An Elmsford distribution business is demanding $500,000 from a beverage company whose hemp drinks it used to sell.
Sarene Craft Beer Distributors sued Delta Beverages on Sept. 18 in Westchester Supreme Court for allegedly refusing to buy out the distribution rights when it cancelled their contract.
“The termination of the distribution agreement,” the complaint states, “deprives Sarene of the rewards for the risk it took and its efforts to develop a market in three states.”
Serene was incorporated in 2013 by Matthew Schulman, and according to its website his brother, a cousin and a friend also were active in founding the enterprise. It represents more than a hundred brands of beer, coffee, cider, spirits and tea; operates six warehouses; and services more than 7,500 retailers.
The website for Delta Beverages, of Charlotte, North Carolina, encourages buyers to “find your vibe” when choosing among several fruity flavored seltzers that contain hemp-based cannabidiol (CBD) and tetrahydrocannabinol (THC) psychoactive compounds.
Sarene began operating as Delta’s exclusive distributor in New York, New Jersey and Connecticut in March 2023. At the time, according to the complaint, the market for hemp-based products was uncertain and many distributors were unwilling to take on the risks of handling such beverages.
But Sarene increased its sales staff, secured larger warehouses in New York and New Jersey, invested in new equipment, and expanded its fleet of trucks.
Business grew rapidly, and by the second year Sarene made a gross profit of $578,766. Sarene claims that Delta was pleased with the results, yet, this past April, Delta terminated their distribution deal.
The lawsuit does not say why Delta cancelled. But it notes that either party may terminate without cause at any time, with a 90 days notice.
Sarene consented to the termination, and by doing so, the complaint states, Delta must pay Sarene the fair market value of the distribution rights.
Sarene calculated a fair market value of at least $500,000, based on strong sales and on “immense growth” in the CBD and THC beverage industry. But Delta has allegedly refused to acknowledge an obligation to pay for the distribution rights.
Sarene accused Delta of breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment.
Delta’s attorney, Daniel Edelman, did not reply to a message asking for his client’s side of the story.
