When serving alcohol in Texas, business owners must obtain a Texas alcoholic beverage license. Failing to do so could result in serious legal charges. There are several qualifications that need to be met to obtain a license.

How To Qualify

To qualify for a Houston alcoholic beverage license, an applicant must be at least 21 years of age. In addition to this, these criteria must be met:

• The applicant must not have any felony convictions within the past five years.
• The applicant must not have violated state liquor laws within the past two years.
• The applicant must not have any moral turpitude violations of liquor laws within the past six months.

For on-premise alcohol permits, business owners must provide verification from the city clerk that their business is in a zone where alcohol can be served and has late-hour operations. People who plan to serve only beer or wine will have to provide verification of alcohol content for their beverages. For off-premise permits, applicants must obtain verification forms and a list of approved areas from the city clerk. In addition to this, public notice must be published in a local newspaper. There are also other requirements for temporary permits for off-site events, which are usually granted to business owners who currently hold liquor licenses. Some types of events may not require licenses if they provide free alcohol to adults.

How To Apply

Most business owners who plan to serve alcohol on a daily basis apply for a license through the local sheriff’s department. There are over 20 different types of licenses available from the Texas Alcoholic Beverage Commission, so it is important to choose the right type. For example, a person who is looking for a Texas beer license just to sell beer at an event would not need the same type of permit a person serving cocktails in a restaurant would need. After obtaining the right forms, an applicant must fill out all of the information correctly. Mistakes will usually bring delays. Applications are taken to the Texas State Controller’s Office, and the information must also be turned in to the local City Secretary. Following this step, the TABC must be contacted to perform a background and eligibility check. An interview will be conducted, and the applicant will be notified when to appear before a judge for a hearing. If the application is approved by the judge, the applicant must pay the required taxes and wait for the TABC to issue a permit.

Many people mistakenly assume that obtaining a liquor license is a process that involves filing a few forms and paying a fee. The process is much more complex and much more serious, so it is important to make sure there are no mistakes made. Businesses planning to open are usually in a time crunch, and this can add even more stress to the preparations for a grand opening. The best way to get through the process without major hassles is to hire a Houston liquor license service company.

A Texas license service provider knows all of the local and state laws for obtaining all of the different types of licenses and permits offered by the TABC. The service provider knows what to write on the forms, where to file them and how to deliver efficient and effective results. Many people make the mistake of filling out the wrong types of forms when applying for licenses on their own, but a liquor license service will make sure the correct forms are used. Investing in a license service is well worth avoiding the headache of losing money, delaying and opening or canceling a special event while waiting on a license.

Economic experts warn that the impending merger between beer giants Budweiser and Miller may have a significant impact on the fate of craft breweries in Texas and across the nation. The precise nature of that impact, however, is a matter of some discussion among those closest to the issue. Some believe that the merger could have a positive effect on craft breweries by increasing the cachet of these flavorful beers in the consumer marketplace. Others predict that the increased financial resources available to the merged companies will allow them to market their products more effectively, cutting into the sales and revenues for craft breweries. For brewpubs currently operating with a Houston beer license, keeping an eye on this developing news story can ensure the highest level of proactive response to the market changes ahead.

The Biggest Beer Merger Ever

The purchase of SABMiller by Anheuser-Busch represents the largest single acquisition in the history of the beer industry. Anheuser-Busch offered well over $107 billion for Miller in a deal that is still being examined by federal lawmakers. Concerns have been raised that this merger will in effect create a near-monopoly in the beer industry. It is estimated that one out of every three beers sold in the U.S. will be produced by the company resulting from the merger of Budweiser and Miller.

Statistics and Rankings

Sales figures for 2015 indicate that the Bud Light, Coors Light, Miller Lite, Budweiser and Michelob domestic beer brands continue to dominate the U.S. marketplace:

• Bud Light brings in approximately $2.0 billion annually as the top-ranked in sales for the U.S. marketplace.
• Coors Light pulls in $1.0 billion in sales each year.
• Miller Lite ranks third at $862.6 million in annual sales.
• Budweiser rakes in $718.7 million for Anheuser-Busch per year.
• Finally, Michelob Ultra Light is ranked fifth in annual sales at $428.2 million.

