89R8664 MPF-D
By: Hancock S.B. No. 2225
A BILL TO BE ENTITLED
AN ACT
relating to the creation of a spirit cooler certificate;
authorizing a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.04, Alcoholic Beverage Code, is
amended by amending Subdivisions (3) and (5) and adding Subdivision
(32) to read as follows:
(3) "Distilled spirits" means alcohol, spirits of
wine, whiskey, rum, brandy, gin, or any liquor produced in whole or
in part by the process of distillation, including all dilutions or
mixtures of them, and includes spirit coolers [that may have an
alcoholic content as low as four percent alcohol by volume and that
contain plain, sparkling, or carbonated water and may also contain
one or more natural or artificial blending or flavoring
ingredients].
(5) "Liquor" means any alcoholic beverage, other than
a malt beverage, containing alcohol in excess of five percent by
volume, unless otherwise indicated, and any spirit coolers. Proof
that an alcoholic beverage is alcohol, spirits of wine, whiskey,
liquor, wine, brandy, gin, rum, tequila, mescal, habanero, or
barreteago, is prima facie evidence that it is liquor.
(32) "Spirit cooler" means an alcoholic beverage that:
(A) consists of:
(i) alcohol, spirits of wine, whiskey, rum,
brandy, gin, or any liquor produced wholly or partly by the process
of distillation; and
(ii) plain, sparkling, or carbonated water,
or juices, and may also contain one or more natural or artificial
blending or flavoring ingredients; and
(B) has an alcoholic content of less than 17
percent by volume.
SECTION 2. Subtitle A, Title 3, Alcoholic Beverage Code, is
amended by adding Chapter 39 to read as follows:
CHAPTER 39. SPIRIT COOLER CERTIFICATE
Sec. 39.01. ELIGIBLE PERMIT AND LICENSE HOLDER. A spirit
cooler certificate may be issued to the holder of a wine only
package store permit, wine and malt beverage retailer's permit,
wine and malt beverage retailer's off-premise permit, or retail
dealer's off-premise license whose premises are located in an area
where the sale of alcoholic beverages is legal as provided by a
ballot issue approved by the voters under Section 501.035(b)(5),
(6), or (7), Election Code.
Sec. 39.02. AUTHORIZED ACTIVITIES. The holder of a spirit
cooler certificate may:
(1) purchase spirit coolers from the holder of a
wholesaler's permit or general class B wholesaler's permit;
(2) if the certificate holder is a wine only package
store permittee, wine and malt beverage retailer's off-premise
permittee, or retail dealer's off-premise licensee, sell spirit
coolers at retail for consumption off the premises where sold but
not for resale; and
(3) if the certificate holder is a wine and malt
beverage retailer's permittee, sell spirit coolers at retail for
consumption on or off the premises where sold but not for resale.
Sec. 39.03. FEE. The fee for a spirit cooler certificate
shall be set at a level sufficient to recover the cost of issuing
the certificate and administering this chapter.
Sec. 39.04. HOURS OF SALE. The holder of a spirit cooler
certificate issued under this chapter may remain open and sell
spirit coolers as provided under this chapter on any day and during
the same hours as those prescribed for the sale of malt beverages
under Section 105.05.
SECTION 3. Section 102.31(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) This section applies to:
(1) the sale of malt beverages or malt beverage
containers or the original packages in which malt beverages are
received, packaged, or contained by a distributor's licensee to a
retail dealer's on-premise or off-premise licensee, a wine and malt
beverage retailer's permittee, or a wine and malt beverage
retailer's off-premise permittee; [and]
(2) the sale of malt beverages by a local distributor's
permittee, or by any licensee authorized to sell those beverages
for resale, to a mixed beverage permittee; and
(3) the sale of spirit coolers by a wholesaler's or
general class B wholesaler's permittee to a wine only package store
permittee, wine and malt beverage retailer's permittee, wine and
malt beverage retailer's off-premise permittee, or retail dealer's
off-premise licensee.
SECTION 4. Section 102.32, Alcoholic Beverage Code, is
amended by adding Subsection (a-1) to read as follows:
(a-1) This section does not apply to the sale of a spirit
cooler by a wholesale dealer to a retailer.
SECTION 5. Chapter 102, Alcoholic Beverage Code, is amended
by adding Subchapters E and F to read as follows:
SUBCHAPTER E. TERRITORIAL LIMITS ON SALE OF SPIRIT COOLERS
Sec. 102.101. DEFINITIONS. In this subchapter:
(1) "Brand" means any word, name, group of letters,
symbol, or trademark or a combination of any word, name, group of
letters, symbol, or trademark adopted and used by a manufacturer or
nonresident seller's permittee on a label or on packaging to
identify a specific spirit cooler and distinguish the spirit cooler
from the label or packaging of another spirit cooler produced or
marketed by any manufacturer or nonresident seller's permittee.
