By: Hancock S.B. No. 2225
A BILL TO BE ENTITLED
AN ACT
relating to the manufacture, distribution, sale, and taxation of
ready-to-drink spirit beverages.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1.04, Alcoholic Beverage Code, is
amended by amending Subdivision (3) 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].
(32) "Ready-to-drink spirit beverage" means a
beverage that:
(A) consists of:
(i) a distilled spirit; and
(ii) a nonalcoholic beverage and other
blending or flavoring component or ingredient;
(B) has an alcoholic content of not more than 10
percent by volume; and
(C) is contained in a sealed container that does
not exceed 3.75 liters.
SECTION 2. Subchapter B, Chapter 5, Alcoholic Beverage
Code, is amended by adding Section 5.62 to read as follows:
Sec. 5.62. RULES REGARDING READY-TO-DRINK SPIRIT BEVERAGE.
The commission shall adopt rules related to the manufacture,
distribution, sale, and regulation of ready-to-drink spirit
beverages, including rules:
(1) authorizing the holder of a distiller's and
rectifier's permit to manufacture, store, dispense, sample,
transport, and sell those beverages as provided by this code;
(2) authorizing the holder of a nonresident seller's
permit to manufacture and sell those beverages to general and
branch distributors as provided by this code;
(3) authorizing persons authorized to sell malt
beverages at retail to purchase ready-to-drink spirit beverages
from general and branch distributors and sell those beverages to
consumers in this state;
(4) clarifying the applicability of Section 102.31 to
the sales of those beverages;
(5) clarifying the applicability of Section 101.671 to
those beverages; and
(6) clarifying that, for state tax purposes,
ready-to-drink spirit beverages are classified as spirit
beverages.
SECTION 3. Section 14.01, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 14.01. AUTHORIZED ACTIVITIES. (a) The holder of a
distiller's and rectifier's permit may:
(1) manufacture distilled spirits;
(2) rectify, purify, and refine distilled spirits and
wines;
(3) mix wines, distilled spirits, or other liquors;
(4) bottle, label, and package the permit holder's
finished products;
(5) sell the finished products in this state to
holders of wholesaler's permits and to qualified persons outside
the state;
(6) purchase distilled spirits, to be used only for
manufacturing or rectification purposes, from holders of
nonresident seller's permits or distiller's and rectifier's
permits;
(7) dispense free distilled spirits for consumption on
the permitted premises under Section 14.04 or at a temporary event
under Section 14.09;
(8) sell bulk alcohol produced by the permit holder
for purposes described by Section 38.01; [and]
(9) sell distilled spirits to ultimate consumers under
Section 14.04 or 14.05;
(10) manufacture ready-to-drink spirit beverages;
(11) sell the finished ready-to-drink spirit
beverages to holders of general and branch distributor's licenses
and qualified persons outside this state;
(12) sell ready-to-drink spirit beverages to ultimate
consumers in the same manner as distilled spirits under Section
14.04 or 14.05; and
(13) dispense free ready-to-drink spirit beverages
for consumption on the permitted premises in the same manner as
distilled spirits under Section 14.04 or at a temporary event under
Section 14.09.
(b) The privileges granted to a distiller and rectifier are
confined strictly to distilled spirits, ready-to-drink spirit
beverages, and wines manufactured and rectified under the
distiller's and rectifier's [his] permit.
SECTION 4. Section 14.07, Alcoholic Beverage Code, is
amended by adding Subsection (h) to read as follows:
(h) The holder of a distiller's and rectifier's permit or
the agent or employee of the holder of a distiller's and rectifier's
permit may conduct a sampling of a ready-to-drink spirit beverage
in the same manner as provided under this section for the sampling
of distilled spirits.
SECTION 5. Section 14.071, Alcoholic Beverage Code, is
amended by adding Subsection (e) to read as follows:
(e) The holder of a distiller's and rectifier's permit may
transport ready-to-drink spirit beverages in the same manner as
provided under this section for the transportation of liquor.
