1-1 By: Kubiak (Senate Sponsor - Harris of Dallas) H.B. No. 2321
1-2 (In the Senate - Received from the House April 26, 1993;
1-3 April 27, 1993, read first time and referred to Committee on State
1-4 Affairs; May 26, 1993, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 8, Nays 0; May 26, 1993,
1-6 sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Harris of Dallas x
1-10 Rosson x
1-11 Carriker x
1-12 Henderson x
1-13 Leedom x
1-14 Lucio x
1-15 Luna x
1-16 Nelson x
1-17 Patterson x
1-18 Shelley x
1-19 Sibley x
1-20 West x
1-21 Whitmire x
1-22 COMMITTEE SUBSTITUTE FOR H.B. No. 2321 By: Harris of Dallas
1-23 A BILL TO BE ENTITLED
1-24 AN ACT
1-25 relating to the continuation of the Texas Alcoholic Beverage
1-26 Commission and to the regulation of alcoholic beverages.
1-27 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-28 SECTION 1. Section 1.04, Alcoholic Beverage Code, is amended
1-29 by amending Subdivisions (3) and (7) and adding Subdivision (24) to
1-30 read as follows:
1-31 (3) "Distilled spirits" means alcohol, spirits of
1-32 wine, whiskey, rum, brandy, gin, or any liquor produced in whole or
1-33 in part by the process of distillation, including all dilutions or
1-34 mixtures of them, and includes spirit coolers that may have an
1-35 alcoholic content as low as four percent alcohol by volume and that
1-36 contain plain, sparkling, or carbonated water and may also contain
1-37 one or more natural or artificial blending or flavoring
1-38 ingredients.
1-39 (7) "Wine and vinous liquor" means the product
1-40 obtained from the alcoholic fermentation of juice of sound ripe
1-41 grapes, fruits, berries, or honey, and includes wine coolers.
1-42 (24) "Wine cooler" means an alcoholic beverage
1-43 consisting of vinous liquor plus plain, sparkling, or carbonated
1-44 water and which may also contain one or more natural or artificial
1-45 blending or flavoring ingredients. A wine cooler may have an
1-46 alcohol content as low as one-half of one percent by volume.
1-47 SECTION 2. Section 5.01(b), Alcoholic Beverage Code, is
1-48 amended to read as follows:
1-49 (b) The Texas Alcoholic Beverage Commission is subject to
1-50 Chapter 325, Government Code (Texas Sunset Act). Unless continued
1-51 in existence as provided by that chapter, the commission is
1-52 abolished and Subchapter A, Chapter 5, of this code expires
1-53 September 1, 2005 <1993>.
1-54 SECTION 3. Chapter 6, Alcoholic Beverage Code, is amended by
1-55 adding Section 6.03 to read as follows:
1-56 Sec. 6.03. CITIZENSHIP REQUIREMENTS. (a) It is the public
1-57 policy of this state and a purpose of this section to require that
1-58 a permit or license may not be issued to a person who was not a
1-59 citizen of this state for a one-year period preceding the date of
1-60 the filing of the person's application for a license or permit. In
1-61 that regard, the legislature makes the findings in Subsections (b)
1-62 through (j) of this section.
1-63 (b) Between 1920 and 1933, the distribution and consumption
1-64 of alcoholic beverages was prohibited in the United States. While
1-65 the idealistic motives behind Prohibition were noble, a law
1-66 enforcement nightmare ensued. Otherwise law-abiding citizens
1-67 routinely violated the law by buying and consuming alcoholic
1-68 beverages. The demand for the illegal products created an
2-1 opportunity for criminal elements to develop a national network for
2-2 the supply and distribution of alcoholic beverages to the populace.
2-3 Massive criminal empires were built on illicit profits from these
2-4 unlawful activities and organized crime openly flourished in
2-5 Chicago, New York, New Orleans, and other cities.
2-6 (c) During Prohibition, the illegal enterprises used their
2-7 national wholesale distribution networks to exert control over
2-8 their customers. A common operating procedure was to sell
2-9 alcoholic beverages to a speakeasy on liberal terms to ensnarl the
2-10 owner in a web of debt and control with the aim of forcing the
2-11 owner to engage in other illegal business enterprises on the
2-12 premises including gambling, prostitution, and the distribution of
2-13 illegal drugs.
2-14 (d) In 1935, when the sale of alcoholic beverages was
2-15 legalized in this state following the adoption of the Twenty-first
2-16 Amendment to the United States Constitution, the state was faced
2-17 with building an entire framework for the distribution of alcoholic
2-18 beverage products. An important concern was that since criminals
2-19 owned and controlled the existing illegal alcoholic beverage
2-20 distribution system, criminals would attempt to own and control the
2-21 newly legalized industry. In an effort to prevent this situation,
2-22 comprehensive laws were adopted to ensure that an alcoholic
2-23 beverage permit or license could be issued only to citizens of the
2-24 state who had lived in this state for at least three years, thus,
2-25 long enough to be known by their community and neighbors.
2-26 (e) Under the newly designed regulatory scheme, permits and
2-27 licenses issued by the state did not grant the holder a right.
2-28 Rather, the holder was granted a privilege that could be challenged
2-29 at both the county and the state level if the character or
2-30 qualifications of the applicant were suspect. Finally, strict cash
2-31 and credit laws were adopted to prevent parties in the wholesale
2-32 distribution system from controlling their retail customers through
2-33 the leveraging of debt to accomplish other illicit gain.
2-34 (f) The alcoholic beverage laws adopted by the legislature
2-35 in the 1930s to free the industry from the influence of organized
2-36 crime have been successful in this state. The alcoholic beverage
2-37 industry in this state is not dominated by organized crime.