Despite the different branding approaches and names attached to these beers, two companies are responsible for all five of the top-selling beers for 2015:

• SABMiller produces both Coors Light and Miller Lite.
• Anheuser-Busch manufactures Michelob, Budweiser and Bud Light.

The proposed merger will not include Coors; instead, Molson Coors intends to buy out the controlling interest currently held by SABMiller and to operate independently from both companies. Nonetheless, the combined economic force of these two brewery powerhouses is likely to impact the craft beer industry in a number of ways.

Craft Beer on the Rise

In 2014, craft beer producers maintained an 11 percent share of the overall marketplace and accounted for $19.6 billion in sales overall. The nature of craft brewing, however, means that those sales and profits were divided among numerous small companies. The Texas Alcoholic Beverage Commission (TABC) is responsible for issuing licenses to brewpubs, craft breweries and other enterprises that produce or sell alcohol to consumers. Current figures indicate that approximately 156 brewpubs and breweries currently hold a TABC license to produce beer in the Lone Star State.

Potentially Damaging Effects

Some smaller breweries fear that the proposed merger between Miller and Anheuser-Busch will have a chilling effect on their ability to obtain aluminum cans, glass bottles and raw materials with which to produce their brews. The power wielded by the new mega-corporation could significantly reduce the ability of craft brewers to compete for supplies and market space. Worse yet, both Anheuser-Busch and Miller have histories of purchasing craft breweries and continuing to sell their products without relabeling or indicating their ownership position to consumers.

For brewpubs and craft breweries, maintaining a valid Houston alcoholic beverage license can limit issues with regulatory agencies and other state authorities. Adopting a proactive approach to current supply chains can also ensure that operations can continue without interruption even if this mega-merger goes through.

The laws for obtaining a Texas liquor license can be confusing and counterproductive to some business owners. It seems that many of the Texas Alcoholic Beverage Code (TABC) provisions are only in place to benefit old favorites and restrain new competitors. However, those days may be coming to an end.

Wal-Mart recently challenged the constitutionality of numerous anticompetitive clauses concerning the sale of distilled spirits for off-site consumption. The problem is also being addressed by new legislation before the state House and Senate.

Texas businesses must get a package store permit prior to selling liquor. Most states require the same type of license, but Texas prohibits companies that are publicly traded from receiving them. Additionally, no individual or company may have more than five liquor licenses.

However, that law does not seem to apply to certain businesses that hold an Austin or Houston alcoholic beverage license. In Austin, for example, there are over a dozen Twin Liquors stores. How do they curry such favor? They merely squirm through a loophole permitting closely related family members to pool their licenses. To make matters even more confusing, hotels are exempt from the five-store limit.

The Houston liquor license laws do not have any basis in public safety or health. A publicly traded company does not have access to liquor that is stronger than the same product sold by a private company. Any sort of protection once afforded by the five-store limit is negated by the large exemptions given to some businesses. It seems the law’s true purpose is to benefit certain companies as opposed to protecting the public health.

This type of regulation smacks of crony capitalism in which businesses enlist the government’s power to protect them from the strains of fair competition, which is nothing new. Taxi companies have entreated cities to regulate Uber enough to force it out of business in their area. Steel companies demand tariffs on steel imports to keep the less-expensive goods out of the U.S.

Rather than improving a product or service in the wake of a competitor’s better offering or lower price, businesses turn to legislators to get the new companies declared illegal. The consumer loses out when these schemes are put into play.

Restriction can stay on the books for decades beyond the point where anyone can recall the reason for their original addition. For instance, the limit of five stores has a grandfathering clause that only applies to stores that have been in business since before 1949.

Litigation seems to be the only recourse to the seemingly arbitrary and outdated TABC regulations. However, lawsuits are expensive and time-consuming. It would make more sense if the Legislature updated the law proactively. Senate Bill 609 and House Bill 1225 aim to end the corporation prohibition and the five-store limit. That would level the playing field for the licensing of spirits sales.

Recent legislation has opened the market for craft breweries in Texas. Microbreweries were restricted by laws that seemed weighted toward the larger breweries. Now, they are able to sell their brews for off-site consumption, which has created an influx of tourists who wish to sample craft beers from Texas. In fact, Texas is embracing a newfound recognition for their numerous craft brews since the laws went into effect. The microbreweries are also enjoying enhanced distribution rights that have encouraged the building of new breweries to cover distribution across the state. These new businesses help to stimulate the economy and create jobs.