SECTION 6. Section 24.01(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) The holder of a wine only package store permit may:
(1) purchase wine and vinous liquors in this state
from the holder of a winery, wholesaler's, or class B wholesaler's
permit;
(2) purchase malt beverages and ready-to-drink spirit
beverages from the holder of a general or branch distributor's
license; and
(3) sell those beverages to consumers at retail on or
from the licensed premises in unbroken original containers of not
less than six ounces for off-premises consumption only and not for
the purpose of resale.
SECTION 7. Section 25.01, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 25.01. AUTHORIZED ACTIVITIES. The holder of a wine and
malt beverage retailer's permit may sell:
(1) for consumption on or off the premises where sold,
but not for resale, wine and malt beverages containing alcohol in
excess of one-half of one percent by volume and not more than 17
percent by volume; [and]
(2) for consumption on the premises, the following
beverages containing alcohol in excess of one-half of one percent
by volume and not more than 24 percent by volume:
(A) traditional port or sherry;
(B) dessert-flavored wine; or
(C) rice wine; and
(3) for consumption on or off the premises where sold,
but not for resale, ready-to-drink spirit beverages.
SECTION 8. Section 26.01(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) The holder of a wine and malt beverage retailer's
off-premise permit may sell for off-premises consumption only, in
unbroken original containers, but not for resale:
(1) [,] wine and malt beverages containing alcohol in
excess of one-half of one percent by volume but not more than 17
percent by volume; and
(2) ready-to-drink spirit beverages.
SECTION 9. Sections 37.01(a) and (d), Alcoholic Beverage
Code, are amended to read as follows:
(a) The holder of a nonresident seller's permit may:
(1) solicit and take orders for liquor from permittees
authorized to import liquor into this state; [and]
(2) ship liquor into this state, or cause it to be
shipped into this state, in consummation of sales made to
permittees authorized to import liquor into the state; and
(3) ship ready-to-drink spirit beverages into this
state, or cause them to be shipped into this state, in consummation
of sales made to holders of a general or branch distributor's permit
authorized to import those beverages into this state.
(d) The holder of a nonresident seller's permit or an agent
or employee of the permit holder may provide samples or tastings of
the kinds of distilled spirits and ready-to-drink spirit beverages
the permit holder is authorized to produce in the manner authorized
by Section 14.07 for the holder of a distiller's and rectifier's
permit or the agent or employee of the holder of a distiller's and
rectifier's permit. Distilled spirits and ready-to-drink spirit
beverages may legally be transported by the holder of a nonresident
seller's permit or the permit holder's agent or employee to a
retailer's premises for the purpose of providing a sample or a
tasting under this subsection. The cost of the distilled spirits
and ready-to-drink spirit beverages provided for a sampling or
tasting under this subsection is the responsibility of the holder
of the nonresident seller's permit providing the sampling or
tasting.
SECTION 10. Section 37.011(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) The holder of a nonresident seller's permit who owns a
distillery outside of the state or whose affiliate owns a
distillery outside of the state and holds a distiller's and
rectifier's permit may enter into an agreement with the holder of a
distiller's and rectifier's permit that allows the nonresident
seller to engage in the following activities on the distiller's and
rectifier's permitted premises:
(1) manufacture distilled spirits or ready-to-drink
spirit beverages;
(2) rectify, purify, and refine distilled spirits,
ready-to-drink spirit beverages, and wines;
(3) mix wines, distilled spirits, or other liquors;
(4) bottle, label, and package the nonresident
seller's finished products; [and]
(5) except as provided by Subdivision (6), sell the
finished products in this state to holders of distiller's and
rectifier's permits and holders of wholesaler's permits and to
authorized wholesalers and manufacturers outside the state; and
(6) sell finished ready-to-drink spirit beverages in
this state to holders of distiller's and rectifier's permits,
holders of general and branch distributor's licenses, and
authorized wholesalers and manufacturers outside the state.