2-38 However, the legislature does find that organized crime continues
2-39 to be a threat that should never be allowed to establish itself in
2-40 the alcoholic beverage industry in this state.
2-41 (g) To accomodate the interest of the consuming public, the
2-42 expansion of popular nationwide businesses, and the increasing
2-43 state interest in tourism, and at the same time to guard against
2-44 the threats of organized crime, unfair competition, and decreased
2-45 opportunities for small businesses, the legislature finds that
2-46 there is no long need for the three-year residency requirements
2-47 with regard to those segments of the industry that sell alcoholic
2-48 beverages to the ultimate consumer only. The legislature finds
2-49 that it is desirable to retain a one-year residency requirement for
2-50 businesses that sell to the consumer packaged liquor and fortified
2-51 wine capable of being used to supply legal or illegal bars and
2-52 clubs. The legislature also finds it reasonable, desirable, and in
2-53 the best interests of the state to provide a one-year residency
2-54 requirement for businesses engaged in the wholesale distribution of
2-55 beer, malt liquor, or wine or in the manufacture and distribution
2-56 of distilled spirits and fortified wines at both the wholesale and
2-57 the retail levels where those beverages, in unopened containers,
2-58 and sold to mixed beverage permittees and private club registration
2-59 permittees as well as to the general public. Adequate protection
2-60 is deemed to be provided by controlling those sources of supply for
2-61 distilled spirits and fortified wines.
2-62 (h) It is also the public policy of this state and a purpose
2-63 of this section to enforce strict cash and credit laws as a means
2-64 of preventing those engaged in the distribution of alcoholic
2-65 beverages from exerting undue influence over any level of the
2-66 industry selling or serving alcoholic beverages to the ultimate
2-67 consumer.
2-68 (i) It is also the public policy of this state and a purpose
2-69 of this section to maintain and enforce the three-tier system
2-70 (strict separation between the manufacturing, wholesaling, and
3-1 retailing levels of the industry) and thereby to prevent the
3-2 creation or maintenance of a "tied house" as described and
3-3 prohibited in Section 102.01 of this code.
3-4 (j) The above-stated public policies, purposes of this
3-5 section, and legislative findings are provided as guidelines for
3-6 the construction of the applicable sections of this code.
3-7 SECTION 4. Section 11.46(a), Alcoholic Beverage Code, is
3-8 amended to read as follows:
3-9 (a) The commission or administrator may refuse to issue an
3-10 original or renewal permit with or without a hearing if it has
3-11 reasonable grounds to believe and finds that any of the following
3-12 circumstances exists:
3-13 (1) the applicant has been convicted in a court of
3-14 competent jurisdiction of the violation of any provision of this
3-15 code during the two years immediately preceding the filing of his
3-16 application;
3-17 (2) three years have not elapsed since the
3-18 termination, by pardon or otherwise, of a sentence imposed on the
3-19 applicant for the conviction of a felony;
3-20 (3) within the six-month period immediately preceding
3-21 his application the applicant violated or caused to be violated a
3-22 provision of this code or a rule or regulation of the commission
3-23 which involves moral turpitude, as distinguished from a technical
3-24 violation of this code or of the rule;
3-25 (4) the applicant failed to answer or falsely or
3-26 incorrectly answered a question in an original or renewal
3-27 application;
3-28 (5) the applicant is indebted to the state for any
3-29 taxes, fees, or payment of penalty imposed by this code or by rule
3-30 of the commission;
3-31 (6) the applicant is not of good moral character or
3-32 his reputation for being a peaceable, law-abiding citizen in the
3-33 community where he resides is bad;
3-34 (7) the applicant is a minor;
3-35 (8) the place or manner in which the applicant may
3-36 conduct his business warrants the refusal of a permit based on the
3-37 general welfare, health, peace, morals, and safety of the people
3-38 and on the public sense of decency;
3-39 (9) the applicant is in the habit of using alcoholic
3-40 beverages to excess or is physically or mentally incapacitated;
3-41 (10) the applicant will sell liquor unlawfully in a
3-42 dry area or in a manner contrary to law or will knowingly permit an
3-43 agent, servant, or employee to do so;
3-44 (11) the applicant is not a United States citizen or
3-45 has not been a citizen of Texas for a period of one year <three
3-46 years> immediately preceding the filing of his application, unless
3-47 he was issued a permit or renewal permit on or before September 1,
3-48 1948, and has at some time been a United States citizen;
3-49 (12) the applicant does not have an adequate building
3-50 available at the address for which the permit is sought;
3-51 (13) the applicant is residentially domiciled with a
3-52 person whose permit or license has been cancelled for cause within
3-53 the 12 months immediately preceding the date of his present
3-54 application;
3-55 (14) the applicant has failed or refused to furnish a
3-56 true copy of his application to the commission's district office in
3-57 the district in which the premises for which the permit is sought
3-58 are located; or
3-59 (15) during the six months immediately preceding the
3-60 filing of the application the premises for which the permit is
3-61 sought have been operated, used, or frequented for a purpose or in
3-62 a manner that is lewd, immoral, or offensive to public decency.