The term does not include the name of the manufacturer or
nonresident seller's permittee unless that name is included in the
name of the brand.
(2) "Brand extension" means a brand that incorporates
a brand name or brand logo, or a substantial part of an existing
brand name or brand logo, of the same manufacturer or nonresident
seller's permittee.
(3) "Manufacturer" means a person licensed under
Chapter 14 or 16.
(4) "Retailer" means a person who holds a certificate
issued under Chapter 39.
(5) "Wholesaler" means a person licensed under Chapter
19 or 20.
Sec. 102.102. SETTING TERRITORIAL LIMITS. (a) Each
manufacturer or nonresident seller's permittee shall designate
territorial limits in this state within which the brands of spirit
coolers the manufacturer or nonresident seller's permittee
manufactures may be sold by a wholesaler.
(b) Each wholesaler shall enter into a written agreement
with each manufacturer or nonresident seller's permittee from which
the wholesaler purchases spirit coolers for distribution and sale
in this state. The contract shall set forth the sales territory
within which the wholesaler may distribute and sell each brand of
spirit coolers. A wholesaler may not sell any brand of spirit
coolers outside of the sales territory specified in the contract.
The contract does not interfere with the rights of a retailer to
purchase spirit coolers as provided by Section 102.104.
(c) A manufacturer or nonresident seller's permittee may
not assign all or any part of the same sales territory to more than
one wholesaler.
(d) A copy of a contract entered into under Subsection (b)
shall be filed with the administrator.
Sec. 102.103. RIGHTS OF WHOLESALERS. Nothing in Section
102.102 limits or alters a wholesaler's right to sell spirit
coolers to any other wholesaler, except that a wholesaler who
purchases spirit coolers from another wholesaler may distribute and
sell the spirit coolers only in the sales territory designated by
contract for the wholesaler making the purchase.
Sec. 102.104. RIGHTS OF RETAILERS. Nothing in Section
102.102 or 102.103 limits or alters a retailer's right to purchase
spirit coolers on the permitted premises of any wholesaler in this
state and transport those spirit coolers to the retailer's
permitted or licensed premises, except that the retailer may sell
the spirit coolers only within a territory for which the
manufacturer or nonresident seller's permittee of the brand has
designated that the spirit coolers may be sold by a wholesaler.
Sec. 102.105. TERRITORIAL ASSIGNMENTS. (a) A brand
extension is not a new or different brand.
(b) A manufacturer or nonresident seller shall assign a
brand extension to a wholesaler to whom the brand was originally
assigned if the wholesaler elects to distribute and sell the brand
extension.
SUBCHAPTER F. SPIRIT COOLER INDUSTRY FAIR DEALING LAW
Sec. 102.131. DEFINITIONS. In this subchapter:
(1) "Agreement" means a contract, agreement, or
arrangement, whether expressed or implied, whether oral or written,
for a definite or indefinite period between a manufacturer or
nonresident seller's permittee and a wholesaler under which the
wholesaler has the right to purchase, resell, and distribute any
brand of spirit cooler offered by the manufacturer or nonresident
seller's permittee.
(2) "Brand" has the meaning assigned by Section
102.101.
(3) "Brand extension" has the meaning assigned by
Section 102.101.
(4) "Good cause" means the failure by any party to an
agreement, without reasonable excuse or justification, to comply
substantially with an essential, reasonable, and commercially
acceptable requirement imposed by the other party under the terms
of the agreement.
(5) "Manufacturer" has the meaning assigned by Section
102.101.
(6) "Retailer" has the meaning assigned by Section
102.101.
(7) "Territory" or "sales territory" means the
geographic territory of distribution and sale responsibility
designated by an agreement between a manufacturer or nonresident
seller's permittee and a wholesaler, as provided in Section
102.102, for any brand of spirit cooler offered by the manufacturer
or nonresident seller's permittee.
(8) "Wholesaler" has the meaning assigned by Section
102.101.
Sec. 102.132. PURPOSE. (a) This subchapter is enacted
pursuant to authority of the state under the provisions of the
Twenty-first Amendment to the United States Constitution to promote
the public's interest in the fair, efficient, and competitive
distribution of liquor within this state by requiring manufacturers
or nonresident seller's permittees and wholesalers to conduct their
business relations so as to assure that:
(1) the wholesaler is free to manage its business
enterprise, including having the right to independently establish
its selling prices; and
(2) the public, retailers, and manufacturers or
nonresident seller's permittees are served by wholesalers who will
devote their reasonable efforts and resources to the sales and
distribution of all the manufacturer's or nonresident seller's
permittee's products that the wholesaler has the right to sell and
distribute and maintain satisfactory sales levels in the sales
territory assigned the wholesaler.