A similar type of relaxing of the statutes concerning spirits would modernize the industry and create a more competitive marketplace. Laws must be kept current so that new technologies and established business practices can merge for the benefit of the consumer.

Texans who enjoy cracking open a can of Lone Star beer or sampling the latest craft brews are not alone. For more than 160 years, Texans have supported the state’s vibrant beer industry. Today, we are in the middle of a microbrewing renaissance that began more than 20 years ago. It all started in 1978 when former President Carter paved the way by allowing home brewers to partake in the craft without a Texas beer license. This decision has helped the industry come full circle going from local breweries to corporate conglomerates and back to microbrewing.

Although craft brewing seems like a new idea, it is how the beer industry began in Texas and many other states. During the 19th century, British immigrants made stouts, porters and ales with recipes from their native country. These ales could be brewed and enjoyed almost immediately without aging. By the 1860s, German immigrants transformed the beer culture and helped shape the industry that we know today.

Small German breweries sprang up in San Antonio, Brenham, New Braunfels and immigrant enclaves across the state, but German beers were more difficult to produce. Unlike the top-fermenting British ales, Germans preferred lagers that fermented for months in cool temperatures. For these reasons, German lagers were brewed in the winter and were stored deep underground. At William Menger’s Western Brewery in San Antonio’s Alamo Square, barrels were aged in a cellar protected by stone walls that were 3 feet thick.

During the mid-1800s, there were roughly 20 small brewers in the state, and 77 people worked in the industry. Steam engines and advances of the Industrial Revolution increased overall production but decreased the number of breweries. Some of the larger institutions, such as Menger’s, produced 1,500 barrels of beer annually. The smallest brewery sold 49 barrels a year.

By the 1870s, the industry reached an all-time high. Some 58 companies held a Houston beer license, and these brewers produced 16,000 barrels collectively. However, the industry experienced a rapid decline. Strong competition, poor products and financial issues caused smaller breweries to shut their doors. As mass production increased, beer barons needed more capital to invest in machinery that would increase production from thousands of barrels to millions.

Adolphus Busch was one businessman who embraced the new business model. He raised $400,000 to build the cutting-edge Lone Star Brewery in San Antonio. Pearl Beer was another company that used technology to produce 110,000 barrels annually. As these large corporations took over the industry, Prohibition became the new threat. Some breweries rebranded themselves, and other companies produced soft drinks and “near beer” to survive. After this era, national firms like Miller invaded the market.

Throughout most of the 20th century, per capita beer consumption increased steadily. Conglomerates bought up the few successful brands, and small brewers struggled to keep their businesses alive. The Spoetzl Brewery, which produces Shiner beer, embodies the struggle of these underdogs. When vertically integrated beer makers, bottlers and distributors ruled the market in the 1980s, Spoetzl’s production was cut in half. The company changed hands and gradually achieved success under the leadership of Carlos Alvarez. Between 1990 and 1994, the company’s production went from 36,000 barrels to 100,000 barrels. Eventually, mega-corporations like Miller and Budweiser became a victim of their own success. Now, the beer industry has gone back to its roots thanks to consumers who embrace craft brews and microbrew brands.

In 2008, Houston had just one craft beer maker, which is defined as a brewery that produces less than 75,000 barrels per year. Today, many more independent companies are requesting a Houston alcoholic beverage license to cater to consumers who seek out original craft beers and brewpubs that offer a singular product and experience.

Some Texas bars may have been systematically shortchanging customers by serving up lower-cost drinks in place of the top shelf brand names ordered by their clientele. The Texas Alcoholic Beverage Commission (TABC) is currently investigating claims made against 21 bars throughout the state that they substituted lower-cost alcohol products for the brands actually requested by their customers and that they charged those patrons at the higher rate for the drinks in question. Investigators indicated that four bars in the Houston area were involved in this activity. Serving counterfeit drinks could lead to the revocation of the Houston alcoholic beverage license held by these establishments and may result in added fines and penalties when the TABC investigation is concluded.