3-63 SECTION 5. Section 11.61, Alcoholic Beverage Code, is
3-64 amended by amending Subsection (b) to read as follows:
3-65 (b) The commission or administrator may suspend for not more
3-66 than 60 days or cancel an original or renewal permit if it is
3-67 found, after notice and hearing, that any of the following is true:
3-68 (1) the permittee has been finally convicted of a
3-69 violation of this code;
3-70 (2) the permittee violated a provision of this code or
4-1 a rule of the commission;
4-2 (3) the permittee was finally convicted of a felony
4-3 while holding an original or renewal permit;
4-4 (4) the permittee made a false or misleading statement
4-5 in connection with his original or renewal application, either in
4-6 the formal application itself or in any other written instrument
4-7 relating to the application submitted to the commission, its
4-8 officers, or employees;
4-9 (5) the permittee is indebted to the state for taxes,
4-10 fees, or payment of penalties imposed by this code or by a rule of
4-11 the commission;
4-12 (6) the permittee is not of good moral character or
4-13 his reputation for being a peaceable and law-abiding citizen in the
4-14 community where he resides is bad;
4-15 (7) the place or manner in which the permittee
4-16 conducts his business warrants the cancellation or suspension of
4-17 the permit based on the general welfare, health, peace, morals, and
4-18 safety of the people and on the public sense of decency;
4-19 (8) the permittee is not maintaining an acceptable
4-20 bond;
4-21 (9) the permittee maintains a noisy, lewd, disorderly,
4-22 or unsanitary establishment or has supplied impure or otherwise
4-23 deleterious beverages;
4-24 (10) the permittee is insolvent or mentally or
4-25 physically unable to carry on the management of his establishment;
4-26 (11) the permittee is in the habit of using alcoholic
4-27 beverages to excess;
4-28 (12) the permittee knowingly misrepresented to a
4-29 customer or the public any liquor sold by him;
4-30 (13) the permittee was intoxicated on the licensed
4-31 premises;
4-32 (14) the permittee sold or delivered an alcoholic
4-33 beverage to an intoxicated person;
4-34 (15) the permittee possessed on the licensed premises
4-35 an alcoholic beverage that he was not authorized by his permit to
4-36 purchase and sell;
4-37 (16) a package store or wine only package store
4-38 permittee transported or shipped liquor, or caused it to be
4-39 transported or shipped, into a dry state or a dry area within this
4-40 state;
4-41 (17) the permittee is residentially domiciled with a
4-42 person who has a financial interest in an establishment engaged in
4-43 the business of selling beer at retail, other than a mixed beverage
4-44 establishment, except as authorized by Section 22.06, 24.05, or
4-45 102.05 of this code;
4-46 (18) the permittee is residentially domiciled with a
4-47 person whose permit or license was cancelled for cause within the
4-48 12-month period preceding his own application;
4-49 (19) the permittee is not a citizen of the United
4-50 States or has not been a citizen of Texas for a period of one year
4-51 <three years> immediately preceding the filing of his application,
4-52 unless he was issued an original or renewal permit on or before
4-53 September 1, 1948, and has been a United States citizen at some
4-54 time; or
4-55 (20) the permittee permitted a person to open a
4-56 container of alcoholic beverage or possess an open container of
4-57 alcoholic beverage on the licensed premises unless a mixed beverage
4-58 permit has been issued for the premises.
4-59 SECTION 6. Chapter 27, Alcoholic Beverage Code, is amended
4-60 by adding Subchapter B to read as follows:
4-61 SUBCHAPTER B. SPECIAL THREE-DAY WINE AND BEER PERMIT
4-62 Sec. 27.11. AUTHORIZED ACTIVITIES. The holder of a special
4-63 three-day wine and beer permit may sell for consumption on the
4-64 premises for which the permit is issued, but not for resale, wine,
4-65 beer, and malt liquors containing alcohol in excess of one-half of
4-66 one percent by volume but not more than 14 percent by volume.
4-67 Sec. 27.12 FEE. The state fee for a special three-day wine
4-68 and beer permit is $30.
4-69 Sec. 27.13. ISSUANCE OF PERMIT. (a) The commission may
4-70 issue a special three-day wine and beer permit directly to a
5-1 nonprofit charitable, civic, or religious organization for the
5-2 temporary serving of wine and beer at a picnic, celebration, or
5-3 similar event sponsored by the organization.
5-4 (b) The commission by rule may limit the number of special
5-5 three-day wine and beer permits issued in each calendar year to a
5-6 single nonprofit charitable, civic, or religious organization for
5-7 events sponsored by that organization.
5-8 (c) If a special three-day wine and beer permit is issued
5-9 for a premises in an area in which the sale of beer for on-premise
5-10 consumption has been authorized by a local option election, but the
5-11 sale of wine for on-premise consumption has not been authorized,
5-12 then the permittee is only authorized to sell beer.
5-13 Sec. 27.14. APPLICATION OF WINE AND BEER RETAILER'S PERMIT
5-14 PROVISIONS. A provision of this code that applies to a wine and
5-15 beer retailer permit applies to a special three-day wine and beer
5-16 permit unless the provision conflicts with a provision of this
5-17 subchapter.
5-18 Sec. 27.15. RULES. The commission may adopt rules as
5-19 necessary to implement and administer this subchapter.
5-20 SECTION 7. Chapter 28, Alcoholic Beverage Code, is amended
5-21 by adding Section 28.081 to read as follows:
5-22 Sec. 28.081. SUBSTITUTION OF BRAND WITHOUT CONSENT OF
5-23 CONSUMER PROHIBITED. (a) The holder of a mixed beverage permit or
5-24 a private club permit, or the agent, servant, or employee of a
5-25 holder of a mixed beverage permit or private club permit commits an
5-26 offense if the holder, agent, servant, or employee substitutes one
5-27 brand of alcoholic beverage for a brand that has been specifically
5-28 requested by a consumer, unless the consumer is notified and
5-29 consents to the substitution.
5-30 (b) A holder of a permit who violates Subsection (a) of this
5-31 section is liable in a civil suit to a consumer for damages
5-32 resulting from the substitution. The court shall award the
5-33 prevailing party in an action under this section attorney's fees
5-34 and costs of action.
