New Texas Alcohol Permit

Getting a Texas liquor license approved can be a cumbersome and difficult process. Deciding on which liquor license to apply for, determining whether the location is wet for the alcohol permit you’re seeking, navigating city and county alcohol regulations and choosing the appropriate TABC subordinate permits are just some of the things that need to be considered when you start the liquor licensing process.

Choosing the TABC Permits for your business model

Deciding on the type of TABC permits to apply for should be one of the first steps in the application process. Also, once you decide which tier of the alcohol industry you will hold an interest in (Retail, manufacturing or distributing), you will only be allowed to hold interests within that same tier. Holding an interest in more than one tier of the alcohol industry is called a “Tied House” and is prohibited under the Texas Alcoholic Beverage Code. Tied House interest prohibitions are strictly enforced in Texas. A list of the different types of TABC permits can be found here.

Some of the most common primary Texas Liquor permits are:

• Mixed Beverage Permit (MB) – Authorizes the sale of distilled spirits, wine and malt beverages for on-premise consumption, and also for off-premise consumption in some circumstances if the MB also holds a subordinate Food and Beverage Certificate (FB). Alcohol served for on-premise consumption is subject to 14.95% mixed beverage taxes (8.25% Mixed Beverage Sales Tax and 6.7% Mixed Beverage Gross Receipt tax).
• Wine and Malt Beverage Retailer’s Off-Premise Permit (BQ) – Authorizes the sale of malt beverages and wine for off-premise consumption. This permit is commonly used by convenience stores and gas stations.
• Wine and Malt Beverage Retailer’s Permit (BG) – Authorizes the sale of wine and malt beverages for on-premise and off-premise consumption. BG holders pay less taxes on on-premise alcohol sales than MB permit holders, but cannot sell liquor. On-premise alcohol sales at a business with a BG permit are subject to 8.25% sales and use tax, so BG’s pay 6.7% less in taxes than MB’s for on-premise alcohol sales.
• Private Club Registration Permit (N) – Authorizes the service of wine, malt beverages and distilled spirits to club members for on-premise consumption, and also for off-premise consumption in some circumstances if the N also holds a subordinate Food and Beverage Certificate (FB). The biggest appeal of this permit is it can be issued in dry areas. Alcohol served for on-premise consumption is subject to 14.95% mixed beverage taxes.
• Package Store Permit (P) – Commonly referred to as a “liquor store”, this permit authorizes the sale of wine, malt beverages and liquor for off-premise consumption.
• Brewer’s License (BW) – Authorizes the manufacture of malt beverages, and under certain circumstances, the sale of malt beverages to consumers for on-premise and off-premise consumption.
• Winery Permit (G) – Authorizes the manufacture of wine and the ability to sell wine for on-premise and off-premise consumption.
• Distiller’s and Rectifier’s Permit (D) – Authorizes the manufacture of distilled  spirits, and under certain circumstances, the sale of distilled spirits to consumers for on-premise and off-premise consumption.

Subordinate TABC permits attach to a primary permit. Some of the most common subordinate TABC liquor licenses are:

• Food and Beverage Certificate (FB) – an FB can attach to the following primary retail permits: MB, BG, BE, N, NB & NE. FB’s provide many benefits, including: 
  
  

1. the ability for mixed beverage permit holders and private club permit holders to serve alcohol for off-premise consumption along with food prepared at the premises;
2. exempting a business with on-premise alcohol sales  from having to hold a conduct surety bond or performance bond; and
3. exempting a business with on-premise alcohol sales from having to post a 51% red gun sign. 
4. Some areas are only wet for MB’s that also hold FB’s (commonly referred to as a “Restaurant Mixed Beverage Permit”, or “RM”). As of January 1, 2022, the TABC lessened the requirements for businesses to hold an FB. Before the January 2022 rule change, businesses had to maintain at least 40% non-alcohol revenue generated at the location to maintain an FB permit; however, now businesses are exempt from the under-60%-alcohol sales requirement as long as the business has commercial cooking equipment at the premise.  
   
   

•  Late Hours Permit (LH) – Can attach to the following primary retail permits: MB, BG, BE, N, NB & NE. Authorizes the service of alcohol between midnight and 2:00 a.m. Late Hours permits are only available in areas that either: 

1. meet a certain minimum population threshold (the number varies depending on which census is being relied on). If an area is above the minimum population threshold, an LH is allowed by right; or
2. the city or county has enacted an ordinance allowing for an LH to be issued to permit holders within its jurisdiction.
   
   

• Brewpub License (BP) – Can attach to the following primary retail permits: MB, BG, BE. This permit authorizes the manufacture of malt beverages, and the sale of manufactured beer for on-premise or off-premise consumption. 
  
