CHAPTER 6. ACTIVITIES SUBJECT TO REGULATION
ALCOHOLIC BEVERAGE CODE
TITLE 2. ADMINISTRATION OF CODE
CHAPTER 6. ACTIVITIES SUBJECT TO REGULATION
Sec. 6.01. RIGHTS AND PRIVILEGES; REVOCATION. (a) A person may
manufacture, distill, brew, sell, import, export, transport,
distribute, warehouse, store, possess, possess for the purpose of
sale, bottle, rectify, blend, treat, fortify, mix, or process
alcoholic beverages or possess equipment or material designed for
or capable of use for manufacturing alcoholic beverages, if the
right or privilege of doing so is granted by this code and the
person has first obtained a license or permit of the proper type
as required by this code.
(b) A license or permit issued under this code is a purely
personal privilege and is subject to revocation or suspension if
the holder is found to have violated a provision of this code or
a rule of the commission.
Added by Acts 1987, 70th Leg., ch. 303, Sec. 1, eff. June 11,
1987. Amended by Acts 1993, 73rd Leg., ch. 934, Sec. 15, eff.
Sept. 1, 1993.
Sec. 6.02. COORDINATION OF EXPIRATION DATES. (a) The
commission may authorize a licensee or permittee to change the
expiration date of a license or permit held by the licensee or
permittee to any date that is agreeable to the commission,
consistent with a reasonable annual distribution of renewal
application review work of the commission, and to the licensee or
permittee.
(b) The fee for an application for a change in expiration date
is $25 per license or permit affected.
(c) The commission may not abate or refund a license or permit
fee because of a change in the expiration date made under this
section but may authorize a license or permit period of less than
one year for the period during which the expiration date is
changed. The commission may not authorize a license or permit
period of greater than two years.
Added by Acts 1989, 71st Leg., 1st C.S., ch. 36, Sec. 5, eff.
Oct. 18, 1989.
Amended by:
Acts 2007, 80th Leg., R.S., Ch.
986, Sec. 2, eff. September 1, 2007.
Sec. 6.03. CITIZENSHIP REQUIREMENTS. (a) It is the public
policy of this state and a purpose of this section to require
that, except as provided in Subsection (k) of this section or
otherwise in this code, a permit or license may not be issued to
a person who was not a citizen of this state for a one-year
period preceding the date of the filing of the person's
application for a license or permit. In that regard, the
legislature makes the findings in Subsections (b) through (j) of
this section.
(b) Between 1920 and 1933, the distribution and consumption of
alcoholic beverages was prohibited in the United States. While
the idealistic motives behind Prohibition were noble, a law
enforcement nightmare ensued. Otherwise law-abiding citizens
routinely violated the law by buying and consuming alcoholic
beverages. The demand for the illegal products created an
opportunity for criminal elements to develop a national network
for the supply and distribution of alcoholic beverages to the
populace. Massive criminal empires were built on illicit profits
from these unlawful activities and organized crime openly
flourished in Chicago, New York, New Orleans, and other cities.
(c) During Prohibition, the illegal enterprises used their
national wholesale distribution networks to exert control over
their customers. A common operating procedure was to sell
alcoholic beverages to a speakeasy on liberal terms to ensnarl
the owner in a web of debt and control with the aim of forcing
the owner to engage in other illegal business enterprises on the
premises including gambling, prostitution, and the distribution
of illegal drugs.
(d) In 1935, when the sale of alcoholic beverages was legalized
in this state following the adoption of the Twenty-first
Amendment to the United States Constitution, the state was faced
with building an entire framework for the distribution of
alcoholic beverage products. An important concern was that since
criminals owned and controlled the existing illegal alcoholic
beverage distribution system, criminals would attempt to own and
control the newly legalized industry. In an effort to prevent
this situation, comprehensive laws were adopted to ensure that an
alcoholic beverage permit or license could be issued only to
citizens of the state who had lived in this state for at least
three years, thus, long enough to be known by their community and
neighbors.
(e) Under the newly designed regulatory scheme, permits and
licenses issued by the state did not grant the holder a right.
Rather, the holder was granted a privilege that could be
challenged at both the county and the state level if the
character or qualifications of the applicant were suspect.
Finally, strict cash and credit laws were adopted to prevent
parties in the wholesale distribution system from controlling
their retail customers through the leveraging of debt to
accomplish other illicit gain.
(f) The alcoholic beverage laws adopted by the legislature in
the 1930s to free the industry from the influence of organized
crime have been successful in this state. The alcoholic beverage
industry in this state is not dominated by organized crime.
However, the legislature does find that organized crime continues
to be a threat that should never be allowed to establish itself
in the alcoholic beverage industry in this state.