SECTION 11. Section 37.03, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 37.03. PERMIT REQUIRED. A nonresident seller's permit
is required of any distillery, winery, importer, broker, or person
who sells liquor or ready-to-drink spirit beverages to permittees
authorized to import liquor or ready-to-drink spirit beverages into
this state, regardless of whether the sale is consummated inside or
outside the state.
SECTION 12. Section 37.07, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 37.07. PROHIBITED ACTIVITIES. No holder of a
nonresident seller's permit, nor any officer, director, agent, or
employee of the holder, nor any affiliate of the holder, regardless
of whether the affiliation is corporate or by management,
direction, or control, may do any of the following:
(1) hold or have an interest in the permit, business,
assets, or corporate stock of a person authorized to import liquor
into this state for the purpose of resale unless the interest was
acquired on or before January 1, 1941, or unless the permittee is a
Texas corporation holding a manufacturer's license and a brewer's
permit issued before April 1, 1971;
(2) fail to make or file a report with the commission
as required by a rule of the commission;
(3) sell liquor or ready-to-drink spirit beverages for
resale inside this state that fail [fails] to meet the standards of
quality, purity, and identity prescribed by the commission;
(4) advertise any liquor or ready-to-drink spirit
beverages contrary to the laws of this state or to the rules of the
commission, or sell liquor or ready-to-drink spirit beverages for
resale in this state in violation of advertising or labeling rules
of the commission;
(5) sell liquor or ready-to-drink spirit beverages for
resale inside this state or cause them [it] to be brought into the
state in a size of container prohibited by this code or by rule of
the commission;
(6) solicit or take orders for liquor or
ready-to-drink spirit beverages from a person not authorized to
import liquor into this state for the purpose of resale;
(7) induce, persuade, or influence, or attempt to
induce, persuade, or influence, a person to violate this code or a
rule of the commission, or conspire with a person to violate this
code or a rule of the commission; or
(8) exercise a privilege granted by a nonresident
seller's permit while an order or suspension against the permit is
in effect.
SECTION 13. Section 37.08, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 37.08. CANCELLATION OR SUSPENSION: NOTICE TO
IMPORTERS. When a nonresident seller's permit is cancelled or
suspended, the commission shall immediately notify in writing all
permittees authorized to import liquor or ready-to-drink spirit
beverages into the state.
SECTION 14. Section 37.09, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 37.09. RESTRICTION ON IMPORTATION. No person who
holds a permit authorizing the importation of liquor or
ready-to-drink spirit beverages, nor his agent or employee, may
purchase or order liquor or ready-to-drink spirit beverages for
importation from any person other than a nonresident seller's
permittee. An importer may not purchase or order liquor or
ready-to-drink spirit beverages from a nonresident seller's
permittee whose permit is under suspension after the importer has
received notice of the suspension.
SECTION 15. Sections 37.10(a) and (b), Alcoholic Beverage
Code, are amended to read as follows:
(a) No holder of a nonresident seller's permit may solicit,
accept, or fill an order for distilled spirits, ready-to-drink
spirit beverages, or wine from a holder of any type of wholesaler's,
distributor's, or winery permit unless the nonresident seller is
the primary American source of supply for the brand of distilled
spirits, ready-to-drink spirit beverages, or wine that is ordered.
(b) In this section, "primary American source of supply"
means the distiller, the producer, the owner of the commodity at the
time it becomes a marketable product, the bottler, or the exclusive
agent of any of those. To be the "primary American source of
supply" the nonresident seller must be the first source, that is,
the manufacturer or the source closest to the manufacturer, in the
channel of commerce from whom the product can be secured by Texas
wholesalers, Texas distributors, and Texas wineries. Except as
provided by Subsection (c), a product may have only one primary
American source of supply to Texas.