(b) This subchapter governs all relations between
manufacturers or nonresident seller's permittees and their
wholesalers, including any renewals or amendments to agreements
between them, to the full extent consistent with the constitutions
and laws of this state and the United States.
Sec. 102.133. WAIVER PROHIBITED. The provisions of this
subchapter may not be waived, voided, or nullified by agreement.
Sec. 102.134. TERMINATION AND NOTICE OF CANCELLATION. (a)
Except as provided by Subsection (c) and as otherwise specifically
agreed upon by the parties to an agreement, a manufacturer,
nonresident seller's permittee, or wholesaler may not cancel, fail
to renew, or otherwise terminate an agreement unless the
manufacturer, nonresident seller's permittee, or wholesaler
provides prior notice in accordance with Subsection (b) to the
other party to the agreement.
(b) The notice provided under Subsection (a) must be in
writing and received by the affected party not later than the 90th
day before the date on which the agreement will be canceled, not
renewed, or otherwise terminated. The notice must contain:
(1) a statement of the party's intention to cancel, not
renew, or otherwise terminate the agreement;
(2) a statement of reasons for the cancellation,
nonrenewal, or termination; and
(3) the date on which the cancellation, nonrenewal, or
termination takes effect.
(c) A manufacturer, nonresident seller's permittee, or
wholesaler may cancel, fail to renew, or otherwise terminate an
agreement without providing prior notice to the other party to the
agreement for the following reasons:
(1) the other party is insolvent, files for
bankruptcy, or is dissolved or liquidated;
(2) the other party assigns for the benefit of
creditors or otherwise disposes of substantially all of the assets
of the party's business;
(3) the party's ability to continue in business is
materially and adversely affected because:
(A) the party is convicted of or pleads guilty or
no contest to a charge of violating a law or regulation; or
(B) the party's permit is revoked or suspended
for a period of 30 or more days; or
(4) the party fails to pay an amount owed to the other
party when due, on demand for the payment, in accordance with the
agreement.
Sec. 102.135. CANCELLATION. A manufacturer, nonresident
seller's permittee, or wholesaler selling spirit coolers may not
cancel, fail to renew, or otherwise terminate an agreement under
this subchapter unless:
(1) the manufacturer, nonresident seller's permittee,
or wholesaler has good cause for the cancellation, failure to
renew, or termination; and
(2) if required to provide prior notice under Section
102.134:
(A) the manufacturer or nonresident seller's
permittee has provided the notice; and
(B) the other party has not eliminated the
reasons specified in the notice as the reasons for cancellation,
nonrenewal, or termination on or before the 90th day after the
receipt of the notice.
Sec. 102.136. PROHIBITED CONDUCT. (a) A manufacturer or
nonresident seller's permittee may not:
(1) induce or coerce, or attempt to induce or coerce, a
wholesaler to engage in any illegal act or course of conduct;
(2) require a wholesaler to assent to any unreasonable
requirement, condition, understanding, or term of an agreement
prohibiting a wholesaler from selling the product of another
manufacturer or nonresident seller's permittee;
(3) fix or maintain the price at which a wholesaler may
resell spirit coolers;
(4) fail to provide each wholesaler of its brands a
written contract embodying the manufacturer's or nonresident
seller's permittee's agreement with the wholesaler;
(5) require a wholesaler to accept delivery of any
spirit coolers or any other item or commodity that is not ordered by
the wholesaler;
(6) adjust the price at which the manufacturer or
nonresident seller's permittee sells spirit coolers to a wholesaler
based on the price at which a wholesaler resells spirit coolers to a
retailer, but a manufacturer or nonresident seller's permittee may
set its own price if the price adjustment is based on factors other
than a wholesaler's increase in the price it charges to a retailer
and the adjustment is not intended to otherwise coerce illegal
behavior under this section; or
(7) accept payment in exchange for an agreement
providing for territorial rights.
(b) Nothing in this section shall interfere with the rights
of a manufacturer, nonresident seller's permittee, or wholesaler to
enter into contractual agreements that could be construed as
governing ordinary business transactions, including agreements
concerning allowances, rebates, refunds, services, capacity,
advertising funds, promotional funds, or sports marketing funds.
Sec. 102.137. TRANSFER OF BUSINESS ASSETS OR STOCK. (a) A
manufacturer or nonresident seller's permittee may not
unreasonably withhold or delay its approval of any assignment,
sale, or transfer of a wholesaler's stock or all or any portion of a
wholesaler's assets, a wholesaler's voting stock, the voting stock
of any parent corporation, or the beneficial ownership or control
of any other entity owning or controlling the wholesaler, including
the wholesaler's rights and obligations under the terms of an
agreement whenever the person to be substituted meets reasonable
standards imposed on the wholesaler and all other wholesalers of
that manufacturer or nonresident seller's permittee of the same
general class, taking into account the size and location of the
sales territory and market to be served.
