Relating to operating agreements between holders of a distiller's and rectifier's permit and nonresident seller's permit.
Summary
HB 5388 would expand the Alcoholic Beverage Code provisions governing operating agreements between Texas distilleries and nonresident sellers. Under current law, a nonresident seller that owns, or is affiliated with an owner of, an out-of-state distillery and holds a distiller’s and rectifier’s permit may enter into an agreement with a Texas distiller’s and rectifier’s permit holder to use the Texas premises for manufacturing, rectifying, blending, bottling, labeling, packaging, and selling finished distilled spirits and related products.
The bill appears to clarify and broaden the circumstances under which these agreements may be made by expressly allowing a nonresident seller whose affiliate owns the out-of-state distillery to participate, rather than only the permit holder itself. It would take effect September 1, 2025, and would affect how distilleries, wholesalers, and nonresident alcohol producers structure production and distribution arrangements in Texas.
Impact
HB 5388 would amend Chapter 37 of the Alcoholic Beverage Code, specifically Section 37.011(a), to expand the authority for operating agreements between holders of a distiller’s and rectifier’s permit and nonresident seller’s permit holders. The practical effect is to permit more cross-border production and commercialization arrangements involving Texas distillery premises, potentially benefiting out-of-state alcohol producers and their affiliates while also affecting Texas distilleries, wholesalers, and authorized manufacturers that participate in these agreements.
Sentiment
There is little recorded public debate in the available materials, and no committee transcript or vote record is provided. The bill’s placement in the Licensing & Administrative Procedures committees suggests it was treated as a regulatory and industry-structure measure rather than a highly controversial policy change. However, the fact that it was withdrawn from the House schedule on April 22, 2025 indicates it did not advance at that time, which may reflect unresolved concerns or simply scheduling issues.
Contention
The main point of potential contention is the expansion of access for nonresident sellers and their affiliates to conduct production-related activities on Texas distillery premises. Supporters would likely view the bill as a modernization or business-facilitation measure for the alcohol industry, while opponents could worry about increased out-of-state influence, competitive effects on in-state producers, or regulatory complexity in alcohol manufacturing and distribution. Because there are no transcripts or votes, the specific objections or supporters are not identified in the record provided.