SECTION 16. Section 37.13, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 37.13. SOLICITATION FROM HOLDER OF MIXED BEVERAGE OR
PRIVATE CLUB PERMIT. A holder of a nonresident seller's permit may
not solicit business directly or indirectly from a holder of a mixed
beverage permit or a private club registration permit unless the
nonresident seller's permit holder [he] is accompanied by the
holder of a wholesaler's permit or the wholesaler's agent or, for
the solicitation of business in relation to a ready-to-drink spirit
beverage, the holder of a general or branch distributor's license
or the distributor's agent.
SECTION 17. Section 37.14, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 37.14. MONTHLY REPORTS. The commission shall
promulgate rules requiring holders of nonresident seller's permits
to file monthly reports of liquor and ready-to-drink spirit
beverages sold to persons within this state. The reports shall be
supported by copies of invoices. The commission shall prescribe
and furnish forms for this purpose.
SECTION 18. Section 64.01(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) The holder of a general distributor's license may:
(1) receive malt beverages in unbroken original
packages from brewers and brewpubs and from general or branch
distributors;
(2) distribute or sell malt beverages in the unbroken
original packages in which they are received to general or branch
distributors, to local distributor permittees, to permittees or
licensees authorized to sell to ultimate consumers, to private club
registration permittees, to authorized outlets located on any
installation of the national military establishment, or to
qualified persons for shipment and consumption outside the state;
[and]
(3) serve free malt beverages and ready-to-drink
spirit beverages for consumption on the licensed premises;
(4) receive ready-to-drink spirit beverages in
unbroken original packages from holders of distiller's and
rectifier's permits, holders of nonresident seller's permits, and
general or branch distributors; and
(5) distribute or sell ready-to-drink spirit
beverages in unbroken original packages in which they are received
to general or branch distributors, to permittees or licensees
authorized to sell to ultimate consumers, or to qualified persons
for shipment and consumption outside this state.
SECTION 19. Section 64.04(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) Each holder of a general or branch distributor's license
shall make and keep a daily record of every receipt of malt
beverages and ready-to-drink spirit beverages and of every sale of
malt beverages and ready-to-drink spirit beverages, including the
name of each purchaser. Each transaction shall be recorded on the
day it occurs. The licensee shall make and keep any other records
that the commission or administrator requires.
SECTION 20. Sections 64.07(a) and (b), Alcoholic Beverage
Code, are amended to read as follows:
(a) Any number of general and branch distributors may use
the same delivery vehicles, premises, location, or place of
business as licensed premises if the malt beverages and
ready-to-drink spirit beverages owned and stored by each of the
distributors are segregated.
(b) If delivery vehicles are shared by any number of
distributors who also hold any class of wholesaler's permits,
liquor, [or] malt beverages, or ready-to-drink spirit beverages may
be transported.
SECTION 21. Chapter 64, Alcoholic Beverage Code, is amended
by adding Section 64.091 to read as follows:
Sec. 64.091. READY-TO-DRINK SPIRIT BEVERAGES FOR EXPORT.
(a) In this section, "ready-to-drink spirit beverages for export"
means ready-to-drink spirit beverages a distributor holds for
export to another state in which the distributor has been assigned a
territory for the distribution and sale of the ready-to-drink
spirit beverages. The term includes ready-to-drink spirit
beverages that are illegal to sell in this state because of alcohol
content, containers, packages, or labels.
(b) The holder of a general distributor's license who
receives ready-to-drink spirit beverages for export from the holder
of a distiller's and rectifier's permit or nonresident seller's
permit may:
(1) store the ready-to-drink spirit beverages for
export at the distributor's premises;
(2) transport the ready-to-drink spirit beverages for
export outside the state in the distributor's own vehicles; or
(3) deliver the ready-to-drink spirit beverages for
export to a common carrier for export and delivery outside the
state.
(c) The holder of a general distributor's license is not
liable for any state tax on the ready-to-drink spirit beverages for
export.
