By: Geren (Senate Sponsor - Carona) H.B. No. 2537

(In the Senate - Received from the House May 6, 2013; May 7, 2013, read first time and referred to Committee on Business and Commerce; May 16, 2013, reported adversely, with favorable Committee Substitute by the following vote: Yeas 8, Nays 1; May 16, 2013, sent to printer.)

COMMITTEE SUBSTITUTE FOR H.B. No. 2537 By: Carona

A BILL TO BE ENTITLED

AN ACT

relating to production requirements for holders of winery permits.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 16, Alcoholic Beverage Code, is amended by adding Section 16.012 to read as follows:

Sec. 16.012. PRODUCTION REQUIREMENTS. (a) This section does not apply to a holder of a winery permit described by Section 16.09(i).

(b) The holder of a winery permit must produce or bottle and offer for sale at least 200 gallons of wine or fruit brandy annually beginning in the 12-month period preceding the first anniversary of the date the winery's original permit is issued.

(b-1) Notwithstanding Subsection (b), the holder of a winery permit issued before September 1, 2014, must produce or bottle and offer for sale at least 200 gallons of wine or fruit brandy annually beginning in the 12-month period preceding September 1, 2015. This subsection expires September 1, 2016.

(c) The production required by this section must be done at the permitted location or at a Texas winery owned and operated by the same permit holder.

(d) Failure to comply with this section constitutes grounds to cancel or suspend a winery permit or deny an application for renewal of a winery permit.

SECTION 2. Section 16.09, Alcoholic Beverage Code, is amended by adding Subsections (f), (g), (h), and (i) to read as follows:

(f) At least 51 percent by volume of the wine shipped under this section must be produced or bottled in this state:

(1) by the holder of a winery permit on the winery's premises or at another permitted location owned and operated by the permit holder;

(2) under an operating agreement authorized by Section 16.05; or

(3) under an agreement with another winery permit holder for a bottling brand under an Alcohol and Tobacco Tax and Trade Bureau Basic Permit trade name application.

(g) The holder of a winery permit shall maintain complete records of each sale and delivery made under this section for at least five years from the date of the sale. The records shall be made available on request for inspection by the commission or any other appropriate state agency.

(h) The commission shall adopt rules requiring the holder of a winery permit to periodically file reports providing the commission with any information the commission determines is necessary to more efficiently and effectively enforce this section. At a minimum, the reports must specify:

(1) whether wine sold and delivered by the permit holder under this section was produced or bottled in this state; and

(2) whether the wine was:

(A) produced or bottled:

(i) by the holder of the winery permit on the winery's premises or at another permitted location owned and operated by the permit holder;

(ii) under an operating agreement authorized by Section 16.05; or

(iii) under an agreement with another winery permit holder for a bottling brand under an Alcohol and Tobacco Tax and Trade Bureau Basic Permit trade name application; or

(B) purchased from an authorized source.

(i) Subsection (f) does not apply to the holder of a winery permit issued on or before June 1, 2012, if at least 95 percent by volume of the wine shipped under that permit during 2012 had a personalized label that:

(1) contained a personal message, picture, or other artwork that was specific to the consumer who purchased the product; and

(2) was designed by the consumer and affixed by the permit holder at the licensed premises.

SECTION 3. This Act takes effect September 1, 2014.

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