ALCOHOLIC BEVERAGE CODE
CHAPTER 6. ACTIVITIES SUBJECT TO REGULATION
§ 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, § 1, eff. June 11, 1987.
Amended by Acts 1993, 73rd Leg., ch. 934, § 15, eff. Sept. 1,
1993.
Validity
This section has been declared unconstitutional by Dickerson v.
Bailey, 336 F.3d. 388.
§ 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 one year.
Added by Acts 1989, 71st Leg., 1st C.S., ch. 36, § 5, eff. Oct.
18, 1989.
§ 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, § 16, eff. Sept. 1, 1993.
§ 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, § 16, eff. Sept. 1, 1993.
Amended by Acts 2001, 77th Leg., ch. 364, § 1, eff. Sept. 1,
2001.
§ 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, § 17, eff. Sept. 1, 1993.