5-35 (c) The commission shall provide written notice of the
5-36 provisions of this section to an applicant or permittee when
5-37 issuing an original or renewal mixed beverage permit or private
5-38 club permit on or after October 1, 1993.
5-39 SECTION 8. Section 31.01, Alcoholic Beverage Code, is
5-40 amended to read as follows:
5-41 Sec. 31.01. AUTHORIZED ACTIVITIES. The holder of a
5-42 caterer's permit may sell mixed beverages on a temporary basis at a
5-43 place other than the premises for which the holder's mixed beverage
5-44 permit is issued<, but> only in:
5-45 (1) an area where the sale of mixed beverages has been
5-46 authorized by a local option election; or
5-47 (2) an area that:
5-48 (A) is adjacent to a county with a home-rule
5-49 municipality with a population of more than 350,000:
5-50 (i) that has in its charter a provision
5-51 allowing for limited purpose annexation for zoning;
5-52 (ii) that has previously disannexed
5-53 territory annexed for limited purposes; and
5-54 (iii) that allows the sale of mixed
5-55 beverages;
5-56 (B) does not comprise an entire county; and
5-57 (C) is not within the corporate limits of a
5-58 municipality.
5-59 SECTION 9. Subchapter A, Chapter 61, Alcoholic Beverage
5-60 Code, is amended by adding Section 61.13 to read as follows:
5-61 Sec. 61.13. CONDUCT SURETY BOND. (a) Except as provided in
5-62 Subsection (e) of this section, an applicant for a license or a
5-63 holder of a license issued under Chapter 69 of this code shall file
5-64 with the commission a surety bond in the amount of $5,000
5-65 conditioned on the applicant's or holder's conformance with
5-66 alcoholic beverage law.
5-67 (b) A surety bond required under this section shall contain
5-68 the following statements on the face of the bond:
5-69 (1) that the holder of the license will not violate a
5-70 law of the state relating to alcoholic beverages or a rule of the
6-1 commission; and
6-2 (2) that the holder of the license agrees that the
6-3 amount of the bond shall be paid to the state if the license is
6-4 revoked.
6-5 (c) The commission shall adopt rules relating to the:
6-6 (1) form of a surety bond;
6-7 (2) qualifications for a surety;
6-8 (3) method for filing and obtaining approval of the
6-9 bond by the commission; and
6-10 (4) release or discharge of the bond.
6-11 (d) A holder of a license required to file a surety bond may
6-12 furnish instead of all or part of the required bond amount:
6-13 (1) one or more certificates of deposit assigned to
6-14 the state issued by a federally insured bank or savings institution
6-15 authorized to do business in this state; or
6-16 (2) one or more letters of credit issued by a
6-17 federally issued bank or savings institution authorized to do
6-18 business in this state.
6-19 (e) A holder of a license issued under this code who has
6-20 held a permit for three years or more before the date the holder
6-21 applied for renewal of the license is not required to furnish a
6-22 surety bond if the holder:
6-23 (1) has not had a license or permit issued under this
6-24 code revoked in the five years before the date the holder applied
6-25 for renewal of the license;
6-26 (2) is not the subject of a pending permit or license
6-27 revocation proceeding; and
6-28 (3) has continuously operated on the licensed premises
6-29 for three years or more before the date the holder applied for
6-30 renewal of the license.
6-31 (f) If a holder of a license is exempt from furnishing a
6-32 conduct surety bond under Subsection (e) of this section, the
6-33 holder shall be exempt from furnishing the bond at another location
6-34 where the holder applies for or holds a license.
6-35 (g) This section applies only in a county having a
6-36 population of 2.4 million or more.
6-37 SECTION 10. Section 61.42(a), Alcoholic Beverage Code, is
6-38 amended to read as follows:
6-39 (a) The county judge shall refuse to approve an application
6-40 for a license as a distributor or retailer if he has reasonable
6-41 grounds to believe and finds that:
6-42 (1) the applicant is a minor;
6-43 (2) the applicant is indebted to the state for any
6-44 taxes, fees, or penalties imposed by this code or by rule of the
6-45 commission;
6-46 (3) the place or manner in which the applicant for a
6-47 retail dealer's license may conduct his business warrants a refusal
6-48 of a license based on the general welfare, health, peace, morals,
6-49 safety, and sense of decency of the people;
6-50 (4) the applicant is in the habit of using alcoholic
6-51 beverages to excess or is mentally or physically incompetent;
6-52 (5) the applicant is not a United States citizen or
6-53 has not been a citizen of Texas for a period of one year <three
6-54 years> immediately preceding the filing of his application, unless
6-55 he was issued an original or renewal license on or before September
6-56 1, 1948;
6-57 (6) the applicant was finally convicted of a felony
6-58 during the two years immediately preceding the filing of his
6-59 application;
6-60 (7) the applicant is not of good moral character or
6-61 his reputation for being a peaceable, law-abiding citizen in the
6-62 community where he resides is bad; or
6-63 (8) as to a corporation, it is not incorporated under
6-64 the laws of this state, or at least 51 percent of the corporate
6-65 stock is not owned at all times by persons who individually are
6-66 qualified to obtain a license, except that this subdivision does
6-67 not apply to a holder of any renewal of a distributor's license
6-68 which was in effect on January 1, 1953, or to an applicant for a
6-69 beer retailer's on-premise license for a railway car.
6-70 SECTION 11. Section 101.66, Alcoholic Beverage Code, is
7-1 amended to read as follows:
7-2 Sec. 101.66. Beverages of Certain Alcohol Content
7-3 Prohibited. No person may manufacture, sell, barter, or exchange a
7-4 beverage that contains alcohol in excess of one-half of one percent
7-5 by volume and not more than four percent of alcohol by weight,
7-6 except beer, wine coolers, and spirit coolers.
