A Timeline of Notable Texas Beer Laws and Advocacy Efforts
1918: 18th Amendment is Ratified in Texas
The Texas Legislature ratified the Eighteenth Amendment to the U.S. Constitution in February of 1918. By January 1919, enough other states did the same for federal prohibition to become law, but enforcement would not begin until January of 1920 when the Volstead Act took effect. In the meantime, in May 1919, Texans voted to adopt a prohibition amendment to the state constitution. Leading into prohibition, Texas had 10 wet, 43 partly wet, and 201 dry counties.
1933: Texas Votes in Favor of 21st Amendment
In August 1933, Texas voted in favor of the Twenty-first Amendment repealing national prohibition, but it had no effect in the state because of the 1919 state prohibition amendment. However, at the same 1933 election, Texans voted in favor of allowing the sale of 3.2% beer, which began within months. Ratification of the Twenty-first Amendment was completed on December 5, 1933. After nearly 14 years, federal prohibition had come to an end.
1935: Texans Vote to Repeal State Dry Laws
In August of 1935, the fate of Texas’s state dry law was put before voters who voted 54% in favor of repeal. In response to the vote, the Legislature was called to a special session to pass the Texas Liquor Control Act and create the Texas Liquor Control Board. The sale of full-strength beer and other alcoholic beverages became licensed in early 1936, although enforcement of prohibition had waned some time before. All Texas counties returned to the same wet, partially wet, or dry statuses that they held in 1918 until local-option elections could be held.
1970: TABC Gets its Name
The Texas Liquor Control Board is renamed the Texas Alcoholic Beverage Commission.
1977: The Code Gets a New Name
The Texas Liquor Control Act is updated to become the Texas Alcoholic Beverage Code.
1979: Three-Tier System Extended to Beer
In 1979, SB 419 extended three-tier restrictions to the beer segment of the Texas alcoholic beverage industry. Contrary to popular mythology that the Three-Tier System has been in place since the dawn of man–or at least the repeal of prohibition–prior to the passage of SB 419, Texas breweries could sell beer directly to retailers and distributors could conduct “dockside sales” directly to consumers. Spoetzel Brewery in Shiner successfully lobbied for an amendment authorizing self-distribution for breweries producing no more than 75,000 barrels of beer annually. This remaining self distribution allowance became known as the “Shiner Exception.”
1981: Beer Industry “Fair Dealing” Law
SB 720, also known as “The Beer Industry Fair Dealing Law,” gave way to the birth of beer franchise law in Texas. The law prohibited termination or non-renewal of distribution agreements by manufacturers without “good cause,” and limited the ability of a manufacturer to deny assignment of distribution rights to another distributor. To this day, terms of the BIFDL cannot be overridden by contract.
1990: SeaWorld Exception
In what some might call the “Shamu of all Carve-Outs,” a decade after the Three-Tier System was extended to the Texas beer industry, Anheuser-Busch purchased SeaWorld in San Antonio–not just a theme park, but a licensed retailer selling alcohol from its concession stands and restaurants. To maintain beer sales at the park, in 1990, the Texas Legislature passed a carve-out to the state’s liquor laws applying to any “marine park” in “an enclosed restricted access area of not less than 254 acres nor more than 255 acres in a county with a population of over 950,000.” As a result, America’s largest beer manufacturer was granted an exception to conduct retail beer sales at one of Texas’s largest tourist attractions. Soon thereafter, the Budweiser Clydesdales became a mainstay attraction at the park.
1993: Brewpubs Legalized
By 1993, 41 states allowed for the operation of brewpubs–small, restaurant/taproom focused breweries selling all or a majority of their beer onsite directly to consumers. Pioneering brewers had been working for a few legislative sessions to pass a bill legalizing brewpubs in Texas and they succeeded in 1993 with the passage of HB 1425. The new license allowed brewpubs to brew up to 5,000 bbls of beer annually and sell that beer directly to their customers for enjoyment onsite or to-go. Around 18 brewpubs opened in the wake of HB 1425’s passage, but nearly all closed in the years to follow. It would be another 20 years before brewpubs would be granted the right to distribute their beer beyond the four walls of their pubs.