  

Determining whether the proposed location is wet for the type of TABC permit needed for your business

After deciding which TABC liquor license/licenses you’ll need for your business model, you’ll need to find a location where those permits are allowed. A list the TABC prepared showing which cities & counties are wet for certain types of TABC permits can be found here. However, although the TABC wet/dry spreadsheet is a good starting point, it is only based on information provided to the TABC and is not conclusive; only a city or county clerk’s office can make an official wet/dry determination for a TABC application.

Qualifications for a TABC permit

Once you decide on your permits and find a suitable location, you should verify that you meet the minimum qualifications to hold a TABC permit. 

Some of the main qualifications for an applicant to hold a TABC permit include:

• Must be 21 years of age or older;
• Cannot have any felony convictions in the last 5 years; 
• Cannot have an interest in a TABC permit within a different tier. The three tiers are the manufacturing tier, distribution tier and retail tier; and
• Cannot have any moral turpitude violations within the last 6months.
  
  

The TABC application process

In September 2021, the TABC transitioned to an online application system called AIMS. The link to log into AIMs can be found here. Although the AIMs application process lists getting the city, county and comptroller to certify the L-Cert form as one of the last steps in the application process, we recommend that you start with this step (note that an L-Cert isn’t required for a private club permit ). In our experience, obtaining a completed L-Cert form tends to take up the most amount of time in the liquor licensing process. 

Getting the city, county and comptroller to sign off on the L-Cert form early in the process will help ensure that the potential location is wet for the type of permit sought, that no municipal ordinances prohibit the TABC permit sought, and that your business doesn’t have additional delays in being able to serve alcohol.

Also, the comptroller will refuse to sign off on the L-Cert if an officer of the applicant entity has delinquent taxes owed to the state, even if the taxes are owed by a different, unrelated entity with the same officer.

The timing in which the L-Cert should be submitted is also important and varies depending on location. Some cities require the county to sign off before the city will sign the L-Cert form. For example, the City of Dallas requires that Dallas County sign before it will consider signing a TABC application. Conversely, many counties – such as Tarrant County – require that the city sign off before it will. Some cities even require that both the county and comptroller sign off on an application before the city will sign the L-Cert. Most cities have their own application processes that need to be completed before they will consider signing off on a TABC application. 

City & County alcohol regulations

The Texas Alcoholic Beverage Code (TABC Code) is the ultimate authority on alcohol sales in Texas. Generally, cities and counties cannot enact ordinances regulating alcohol sales unless the TABC Code has a carved out an exception allowing for them to do so. The TABC Code allows municipalities to regulate alcohol sales in various ways, such as prohibiting the sale of alcohol within 300ft of a school, church, hospital or daycare. Although some cities do have enforceable ordinances that are more stringent than what the TABC Code allows because the ordinances were enacted by the city prior to June 11, 1987 and are grandfathered in, many cities have enacted ordinances that attempt to regulate alcohol in ways that aren’t authorized under the TABC Code and are actually unenforceable. Many cities also have onerous alcohol licensing processes they attempt to impose on businesses before agreeing to sign off on a TABC application. We regularly complete various local municipal requirements to get businesses TABC applications timely certified. When cities and counties incorrectly refuse to certify a TABC application, we first attempt to educate local officials on the reasons their certification is required under state law. If a city or county still refuses to comply with its requirements under the TABC Code, as a last resort, we’ll file suit and force them to certify the TABC application.

Getting assistance with obtaining your TABC permit

This article only provides an overview of just some of the code provisions, rules and ordinances that need to be considered when a business enters the alcoholic beverage industry in Texas. There are also publication notices, required signage, best practices to avoid a comptroller audit, checking for tier violations, requirements to qualify for the Safe Harbor Defense, written alcohol policies that need to be adopted, ensuring the business is correctly structured, applying for a sales tax permit, etc. that need to be addressed when applying for a Texas liquor license. The information in this article is for informational purposes only and should not be taken as legal advice.

Our expert TABC law attorneys and consultants have over 85-years combined experience handling TABC related cases, and as a result we are intimately familiar with the TABC application processes, municipal application requirements and issues businesses commonly deal with when entering the alcohol industry. We can efficiently handle the complex liquor licensing process for you and help limit the time it takes to get your business up and running. We also regularly assist other Texas licensing services when a situation comes up that they’re not sure how to handle. Our TABC consultants and attorneys work closely with restaurants, bars, private clubs, and breweries in Dallas, Fort Worth, Arlington, Houston and throughout Texas; and we help our clients ensure they operate in compliance with the TABC Code and Rules.