7-7 SECTION 12. Section 101.46, Alcoholic Beverage Code, is
7-8 amended by adding Subsection (d) to read as follows:
7-9 (d) Spirit coolers, as described by the definition of
7-10 "distilled spirits" in Section 1.04 of this code, may be sold in
7-11 containers with a capacity of 355 milliliters as well as in
7-12 containers with any other capacity authorized by this code for
7-13 distilled spirits.
7-14 SECTION 13. Subchapter A, Chapter 102, Alcoholic Beverage
7-15 Code, is amended by adding Section 102.02 to read as follows:
7-16 Sec. 102.02. PROVIDING SAMPLES. Notwithstanding any other
7-17 provision of this code, the holder of a wholesaler's permit or the
7-18 holder's agent, representative, or employee may furnish or give a
7-19 sample of liquor to a holder of a permit authorizing the sale of
7-20 that category of alcoholic beverage at retail if the retail
7-21 permittee has not previously purchased that brand from that
7-22 wholesaler permittee. The wholesaler may give the retail permittee
7-23 not more than 750 milliliters of any brand of distilled spirits,
7-24 not more than three liters of any brand of wine in that package,
7-25 and not more than one six-pack of any other alcoholic beverage so
7-26 packaged. The retail permittee or the permittee's agent, servant,
7-27 or employee may sample the product on the licensed premises only if
7-28 the wholesaler or the wholesaler's agent, servant, or employee is
7-29 present.
7-30 SECTION 14. Section 102.07, Alcoholic Beverage Code, is
7-31 amended by amending Subsections (a), (b), and (d) and by adding
7-32 Subsections (e) and (f) to read as follows:
7-33 (a) Except as provided in Subsections <Subsection> (b) and
7-34 (d) of this section, no person who owns or has an interest in the
7-35 business of a distiller, brewer, rectifier, wholesaler, class B
7-36 wholesaler, winery, or wine bottler, nor the agent, servant, or
7-37 employee of such a person, may:
7-38 (1) own or have a direct or indirect interest in the
7-39 business, premises, equipment, or fixtures of a retailer;
7-40 (2) furnish, give, or lend any money, service, or
7-41 thing of value to a retailer;
7-42 (3) guarantee a financial obligation of a retailer;
7-43 (4) make or offer to enter an agreement, condition, or
7-44 system which will in effect amount to the shipment and delivery of
7-45 alcoholic beverages on consignment;
7-46 (5) furnish, give, rent, lend, or sell to a retail
7-47 dealer any equipment, fixtures, or supplies to be used in selling
7-48 or dispensing alcoholic beverages, except that alcoholic beverages
7-49 may be packaged in combination with other items if the package is
7-50 designed to be delivered intact to the ultimate consumer and the
7-51 additional items have no value or benefit to the retailer other
7-52 than that of having the potential of attracting purchases and
7-53 promoting sales;
7-54 (6) pay or make an allowance to a retailer for a
7-55 special advertising or distribution service;
7-56 (7) allow an excessive discount to a retailer;
7-57 (8) offer a prize, premium, gift, or similar
7-58 inducement to a retailer <or consumer> or to the agent, servant, or
7-59 employee of a retailer <either>.
7-60 (b) A permittee covered by Subsection (a) of this section
7-61 may furnish to a retailer without cost advertising specialties
7-62 showing the name of the product advertised. The total value of all
7-63 advertising specialties for any one brand furnished to a retailer
7-64 in any one calendar year may not exceed $78. Not more than once a
7-65 year, the administrator on the administrator's own motion or on the
7-66 motion of the permittee may increase or decrease the total amount
7-67 of advertising specialties permitted under this subsection by not
7-68 more than six percent based on the consumer price index and
7-69 previous adjustments, if any. For the purposes of this subsection,
7-70 "consumer price index" means the annual average over a calendar
8-1 year of the consumer price index (all items, United States city
8-2 average) published monthly by the Bureau of Labor Statistics,
8-3 United States Department of Labor, or its successor in function.
8-4 Permittees covered by Subsection (a) of this section may not pool
8-5 or combine their dollar limitations to provide a retailer with
8-6 advertising specialties valued in excess of the maximum permitted
8-7 under this subsection <recipes, recipe books, book matches,
8-8 cocktail napkins, or other advertising items showing the name of
8-9 the permittee furnishing the items or the brand name of the product
8-10 advertised if the individual cost of the items does not exceed 25
8-11 cents>.
8-12 (d) A permittee covered under Subsection (a) of this section
8-13 may offer prizes, premiums, or gifts to a consumer if the offer is
8-14 national in scope and legally offered and conducted in 30 states or
8-15 more. The use of rebates or coupons redeemable by the public for
8-16 the purchase of alcoholic beverages is prohibited. The holder of a
8-17 winery permit may furnish to a retailer without cost recipes,
8-18 recipe books, book matches, cocktail napkins, or other advertising
8-19 items showing the name of the winery furnishing the items or the
8-20 brand name of the product advertised if the individual cost of the
8-21 items does not exceed $1.
8-22 (e) A permittee covered under Subsection (a) of this section
8-23 may conduct a sweepstakes promotion if the promotion is part of a
8-24 nationally conducted promotional activity legally offered and
8-25 conducted at the same time in 30 or more states. A purchase or
8-26 entry fee may not be required of any person to enter a sweepstakes
8-27 event authorized under this subsection. A person affiliated with
8-28 the alcoholic beverage industry may not receive a prize from a
8-29 sweepstakes promotion.