1995: Sampling of Ale at Breweries
Prior to 1995, Texas manufacturing breweries were permitted to provide samples of “beer” to patrons visiting their facilities for a brewery tour, but they were not permitted to provide samples of “ale” (defined in the code as malt beverages over 4% ABW or 5% ABV). Because the majority of craft beer styles are considered “ale” by Texas standards, HB 1922 arguably played a critical role in making possible the “tour + tasting” model that Texas craft brewers relied on until the 2013 legalization of taproom sales. Before this 1995 law change you were likely to find much more limited sampling opportunities at Texas’s few craft breweries.
1995: Exclusive Territory Rights
In 1995, beer franchise laws became more entrenched in Texas when SB 1236 was passed requiring brewers to grant exclusive distribution rights to their product to a single distributor per given territory.
2007: First Taproom/Beer-To-Go Bill Filed
In 2007, State Representative Jessica Farrar filed House Bill 1926, which would allow Texas breweries to sell up to 5,000 bbls of beer per year directly to consumers for on or off-premises consumption. The bill died in committee, and would be filed again in various forms in numerous upcoming sessions before on-premise consumption was passed in 2013, and beer-to-go was finally passed in 2019. In those early years, the group of brewers supporting the bill, led by Houston’s Saint Arnold Brewing Company, were known as the “Friends of Texas Microbreweries.” A 2009 article in the Austin American-Statesman about that session’s pair of bills filed by Farrar and State Rep. Lon Burnam, captures what an uphill battle advancing these brewery taproom bills were at the time. “Most of the micros are politically naive, ” Burnham said. “I can file this bill. It’s not going to go anywhere until the brewers can go to multiple members and be a political force because the big guys are a political force, and they have been for years.”
2007: Brewery Retail Sampling Bill Passes
In the same session where taproom rights failed, brewers did eke out a modest win. H.B. 2723 authorized the holder of a brewer’s permit to conduct samplings on a retailer’s premise by allowing an agent or employee of the brewery to open, touch, or pour ale or malt liquor, make a presentation, or answer questions at a sampling event.
2009: Texas Craft Brewers Guild is Formed
Texas craft brewers start to get organized, coming together to officially found the Texas Craft Brewers Guild, a brewer-led trade association that exists for the purpose of promoting Texas craft beer, educating the public about the qualities and attributes of craft beer, and advancing the common interest of Texas craft brewers.
2011: Brewers Can Disclose Where Beer is Sold
Believe it or not, prior to 2011, the TABC did not allow Texas breweries to inform the public of which retail accounts their beers were available for sale at. In 2011, that changed when Jester King Brewery, Authentic Beverages, and Zax Restaurant successfully sued the TABC on constitutional grounds. The lawsuit also challenged Texas’s “beer” vs. “ale” distinction and its impact on beer labeling requirements. As Jester King stated in the lawsuit, “This results in nonsensical and somewhat comical situations where we have to call pale ale at or below 4% ABW ‘pale beer’ and lager that is over 4% ABW ‘ale.’ ” While the lawsuit successfully eased the outdated beer/ale labeling requirements, it would be another decade before “beer” and “ale” were finally harmonized in the Texas Alcoholic Beverage Code.