(b) On the death of one of the partners of a partnership
operating the business of a wholesaler, a manufacturer or
nonresident seller's permittee may not deny the surviving partner
of the partnership the right to become a successor-in-interest to
the agreement between the manufacturer or nonresident seller's
permittee and the partnership provided the surviving partner has
been active in the management of the partnership or is otherwise
capable of carrying on the business of the partnership.
(c) Notwithstanding Subsection (a), on the death of an owner
of a wholesaler, a manufacturer or nonresident seller's permittee
may not deny approval for a transfer of ownership to a surviving
spouse or adult child of the owner. A subsequent transfer of
ownership by the surviving spouse or adult child is subject to
Subsection (a).
Sec. 102.138. REASONABLE COMPENSATION. (a) A manufacturer
or nonresident seller's permittee who, without good cause, cancels,
fails to renew, or otherwise terminates an agreement or unlawfully
denies approval of or unreasonably withholds consent to an
assignment, transfer, or sale of a wholesaler's business assets or
voting stock or other equity securities shall pay the wholesaler
with whom it has an agreement the fair market value of the
wholesaler's business with relation to the affected brand. In
determining fair market value, consideration shall be given to all
elements of value, including goodwill and going concern value.
(b) If the manufacturer or nonresident seller's permittee
and wholesaler are unable to mutually agree on whether or not good
cause exists for cancellation under Section 102.134 or on the
reasonable compensation to be paid for the value of the
wholesaler's business as provided by Subsection (a), the matter
may, at the option of either the wholesaler or the manufacturer or
nonresident seller's permittee, be submitted to three arbitrators,
one of whom shall be named in writing by each party and the third of
whom shall be chosen by the two arbitrators selected by the parties.
If the arbitrators selected fail to choose a third arbitrator on or
before the 10th day after the date the arbitrators were selected, a
judge of a district court in the county in which the wholesaler's
principal place of business is located shall select the third
arbitrator. Arbitration shall be conducted in accordance with
Chapter 171, Civil Practice and Remedies Code. Arbitration costs
shall be paid one-half by the wholesaler and one-half by the
manufacturer or nonresident seller's permittee. The award of the
arbitrators is binding on the parties unless appealed not later
than the 10th day after the date of the award. All proceedings on
appeal shall be in accordance with and governed by Chapter 171,
Civil Practice and Remedies Code.
Sec. 102.139. RIGHT OF FREE ASSOCIATION. A manufacturer or
nonresident seller's permittee or wholesaler may not restrict or
inhibit, directly or indirectly, the right of free association
among manufacturers, nonresident sellers, or wholesalers for any
lawful purpose.
Sec. 102.140. JUDICIAL REMEDIES. (a) If a manufacturer or
nonresident seller's permittee or wholesaler who is a party to an
agreement fails to comply with this subchapter or engages in
conduct prohibited under this subchapter, or if a manufacturer or
nonresident seller's permittee and wholesaler are not able to
mutually agree on reasonable compensation under Section 102.138 and
the matter will not be submitted to arbitration, the aggrieved
manufacturer, nonresident seller's permittee, or wholesaler may
maintain a civil action in an appropriate court in the county in
which the wholesaler's principal place of business is located.
(b) In any action under Subsection (a), the court may grant
such relief the court determines necessary or appropriate
considering the purposes of this subchapter.
(c) The prevailing party in an action under Subsection (a)
is entitled to actual damages, including the value of the
wholesaler's business, as specified in Section 102.138, reasonable
attorney's fees, and court costs.
Sec. 102.141. STATUTE OF LIMITATIONS. A person must bring a
cause of action arising under this subchapter not later than the
fourth anniversary of the date the cause of action accrues. If a
termination related to a change in ownership of the brand occurs,
the cause of action accrues when either the new brand owner or the
transferring or selling brand owner provides notice of termination
to the wholesaler.
Sec. 102.142. APPLICABILITY. (a) This subchapter applies
to an agreement entered into before, on, or after September 1, 2025.
(b) This subchapter does not apply to an agreement
concerning malt beverages to which Subchapter C applies by
operation of Section 102.81.
SECTION 6. Section 105.01(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) Except as provided in Sections 39.04, 105.02, 105.03,
105.04, 105.08, and 105.091, no person may sell, offer for sale, or
deliver any liquor:
(1) on New Year's Day, Thanksgiving Day, or Christmas
Day;
(2) on Sunday; or
(3) before 10 a.m. or after 9 p.m. on any other day.
SECTION 7. This Act takes effect September 1, 2025.