88R20668 SCP-D     By: King of Hemphill, Cook H.B. No. 3656     Substitute the following for H.B. No. 3656:     By:  Harless C.S.H.B. No. 3656       A BILL TO BE ENTITLED   AN ACT   relating to operating agreements between holders of a distiller's   and rectifier's permit and certain alcoholic beverage permit   holders.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 14, Alcoholic Beverage Code, is amended   by adding Section 14.10 to read as follows:          Sec. 14.10.  OPERATING AGREEMENTS BETWEEN PERMIT HOLDERS.   (a) The holder of a distiller's and rectifier's permit may enter   into an agreement with another holder of a distiller's and   rectifier's permit that allows the distiller's and rectifier's   permit holder to engage in the following activities on the   permitted premises of the other distiller's and rectifier's permit   holder:                (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 authorized wholesalers and   manufacturers outside the state;                (6)  sell, through an affiliate who is the holder of a   nonresident seller's permit, the finished products in this state to   holders of wholesaler's permits and to authorized wholesalers and   manufacturers outside the state;                (7)  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; and                (8)  sell bulk alcohol produced by the permit holder   for purposes described by Section 38.01.          (b)  The agreement is subject to approval by the commission   and must describe with specificity the nature, duration, and extent   of the activities authorized by the agreement.          (c)  The holder of a distiller's and rectifier's permit may   enter into an agreement authorized by Section 37.011 with the   holder of a nonresident seller's permit.          (d)  The holder of a distiller's and rectifier's permit on   whose premises another distiller's and rectifier's permit holder   contracts under this section to manufacture, bottle, package, or   label alcoholic beverages may not:                (1)  consider or treat the alcoholic beverages   manufactured, bottled, packaged, or labeled under the agreement as   being owned by the permit holder; or                (2)  sell those alcoholic beverages on the permit   holder's premises.          (e)  The commission shall adopt rules regulating the shared   use of the permitted premises under this section to ensure   administrative accountability of each permit holder and a strict   separation between the businesses and operations of the permit   holders.          SECTION 2.  Chapter 37, Alcoholic Beverage Code, is amended   by adding Section 37.011 to read as follows:          Sec. 37.011.  OPERATING AGREEMENT WITH IN-STATE DISTILLERY.   (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;                (2)  rectify, purify, and refine distilled spirits and   wines;                (3)  mix wines, distilled spirits, or other liquors;                (4)  bottle, label, and package the nonresident   seller's finished products; and                (5)  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.          (b)  The agreement is subject to approval by the commission   and must describe with specificity the nature, duration, and extent   of the activities authorized by the agreement.          (c)  The holder of a distiller's and rectifier's permit on   whose premises the holder of a nonresident seller's permit   contracts under this section to manufacture, bottle, package, or   label alcoholic beverages may not:                (1)  consider or treat the alcoholic beverages   manufactured, bottled, packaged, or labeled under the agreement as   being owned by the distiller's and rectifier's permit holder; or                (2)  sell those alcoholic beverages on the distiller's   and rectifier's permit holder's premises.          (d)  The commission shall adopt rules regulating the shared   use of the permitted premises under this section to ensure   administrative accountability of each permit holder and a strict   separation between the businesses and operations of the permit   holders.          SECTION 3.  This Act takes effect September 1, 2023.