2013: Taprooms + Brewpub Distribution Legalized
A package of 2013 bills supported by the Texas Craft Brewers Guild brought sweeping reform, creating a modern framework for craft beer in Texas. For the first time, brewpubs gained the right to sell their beer outside of their own premises–doubling their production cap to 10,000 bbls per year, which could be sold to retailers like grocery, c-stores, bars and restaurants–including up to 1,000 bbls of self-distribution. At the same time, craft breweries producing less than 225,000 bbls of beer annually gained the right to operate an onsite taproom, selling up to 5,000 bbls of beer per year for on-premise consumption. These changes shepherded the Texas craft beer scene into the modern age and spurred massive growth in the industry in the years immediately to follow. However, the legislature also made a concession to the beer distributor lobby in 2013, passing a bill limiting a brewery’s ability to receive payment when signing away their territorial distribution rights to a wholesaler. Finally, manufacturing breweries’ self-distribution allowance was changed. Prior to the change, any brewery that sold fewer than 75,000 bbls of beer per year could self-distribute all of their beer. The new legislation allowed breweries that sold as much as 125,000 bbls of beer per year to self-distribute 40,000 bbls of those sales.
2017: Distributor-Backed Bill Limits Brewery Rights
Prior to 2017, all the various caps, rights, and privileges in the Texas Alcoholic Beverage Code were based on how much beer a brewery brewed at an individual licensed location. However, that changed in 2017 when the beer distributor lobby prevailed on the Legislature to pass HB 3287, which suddenly factored in a brewery’s beer production across all if its licensed facilities for the purposes of determining if it produced less than 225,000 bbls and could legally operate a taproom. While only a subset of breweries were immediately impacted by the legislation, it created a new dimension of absurdity inside of the Alcoholic Beverage Code and had the real effect of devaluing ALL of Texas’ independent craft breweries the day it became law. Under the most ludicrous provision of the law, certain breweries became obligated to pay a distributor for the right to sell their *own* beer in their *own* taproom. The distributor lobby foisted this upon the Legislature proclaiming it would protect craft brewers from internationally owned multi-billion dollar corporate mega-brewers, yet the final version of the bill actually carved out Bud and Miller’s faux craft portfolios so the law doesn’t apply to them.
2018: CraftPAC is Formed
In 2018, the Texas Craft Brewers Guild formed CraftPAC, a general purpose Political Action Committee (PAC) created to fight to protect the rights of Texas craft breweries and champion common sense, 21st century legislative reforms. Through grassroots fundraising to support legislative candidates and pieces of legislation which positively impact the growth and sustainability of the Texas craft beer industry, CraftPAC has given Texas brewers and craft beer advocates a larger voice in the political process.
On September 1st 2019, Texas became the final state in the country to legalize Beer-To-Go sales from manufacturing breweries after well over a decade of advocacy efforts from Texas craft brewers and the Texas craft beer community, and the hard work of Representative Eddie Rodriguez (D-Austin) and Senator Dawn Buckingham (R-Lakeway) during a rollercoaster legislative session. Over the next two years, the TABC Sunset bill, which the Beer-To-Go amendment passed along with, calls for consolidating permits, repealing the arbitrary difference between “Beer” and “Ale” in the Texas Alcoholic Beverage Code, allowing for out-of-county warehousing for self-distributing breweries so they can better serve new markets, and reducing bloated wait times for label approvals so new beers can hit the market fresher and faster. “This legislation represents the most comprehensive and positive reform of the Texas Alcoholic Beverage Code in a generation, while serving the entire industry from the manufacturer down to the consumer,” Texas Craft Brewers Guild Executive Director Charles Vallhonrat said.
2020: COVID-19 Crisis
Prolonged shutdowns of brewery taprooms and on-premise retail accounts during the COVID-19 public health and economic crisis have left the Texas craft brewing industry facing immense challenges. Thank you to the craft beer community for rallying to help #SaveTexasBreweries.
Sources & Further Reading:
Texas Almanac: Prohibition Elections in Texas
Martin Frost & Hill: Texas Liquor Lawyers
Texas Alcoholic Beverage Commission: About/History
Texas Legislature Online
Brewers Association: Government Affairs & Legal Update – January 2007
Austin Chronicle: Dying in Committee, Part 8: Microbrewery Bill Dead
Austin American-Statesman: Taste at brewery, but don’t take it with you