8-30 (f) Notwithstanding Subsection (a) of this section, Section
8-31 108.05 of this code, or any other provision of this code, a holder
8-32 of a brewer's permit, nonresident brewer's permit, distiller's and
8-33 rectifier's permit, winery permit, nonresident seller's permit,
8-34 manufacturer's license, or nonresident manufacturer's license may,
8-35 in order to promote the brand name of the permittee's or licensee's
8-36 products, contract with a person licensed under the Texas Racing
8-37 Act (Article 179e, Vernon's Texas Civil Statutes) for on-site
8-38 advertising signs, for advertising in programs, and to supplement
8-39 purses for races even though the licensees under that Act or the
8-40 owners or operators of the racing facilities also hold a mixed
8-41 beverage permit or other permit or license under this code. In
8-42 addition, a permittee or licensee described by this subsection may
8-43 contract for off-site advertising promoting specific races. A part
8-44 of the cost of an advertisement or promotion authorized by this
8-45 section may not be charged to or paid, directly or indirectly, by
8-46 the holder of a wholesale permit, general class B wholesaler's
8-47 permit, local class B wholesaler's permit, local distributor's
8-48 permit, general distributor's license, or local distributor's
8-49 license, except through the price paid by that holder for products
8-50 purchased from the holder's supplier.
8-51 SECTION 15. Subchapter A, Chapter 102, Alcoholic Beverage
8-52 Code, is amended by adding Section 102.19 to read as follows:
8-53 Sec. 102.19. RESTOCKING AND ROTATION OF ALCOHOLIC BEVERAGES
8-54 AUTHORIZED. Restocking of a display and rotation of alcoholic
8-55 beverage stock in a retail establishment from the retailer's
8-56 storeroom, salesroom, display counter, or cooler by a
8-57 representative of a wholesaler or distributor is lawful. The
8-58 commission or administrator may publish guidelines regarding this
8-59 activity as the commission or administrator determines to be
8-60 necessary.
8-61 SECTION 16. Section 102.52, Alcoholic Beverage Code, is
8-62 amended to read as follows:
8-63 Sec. 102.52. Rights of Distributors. <(a)> Nothing in
8-64 Section 102.51 of this code limits or alters the right of a holder
8-65 of a general, local, or branch distributor's license to sell beer
8-66 to any other holder of a general, local, or branch distributor's
8-67 license, except that a distributor who has purchased beer from
8-68 another distributor may distribute and sell the beer only within a
8-69 territory for which the manufacturer of the brand has designated
8-70 that it may be sold by the general, local, or branch distributor
9-1 making a purchase <a distributor>.
9-2 <(b) A holder of general, local, or branch distributor's
9-3 license may not purchase, possess, transport, or sell any brand of
9-4 beer outside of the county in which the distributor's licensed
9-5 premises are located unless the distributor has a written assigned
9-6 territory from the holder of a manufacturer's or nonresident
9-7 manufacturer's license covering that brand of beer.>
9-8 SECTION 17. Chapter 104, Alcoholic Beverage Code, is amended
9-9 by adding Section 104.05 to read as follows:
9-10 Sec. 104.05. SALE IN ORIGINAL PACKAGING. (a) This section
9-11 applies to a permittee or licensee who is authorized to sell beer,
9-12 malt liquor, or ale to an ultimate consumer for consumption off the
9-13 permitted or licensed premises.
9-14 (b) The holder of a permit or license described in
9-15 Subsection (a) of this section may resell beer, malt liquor, or ale
9-16 only in the packaging in which the holder received the beer, malt
9-17 liquor, or ale or may resell the contents of the packages as
9-18 individual containers.
9-19 (c) Except for purposes of resale as individual containers,
9-20 a licensee or permittee may not:
9-21 (1) mutilate, tear apart, or cut apart original
9-22 packaging in which beer, malt liquor, or ale was received; or
9-23 (2) repackage beer, malt liquor, or ale in a manner
9-24 misleading to the consumer or that results in required labeling
9-25 being omitted or obscured.
9-26 (d) Nothing in this code prevents a retailer from making a
9-27 claim for the replacement of alcoholic beverages delivered to the
9-28 retailer by a wholesaler or distributor in a damaged condition. A
9-29 wholesaler or distributor may not give a refund for or replace
9-30 alcoholic beverages that were damaged while in the possession of
9-31 the retailer.
9-32 (e) To assure and control product quality, the holder of a
9-33 distributor's license, wholesaler's permit, or class B wholesaler's
9-34 permit, at the time of a regular delivery, may withdraw, with the
9-35 permission of the retailer, a quantity of beer, ale, or malt liquor
9-36 in its undamaged original packaging from the retailer's stock, if:
9-37 (1) the distributor, wholesaler, or class B wholesaler
9-38 replaces the stock with beer, ale, or malt liquor of identical
9-39 brands, quantities, and packages as the beer, ale, or malt liquor
9-40 withdrawn;
9-41 (2) the stock is withdrawn before the date considered
9-42 by the manufacturer of the product to be the date the product
9-43 becomes inappropriate for sale to a consumer; and
9-44 (3) the quantity of stock withdrawn does not exceed
9-45 the equivalent of 15 cases of 24 12-ounce containers.
9-46 (f) A consignment sale of an alcoholic beverage is not
9-47 authorized under Subsection (e) of this section.
9-48 SECTION 18. Section 105.02(a), Alcoholic Beverage Code, is
9-49 amended to read as follows:
9-50 (a) Except as provided by Subsection (b) of this section, a
9-51 wholesaler or a local distributor's permittee may sell, offer for
9-52 sale, or deliver liquor to a retailer between 5 a. m. <7 a. m.> and
9-53 9 p. m. on any day except Sunday and Christmas Day.
