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.