SECTION 22. Section 64.10, Alcoholic Beverage Code, is
amended by adding Subsection (e) to read as follows:
(e) The holder of a general distributor's license may import
ready-to-drink spirit beverages into this state in the same manner
as provided for the importation of malt beverages under this
section except that the ready-to-drink spirit beverages may only be
imported from the holder of a nonresident seller's permit.
SECTION 23. Chapter 66, Alcoholic Beverage Code, is amended
by adding Section 66.12 to read as follows:
Sec. 66.12. READY-TO-DRINK SPIRIT BEVERAGES FOR EXPORT.
(a) In this section, "ready-to-drink spirit beverages for export"
means ready-to-drink spirit beverages a distributor holds for
export to another state in which the distributor has been assigned a
territory for the distribution and sale of the ready-to-drink
spirit beverages. The term includes ready-to-drink spirit
beverages that are illegal to sell in this state because of alcohol
content, containers, packages, or labels.
(b) The holder of a branch distributor's license who
receives ready-to-drink spirit beverages for export from the holder
of a distiller's and rectifier's permit or nonresident seller's
permit may:
(1) store the ready-to-drink spirit beverages for
export at the distributor's premises;
(2) transport the ready-to-drink spirit beverages for
export outside the state in the distributor's own vehicles; or
(3) deliver the ready-to-drink spirit beverages for
export to a common carrier for export and delivery outside the
state.
(c) The holder of a branch distributor's license is not
liable for any state tax on the ready-to-drink spirit beverages for
export.
SECTION 24. Section 71.01, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 71.01. AUTHORIZED ACTIVITIES. The holder of a retail
dealer's off-premise license may sell malt beverages and
ready-to-drink spirit beverages in lawful containers to consumers,
but not for resale and not to be opened or consumed on or near the
premises where sold.
SECTION 25. Section 101.46(a), Alcoholic Beverage Code, is
amended to read as follows:
(a) Except as provided by Subsections (b) and[,] (c), [and
(d),] no person may import, sell, or possess with intent to sell any
liquor in a container with a capacity of less than 20 milliliters.
A container of liquor offered for sale that has a capacity of less
than six fluid ounces must substantially conform to the labeling
requirements of the Bureau of Alcohol, Tobacco, and Firearms for
larger containers in which liquor is sold. Holders of distiller's
or rectifier's permits wishing to sell liquor bottled in containers
of less than six fluid ounces to wholesalers must sell such
containers of liquor to wholesalers in units of unbroken, sealed
cases. Wholesalers shall sell liquor bottled in containers of less
than six fluid ounces to package stores in units of unbroken, sealed
cases.
SECTION 26. Section 101.66, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 101.66. BEVERAGES OF CERTAIN ALCOHOL CONTENT
PROHIBITED. A person may not manufacture, sell, barter, or
exchange a beverage that contains more than one-half of one percent
alcohol by volume and not more than five percent alcohol by volume,
except malt beverages, wine coolers, and ready-to-drink spirit
beverages [coolers].
SECTION 27. Section 101.671, Alcoholic Beverage Code, is
amended by adding Subsection (g) to read as follows:
(g) An authorized permittee must register and get approval
in the manner provided by this section for distilled spirits before
the permittee may ship a ready-to-drink spirit beverage within this
state.
SECTION 28. 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 ready-to-drink spirit beverages by a
distributor's licensee 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.
SECTION 29. Subchapter C, Chapter 102, Alcoholic Beverage
Code, is amended by adding Section 102.501 to read as follows:
Sec. 102.501. APPLICABILITY OF SUBCHAPTER TO CERTAIN
PERMITTEES AND LICENSEES. The holder of a distiller's and
rectifier's permit or nonresident seller's permit shall designate
territorial limits and enter into written agreements with general
or branch distributor's licensees only with regards to the sale of
ready-to-drink spirit beverages in the same manner as a provider
for the sale of malt beverages under this subchapter.