Operation Bottoms Up

After receiving numerous complaints from consumers, the TABC conducted an undercover operation this spring at 68 establishments across the state of Texas. At each stop, the investigators sampled top-shelf liquors and performed tests to determine that these drinks were genuine. At 21 licensed bars, counterfeit liquor was served to the undercover officials. Administrative notices have already been filed against 14 of the offending establishments; the remaining seven are under continuing investigation for multiple violations of the terms of their Texas liquor license. If these licenses are revoked, the bars in question will likely have to shut down for good.

Advanced Technologies Made Detection Possible

Prior to the spring of 2015, TABC investigators had no definitive way to detect the quality of liquor being served to customers in Texas bars. New technologies, however, made a clear identification possible and provided the impetus for Operation Bottoms Up. It is likely that bar owners were unaware of the new technology and were caught off guard by the investigation, allowing the TABC to nab a number of offenders that might have otherwise continued to defraud the public by serving less expensive drinks in the guise of brand-name liquors.

Texas Liquor License Regulations

To obtain a liquor license in the state of Texas, businesses must agree to follow certain rules and regulations, including the following:

• Prominent placement of health warnings, liquor license permit and other signage required by Texas law
• Restrictions for dry counties and communities
• Codes regarding the sale of package liquors and the allowable areas where these beverages can be sold or consumed legally
• Prohibitions against serving alcohol to minors and requirements to check ID for age and authenticity
• Hours allowable for alcohol sales
• Restrictions on the carrying of firearms in establishments that serve alcohol
• Sale of counterfeit alcohol

Failure to observe these rules can result in fines, shutdowns and the loss of the Houston liquor license held by these companies. After the recent round of investigations by the TABC, it is likely that more bars and taverns will be taking special care to comply with all applicable regulations to protect their business interests in the current regulatory environment.

Companies that specialize in delivering expert advice and guidance for bar owners in obtaining and maintaining their liquor licenses can often provide added help in navigating the complexities of the Texas Alcoholic Beverage Code. These firms typically offer a wide range of services, including the following:

• Assistance in qualifying to accept food stamps under the Texas Assistance for Needy Families or the nationwide Supplemental Nutrition Assistance Program
• Help in applying for liquor licenses from TABC and obtaining the required signage for establishments that serve liquor in the state of Texas
• Permission to sell and redeem Lotto tickets
  Assistance with other commercial license applications and compliance issues in the Houston business community

The professional help available from these companies can ensure the smoothest possible processing for license applications in Houston and the state of Texas. By enlisting the assistance of a liquor license service, bars and other drinking establishments can avoid losing their right to serve liquor to customers and can protect their business interests more effectively.

Texans and tourists who love craft beer may soon be able to buy their favorite suds directly from the brewery if a new bill introduced by the Texas Craft Brewers Guild is passed. A similar bill was brought to the Texas Senate two years ago, but it was rejected. Texas State Senator Kevin Eltife introduced the new statute despite the previous failure to alter the laws regarding direct sales of beer to the public. Other changes to Houston beer license regulations were enacted in 2013.

The bill is intended to attract national attention to Texas craft breweries. Visitors would be permitted to purchase souvenir beer to take back to their homes across Texas and in other states. Consumers would be permitted to buy up to two cases of beer from a Texas brewery each month. It is hoped that craft beer aficionados will visit the Lone Star State and enhance its reputation as a tourist destination for beer lovers.

The legislation allows smaller breweries that produce less than 225,000 barrels of beer annually to sell directly to their most ardent supporters, which would place Texas in the forefront of states with a burgeoning craft-brew industry. This bill would afford breweries the same rights enjoyed by wineries, distilleries and out-of-state competitors according to Senator Eltife.

Legislators passed numerous changes to the Texas beer license laws during their last session. Brewpubs were granted the right to distribute their products in off-site locations. Breweries were permitted to sell beer at their production facilities for consumption on premises.

This victory for the brewmeisters was also met with a defeat. Another bill was passed that prevented them from selling the distribution rights for their craft brews to Texas beer distributors. That money has traditionally been used by breweries to beef up their production capabilities. A current lawsuit against the Texas Alcohol and Beverage Commission (TABC) seeks to have that bill’s passage reversed.

The new regulations permit breweries that have a brewpub license to sell beer on site in cans, bottles and growlers and to distribute their wares to restaurants, bars and beer stores. Breweries are ramping up their production by adding more locations to accommodate the expected increased demand.