9-54 SECTION 19. Chapter 105, Alcoholic Beverage Code, is amended
9-55 by adding Section 105.051 to read as follows:
9-56 Sec. 105.051. SALE OF BEER BY DISTRIBUTOR'S LICENSEE. In
9-57 addition to the hours specified for the sale of beer in Section
9-58 105.05(b) of this code, the holder of a general, local, or branch
9-59 distributor's license may sell, offer for sale, or deliver beer
9-60 beginning at 5 a. m. on any day except Sunday.
9-61 SECTION 20. Chapter 107, Alcoholic Beverage Code, is amended
9-62 by adding Sections 107.09, 107.10, and 107.11 to read as follows:
9-63 Sec. 107.09. SINGLE INVOICE AUTHORIZED. If the holder of a
9-64 general, local, or branch distributor's license also holds a
9-65 wholesaler's, general class B wholesaler's, or local class B
9-66 wholesaler's permit, a written statement or invoice required as
9-67 evidence of the sale of beer or liquor may be on the same business
9-68 form that is designed to reflect the sale of both liquor and beer,
9-69 if all information required by this code to be shown on a statement
9-70 or invoice is reflected on the form and all other records required
10-1 by this code are maintained.
10-2 Sec. 107.10. TRANSPORTATION OF WINE COOLERS OR SPIRIT
10-3 COOLERS. (a) A holder of a wholesaler's, general class B
10-4 wholesaler's, or local class B wholesaler's permit may transport
10-5 and sell wine coolers without a prior order if the holder complies
10-6 with the provisions of this code and rules of the commission
10-7 applicable to the transportation and sale of beer by a holder of a
10-8 distributor's license.
10-9 (b) A holder of a wholesaler's permit may transport and sell
10-10 spirit coolers without a prior order if the holder complies with
10-11 the provisions of this code and rules of the commission applicable
10-12 to the transportation and sale of beer by a holder of a
10-13 distributor's license.
10-14 Sec. 107.11. IMPORTATION OF PERSONAL WINE COLLECTION.
10-15 (a) A person who is relocating a household may import, or contract
10-16 with a motor carrier or another person to import, a personal wine
10-17 collection as a part of that person's household goods.
10-18 (b) Section 107.07 of this code does not apply to a person
10-19 who is importing a personal wine collection under Subsection (a) of
10-20 this section.
10-21 SECTION 21. Section 108.03, Alcoholic Beverage Code, is
10-22 amended to read as follows:
10-23 Sec. 108.03. REGULATION OF PROMOTIONAL ACTIVITIES. The
10-24 commission shall adopt rules permitting and regulating the use of
10-25 business cards, menu cards, stationery, service vehicles and
10-26 equipment, and delivery vehicles and equipment that bear alcoholic
10-27 beverage advertising. The commission shall also adopt rules
10-28 permitting and regulating the use of insignia advertising beer,
10-29 distilled spirits, or wine by brand name on caps, regalia, or
10-30 uniforms worn by employees of manufacturers, <or> distributors,
10-31 distillers, or wineries or by participants in a game, sport,
10-32 athletic contest, or revue if the participants are sponsored by a
10-33 manufacturer, <or> distributor, distiller, or winery.
10-34 SECTION 22. Subchapter A, Chapter 108, Alcoholic Beverage
10-35 Code, is amended by adding Section 108.061 to read as follows:
10-36 Sec. 108.061. NATIONALLY CONDUCTED SWEEPSTAKES PROMOTIONS
10-37 AUTHORIZED. Notwithstanding the prohibition against prizes given
10-38 to a consumer in Section 108.06 of this code and subject to the
10-39 rules of the commission, a manufacturer or nonresident manufacturer
10-40 may offer a prize to a consumer if the offer is a part of a
10-41 nationally conducted promotional sweepstakes activity legally
10-42 offered and conducted at the same time period in 30 or more states.
10-43 A purchase or entry fee may not be required of any person to enter
10-44 in a sweepstakes authorized under this section. A person
10-45 affiliated with the alcoholic beverage industry may not receive a
10-46 prize from a sweepstakes promotion.
10-47 SECTION 23. Subchapter A, Chapter 109, Alcoholic Beverage
10-48 Code, is amended by adding Section 109.08 to read as follows:
10-49 Sec. 109.08. EXCLUSION. Notwithstanding any other provision
10-50 of this code, no person engaged in business as a distiller, brewer,
10-51 manufacturer, winery, or any other manufacturing level producer of
10-52 liquor or beer, or their wholesalers, may directly or indirectly or
10-53 through an affiliate require, by agreement or otherwise, that any
10-54 retailer engaged in the sale of liquor or beer purchase any such
10-55 products from such person to the exclusion in whole or in part of
10-56 liquor or beer sold or offered for sale by other persons, or
10-57 prevent, deter, hinder, or restrict other persons from selling or
10-58 offering for sale any such products to any retailer.