(g) To accommodate the interests of the consuming public, the
expansion of popular nationwide businesses, and the increasing
state interest in tourism, and at the same time to guard against
the threats of organized crime, unfair competition, and decreased
opportunities for small businesses, the legislature finds that
there is no longer need for the three-year residency requirements
with regard to those segments of the industry that sell alcoholic
beverages to the ultimate consumer only. The legislature finds
that it is desirable to retain a one-year residency requirement
for businesses that sell to the consumer packaged liquor and
fortified wine capable of being used to supply legal or illegal
bars and clubs. The legislature also finds it reasonable,
desirable, and in the best interests of the state to provide a
one-year residency requirement for businesses engaged in the
wholesale distribution of beer, malt liquor, or wine or in the
manufacture and distribution of distilled spirits and fortified
wines at both the wholesale and the retail levels where those
beverages, in unopened containers, are sold to mixed beverage
permittees and private club registration permittees as well as to
the general public. Adequate protection is deemed to be provided
by controlling those sources of supply for distilled spirits and
fortified wines.
(h) It is also the public policy of this state and a purpose of
this section to enforce strict cash and credit laws as a means of
preventing those engaged in the distribution of alcoholic
beverages from exerting undue influence over any level of the
industry selling or serving alcoholic beverages to the ultimate
consumer.
(i) It is also the public policy of this state and a purpose of
this section to maintain and enforce the three-tier system
(strict separation between the manufacturing, wholesaling, and
retailing levels of the industry) and thereby to prevent the
creation or maintenance of a "tied house" as described and
prohibited in Section 102.01 of this code.
(j) The above-stated public policies, purposes of this section,
and legislative findings are provided as guidelines for the
construction of the following subsections of this section.
(k) A requirement under this code that 51 percent or more of the
stock of a corporation be owned by a person or persons who were
citizens of this state for a one-year period preceding the date
of the filing of an application for a license or permit does not
apply to a corporation organized under the laws of this state
that applies for a license or permit under Chapters 25-34,
Chapter 44, Chapters 48-51, Chapters 69-72, or Chapter 74 of this
code if:
(1) all of the officers and a majority of directors of the
applicant corporation have resided within the state for a
one-year period preceding the date of the application and each
officer or director possesses the qualifications required of
other applicants for permits and licenses;
(2) the applicant corporation and the applicant's shareholders
have no direct or indirect ownership or other prohibited
relationship with others engaged in the alcoholic beverage
industry at different levels as provided by Chapter 102 of this
code and other provisions of this code;
(3) the applicant corporation is not precluded by law, rule,
charter, or corporate bylaw from disclosing the applicant's
shareholders to the commission; and
(4) the applicant corporation maintains its books and records
relating to its alcoholic beverage operations in the state at its
registered office or at a location in the state approved in
writing by the commission.
(l) Corporations subject to Subsection (k) of this section that
have substantially similar ownership may merge or consolidate. A
fee of $100 shall be paid to the commission for each licensed or
permitted premises that is merged or consolidated into the
surviving corporation. The surviving corporation succeeds to all
privileges of the prior corporation that held the permits or
licenses if the surviving corporation is qualified to hold the
permits or licenses under this code. For the purposes of this
subsection, corporations have substantially similar ownership if
90 percent or more of the corporations is owned by the same
person or persons or by the same corporation or corporations or
if the surviving corporation has maintained an ownership interest
in the merged or consolidated corporations since the date the
original permit or license was issued.
Added by Acts 1993, 73rd Leg., ch. 934, Sec. 16, eff. Sept. 1,
1993.
Sec. 6.04. GRACE PERIOD ON RENEWAL OF LICENSES AND PERMITS. (a)
Notwithstanding any other provision of this code, the holder of
a license or permit issued under this code may renew the license
or permit rather than reapply for an original license or permit
if, not later than the 30th day after the date of the expiration
of the license or permit, the holder files a renewal application
and the required license or permit fee with the commission and
pays a late fee as provided by rules of the commission.
(b) If an application is filed under Subsection (a), a violation
of the law that occurs before the filing of a renewal application
may be the basis for an administrative action against the holder
of the license or permit.
(c) The holder of a license or permit who does not renew the
license or permit before its expiration date may not operate
until the holder files an application under Subsection (a).
(d) The commission shall adopt rules necessary to implement this
section.
Added by Acts 1993, 73rd Leg., ch. 934, Sec. 16, eff. Sept. 1,
1993. Amended by Acts 2001, 77th Leg., ch. 364, Sec. 1, eff.
Sept. 1, 2001.
Sec. 6.05. CORPORATE LIABILITY. A corporation with an ownership
interest in a corporation holding a permit under Section 6.03(k)
of this code and which shares space, employees, business
facilities, or services is subject to liability under Chapter 2
of this code.
Added by Acts 1993, 73rd Leg., ch. 934, Sec. 17, eff. Sept. 1,
1993.