Another bill, however, has been introduced that would severely curtail the amount of beer that breweries could self-distribute in Texas. The current limit of 40,000 barrels would be reduced to 5,000 barrels if Houston’s State Representative Senfronia Thompson’s bill becomes law. This is in direct contrast to the previous bill granting breweries that produced 125,000 barrels or less the right to self-distribute 40,000 barrels. The reasoning behind the abrupt change is unclear, but the bill is certain to affect the holders of a Houston alcoholic beverage license.

Craft breweries are seeking further rights during the current legislative session. They are asking for the right to sell beer at their production facilities for consumption off site. They are also trying to regain the ability to sell their distribution rights to Texas beer distributors.

A consumer advocacy group based in Houston called Open the Taps recently published a list of the most important modifications they are seeking this year.

• Elimination of the 24-ounce limit at beer festivals
• Take-home sales for production breweries
• Permitting direct shipments of beer from in-state and out-of-state breweries
• Growler sales at establishments with mixed beverage licenses
• Substituting the TABC labeling requirements with Federal TTB approval
• Other alterations to homebrew regulations

Texas craft beer has recently enjoyed a 44 percent increase in production by the breweries that will be most affected by the legislation. Texas breweries won 16 medals at the last Great American Beer Festival. In 2013, craft brews accounted for some $2.3 billion in sales.

Craft beer breweries in Texas may not be contacting a Houston liquor license service until the latest brew-ha-ha over distribution is resolved. Texas has recently enacted legislation that prevents craft breweries from collecting fees from distributors for the privilege of selling their popular craft beers throughout Texas. This law would effectively force these independent brewers to give up millions of dollars in fees to beverage distributors who have connections to politicians. Naturally, the breweries are fighting back by suing the state over the new alcohol regulations.

Actually, this is not a new law. It was passed back in 2013 and forbade brewers from accepting any compensation from distributors. The lawsuit questions the constitutionality of forcing the brewers to donate a portion of their business to the distributors. The law also curtails the variety of craft beers that consumers in Texas can purchase. The result is that many craft breweries have put plans for expanding their operations on hold. New startup breweries will likely wait until the lawsuit is decided instead of applying for their Houston alcoholic beverage license or a Texas liquor license. That will also curtail revenue the state would love to receive.

Three Texas brewers teamed up with the Institute for Justice (IJ) to challenge the law. The proprietors of Revolver Brewing, Live Oak Brewing and Peticolas Brewing Company are merely trying to protect the businesses that they built from scratch.

Prior to the law’s passing, brewers were paid by their distributors for the right to market their beers in cities across Texas. This law has created a sudden, unexpected source of profit for the distributors. What makes the situation even worse is that the distributors can sell the rights for distribution to other distributors who cover areas other than major Texas cities like Houston, Dallas or Austin. Previously, brewers used those funds from the distributors to grow their businesses.

Matt Miller, the managing attorney for the Texas office of the IJ, said that the law could be compared to forcing authors to donate the rights to their books to their publishers. He believes that it was unconstitutional to hand over the brewers’ property to other businesses that neither earned nor deserved the right to charge others to distribute craft beers.

The president of Live Oak Brewing, Chip McElroy, said that he was honored to be involved in the new trend toward craft beer. He has dedicated 18 years to building his business, but the new law forced him to pull his product from beer stores in San Antonio, Dallas-Fort Worth and areas of Texas where consumers have been able to buy Live Oak beer in the past.

Live Oak Brewing and Revolver Brewing are based in Fort Worth. The other participant in the suit, Peticolas Brewing, is in Dallas. The law has clouded their ability and desire to expand their operations. However, the property rights and economic liberties of entrepreneurs are protected by the Texas Constitution. The lawsuit is seeking to overturn the 2013 legislation so that the breweries can maintain control of their businesses.

The lawsuit is one of several included in the IJ’s so-called National Food Freedom Initiative. Its intention is to challenge laws across the United States that hinder the rights of citizens to make, sell, buy and consume foods of their own choice. The IJ has already won a free speech challenge against a law in Oregon prohibiting the advertising of raw milk. Presently, the IJ is involved in other lawsuits over the right to sell homegrown vegetables in Miami Shores, Florida, and home-baked treats in Minnesota. They are also challenging a Florida law that bars using the name “skim milk.”