10-59 SECTION 24. Section 109.53, Alcoholic Beverage Code, is
10-60 amended to read as follows:
10-61 Sec. 109.53. Citizenship of Permittee; Control of Premises;
10-62 Subterfuge Ownership; Etc. No person who has not been a citizen of
10-63 Texas for a period of one year <three years> immediately preceding
10-64 the filing of his application therefor shall be eligible to receive
10-65 a permit under this code. No permit except a brewer's permit, and
10-66 such other licenses and permits as are necessary to the operation
10-67 of a brewer's permit, shall be issued to a corporation unless the
10-68 same be incorporated under the laws of the state and unless at
10-69 least 51 percent of the stock of the corporation is owned at all
10-70 times by citizens who have resided within the state for a period of
11-1 one year <three years> and who possess the qualifications required
11-2 of other applicants for permits; provided, however, that the
11-3 restrictions contained in the preceding clause shall not apply to
11-4 domestic or foreign corporations that were engaged in the legal
11-5 alcoholic beverage business in this state under charter or permit
11-6 prior to August 24, 1935. Partnerships, firms, and associations
11-7 applying for permits shall be composed wholly of citizens
11-8 possessing the qualifications above enumerated. Any corporation
11-9 (except carrier) holding a permit under this code which shall
11-10 violate any provisions hereof, or any rule or regulation
11-11 promulgated hereunder, shall be subject to forfeiture of its
11-12 charter and it shall be the duty of the attorney general, when any
11-13 such violation is called to his attention, to file a suit for such
11-14 cancellation in a district court of Travis County. Such provisions
11-15 of this section as require Texas citizenship or require
11-16 incorporation in Texas shall not apply to the holders of agent's,
11-17 industrial, medicinal and carrier's permits. No person shall sell,
11-18 warehouse, store or solicit orders for any liquor in any wet area
11-19 without first having procured a permit of the class required for
11-20 such privilege, or consent to the use of or allow his permit to be
11-21 displayed by or used by any person other than the one to whom the
11-22 permit was issued. It is the intent of the legislature to prevent
11-23 subterfuge ownership of or unlawful use of a permit or the premises
11-24 covered by such permit; and all provisions of this code shall be
11-25 liberally construed to carry out this intent, and it shall be the
11-26 duty of the commission or the administrator to provide strict
11-27 adherence to the general policy of preventing subterfuge ownership
11-28 and related practices hereinafter declared to constitute unlawful
11-29 trade practices. No applicant for a package store permit or a
11-30 renewal thereof shall have authority to designate as "premise" and
11-31 the commission or administrator shall not approve a lesser area
11-32 than that specifically defined as "premise" in Section 11.49(a) of
11-33 this code. Every permittee shall have and maintain exclusive
11-34 occupancy and control of the entire licensed premises in every
11-35 phase of the storage, distribution, possession, and transportation
11-36 and sale of all alcoholic beverages purchased, stored or sold on
11-37 the licensed premises. Any device, scheme or plan which surrenders
11-38 control of the employees, premises or business of the permittee to
11-39 persons other than the permittee shall be unlawful. No minor,
11-40 unless accompanied by his or her parent, guardian, adult husband or
11-41 adult wife, or other adult person into whose custody he or she has
11-42 been committed for the time by some court, shall knowingly be
11-43 allowed on the premises of the holder of a package store permit.
11-44 The prohibition against the presence of a minor on the premises of
11-45 the holder of a package store permit does not apply to the presence
11-46 on the premises of the holder or a person lawfully employed by the
11-47 holder. Any package store permittee who shall be injured in his
11-48 business or property by another package store permittee by reason
11-49 of anything prohibited in this section may institute suit in any
11-50 district court in the county wherein the violation is alleged to
11-51 have occurred to require enforcement by injunctive procedures
11-52 and/or to recover threefold the damages by him sustained; plus
11-53 costs of suit including a reasonable attorney's fee. The
11-54 provisions prohibiting the licensing of only a portion of a
11-55 building as premise for a package store permit shall not apply to
11-56 hotels as already defined in this code.
11-57 SECTION 25. Subchapter D, Chapter 109, Alcoholic Beverage
11-58 Code, is amended by adding Section 109.58 to read as follows:
11-59 Sec. 109.58. RELAXATION OF RESTRICTIONS AS TO CHARITABLE
11-60 EVENTS. The commission by rule may set definite limitations
11-61 consistent with the general provisions of this code that relax the
11-62 restrictions of this code with respect to the making of a gift to
11-63 civic, religious, or charitable organizations by the liquor or the
11-64 wine industry.
11-65 SECTION 26. The Texas Alcoholic Beverage Commission shall
11-66 adopt rules relating to the relaxation of restrictions as to
11-67 charitable events as required by Section ______, of this Act on or
11-68 before September 1, 1994.
11-69 SECTION 27. This Act takes effect September 1, 1993.
11-70 SECTION 28. The importance of this legislation and the
12-1 crowded condition of the calendars in both houses create an
12-2 emergency and an imperative public necessity that the
12-3 constitutional rule requiring bills to be read on three several
12-4 days in each house be suspended, and this rule is hereby suspended.
12-5 * * * * *
12-6 Austin,
12-7 Texas
12-8 May 26, 1993
12-9 Hon. Bob Bullock
12-10 President of the Senate
12-11 Sir:
12-12 We, your Committee on State Affairs to which was referred H.B. No.
12-13 2321, have had the same under consideration, and I am instructed to
12-14 report it back to the Senate with the recommendation that it do not
12-15 pass, but that the Committee Substitute adopted in lieu thereof do
12-16 pass and be printed.
12-17 Harris of
12-18 Dallas, Chairman
12-19 * * * * *
12-20 WITNESSES
12-21 FOR AGAINST ON
12-22 ___________________________________________________________________
12-23 Name: Robert Sparks x
12-24 Representing: Licensed Bev Dist Inc
12-25 City: Austin
12-26 -------------------------------------------------------------------
12-27 Name: Mike McKinney x
12-28 Representing: Wholesale Beer Dist of Texas
12-29 City: Austin
12-30 -------------------------------------------------------------------
12-31 Name: Rick Donley x
12-32 Representing: The Harris Co Beer Wholesale
12-33 City: Houston
12-34 -------------------------------------------------------------------