 

"Just to be on par with what's going on right now in our industry in Ohio," she explained. "Just having that language to help you negotiate better terms if something isn't working right would be a weight off our shoulders."

Senate Bill 138 and House Bill 306 are still under review and have yet to be passed.