HB 4517 amends the Texas Alcoholic Beverage Code to authorize credit-based transactions between distillers and wholesalers in the liquor industry. Specifically, it introduces Section 102.33 to Subchapter B, Chapter 102, establishing guidelines for the sale of liquor on credit by holders of distiller’s and rectifier’s permits to holders of wholesaler’s permits. The bill formalizes the process by which such transactions occur, requiring that sales be accompanied by a written invoice and governed by the terms of a contract or letter of agreement between the parties.
Under the bill, if a wholesaler fails to make payment in accordance with the agreed terms and does not pay after receiving a formal demand from the distiller, the distiller may report the delinquency to the Texas Alcoholic Beverage Commission (TABC). The bill defines such failure to pay as a violation of the new section, granting the commission authority to investigate and impose disciplinary action on the delinquent wholesaler. These measures are intended to protect distillers from financial risk while preserving the integrity of contractual agreements within the alcoholic beverage distribution system.
The legislation offers a structured, enforceable mechanism to support credit transactions in the industry, balancing the need for market flexibility with mechanisms to ensure payment compliance. It supports business growth by allowing negotiated credit terms while reinforcing accountability and oversight through TABC’s disciplinary powers in cases of non-payment.
The Committee Substitute for HB 4517 represents a notable shift from the originally filed version by introducing greater flexibility and softening the regulatory enforcement framework governing credit-based liquor sales between distillers and wholesalers. In the original bill, payment terms were rigid—wholesalers were required to pay within 30 days of receiving an invoice. The substitute removes this fixed deadline and instead allows both parties to negotiate payment terms through a contract or letter of agreement. This change supports business autonomy and adapts the legislation to the varying financial arrangements common in the marketplace.
Another significant difference lies in the enforcement mechanism. The original bill mandated that the Texas Alcoholic Beverage Commission (TABC) create and maintain a public list of delinquent wholesalers, and it barred such wholesalers from renewing, transferring, or voluntarily canceling permits until debts were cleared. It also prohibited them from obtaining other permits under the Alcoholic Beverage Code until delinquencies were resolved. In contrast, the committee substitute removes these punitive measures, instead authorizing TABC to take disciplinary action at its discretion. This move ensures a more proportionate response and gives regulatory authorities the ability to assess the context of each case rather than enforce blanket restrictions.
Finally, the definition of a "delinquent" payment is more nuanced in the substitute. Rather than being triggered automatically after 30 days, delinquency now requires both a failure to meet contractually agreed payment terms and a failure to respond to a formal demand for payment. This dual threshold offers additional protection for wholesalers and reinforces due process by ensuring a second chance to resolve payment issues before regulatory action is initiated.
Overall, the substitute bill aims to balance commercial flexibility with responsible oversight, shifting the focus from automatic state enforcement to negotiated business practices supplemented by regulatory recourse when necessary.
Contact the Author
Rep. Dade Phelan