SECTION 30. Subchapter D, Chapter 102, Alcoholic Beverage
Code, is amended by adding Section 102.715 to read as follows:
Sec. 102.715. APPLICABILITY TO CERTAIN PERMITTEES AND
LICENSEES. (a) In this subchapter, the term "brewer" includes a
person permitted under Section 14.01 or 37.01 only with regards to
the manufacture and sale of ready-to-drink spirit beverages.
(b) In this subchapter, the term "malt beverage" includes a
ready-to-drink spirit beverage.
SECTION 31. Section 105.051, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 105.051. SALE OF CERTAIN ALCOHOLIC [MALT] BEVERAGES BY
DISTRIBUTOR'S LICENSEE. The holder of a general or branch
distributor's license may sell, offer for sale, or deliver malt
beverages and ready-to-drink spirit beverages 24 hours a day Monday
through Saturday and between midnight and 1 a.m. and between noon
and midnight on Sunday.
SECTION 32. Chapter 105, Alcoholic Beverage Code, is
amended by adding Section 105.052 to read as follows:
Sec. 105.052. HOURS OF SALE: READY-TO-DRINK SPIRIT
BEVERAGES. A person may sell, offer for sale, or deliver
ready-to-drink spirit beverages during the same hours as a person
may sell malt beverages under Section 105.05.
SECTION 33. Section 105.081, Alcoholic Beverage Code, is
amended by amending Subsection (a) and adding Subsection (c) to
read as follows:
(a) The holder of a distiller's and rectifier's permit may
sell and offer for sale distilled spirits and ready-to-drink spirit
beverages for on-premises consumption and a person may consume
distilled spirits and ready-to-drink spirit beverages on the
permitted premises during the same hours mixed beverages may be
sold and offered for sale by a mixed beverage permit holder under
Section 105.03(b).
(c) The holder of a distiller's and rectifier's permit may
sell and offer for sale ready-to-drink spirit beverages to ultimate
consumers for off-premises consumption during the same hours as a
person may sell malt beverages under Section 105.05.
SECTION 34. Section 107.10, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 107.10. TRANSPORTATION OF WINE COOLERS [OR SPIRIT
COOLERS]. [(a)] A holder of a wholesaler's or general class B
wholesaler's permit may transport and sell wine coolers without a
prior order if the holder complies with the provisions of this code
and rules of the commission applicable to the transportation and
sale of malt beverages by a holder of a distributor's license.
[(b) A holder of a wholesaler's permit may transport and
sell spirit coolers without a prior order if the holder complies
with the provisions of this code and rules of the commission
applicable to the transportation and sale of malt beverages by a
holder of a distributor's license.]
SECTION 35. Section 201.02, Alcoholic Beverage Code, is
amended to read as follows:
Sec. 201.02. "FIRST SALE" DEFINED. In this subchapter,
"first sale":
(1) as applied to liquor imported into this state by
the holder of a wholesaler's permit authorizing importation, means
the first actual sale by the permittee to the holder of any other
permit authorizing the retail sale of the beverage or to the holder
of a local distributor's permit; and
(2) as applied to all other liquor, means the first
sale, possession, distribution, or use in this state, except that
the term does not include the first sale by:
(A) the holder of a winery permit to another
holder of a winery permit or the holder of a wholesaler's permit;
[or]
(B) the holder of a distiller's and rectifier's
permit to the holder of a wholesaler's permit; or
(C) the holder of a distiller's and rectifier's
permit or nonresident seller's permit to the holder of a general or
branch distributor's license.
SECTION 36. Section 101.46(d), Alcoholic Beverage Code, is
repealed.
SECTION 37. As soon as practicable after the effective date
of this Act, the Texas Alcoholic Beverage Commission shall adopt
rules necessary to implement the changes in law made by this Act.
SECTION 38. This Act takes effect September 1, 2025.