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Sunset Report – Issue 3 And Recommendations

Sunset Issue 3 focuses on certain business practices that burden the agency (TABC) as well as the industry they regulate, with little public benefit. Sunset continues the theme concerning malt beverages and makes the bold recommendation that TABC cease product testing and accept the Federal Certificate of Label Approval (COLA) as they do other products. Two other areas Sunset examines are “cash law” for beer and outdoor advertising. While there will not likely be any opposition to the cash law and outdoor advertising recommendations, look for interesting dialog around product testing of malt beverages, something the TABC doesn’t want to give up.


Sunset Issue 3
Over-Regulation of Certain Business Practices Creates Burdens on TABC and the Alcoholic Beverage Industry With Little Public Benefit.

Key Recommendations • Streamline TABC’s process for approving alcoholic beverages for sale in Texas
• Make cash payments optional by applying the existing credit law restrictions to beer transactions between retailers and distributors • Eliminate overly restrictive outdoor advertising requirements.

There are several (in my opinion) over-regulated business practices that create burdens on the TABC and industry that have little public benefit. The Sunset staff chose to focus on three areas in their report; product registration and labeling, retail payments to wholesalers/distributors, and outdoor advertising. If taken in concert with Issue 2 and its recommendations, these recommendations are practical and if acted on, would be historic.

TABC has a lab at headquarters with costly but extraordinary equipment used for testing of alcohol content. Up until a few years ago, TABC tested every malt beverage product for confirmation of alcohol content and currently does the same if an analysis from an independent lab is not provided. Sunset recommends treating malt beverages like all other products which require the mere submission of the Certificate of Label Approval (COLA). This would stop the duplicative testing as well as decrease costs to brewers having to register each product size. Sunset points out that product approval from the TABC for malt beverages accounts for about 1/3 of their total label registrations and takes about three times as long to receive which delays product to market.

In TABC’s response to the Sunset report, they disagree with the recommendation to discontinue testing of malt beverages. They reason that alcohol content in malt beverages varies considerably whereas other products (wine/distilled spirits) vary only slightly in alcohol content. The TABC’s position being – testing in malt beverage alcohol content is more important for truth in labeling. This is even as Sunset points out Texas is the “outlier” of states requiring their own testing, and they find less than 10% discrepancy rate in reported content.

Another recommendation to this issue is to allow beer, now regulated by “cash law” to be treated the same as other products regulated by “credit law.” This would allow beer to be purchased under the same credit restrictions as other products and eliminate the regulation of immediate payment on delivery. TABC says Sunset is wrong in the fact this would free up resources as they have automated most of the process involved in cash law. Why not think even further out of the box and change the way credit law restrictions apply? Current “credit” law dictates payments not received for product be reported to the TABC every two weeks on specific days. Why not look at those reports changing to monthly reporting, achieving the same regulatory benefits with only half the reporting periods?

Lastly, this issue includes a recommendation to eliminate over burdensome outdoor advertising regulations. Outdoor alcohol advertising has been a confusing area of law for as long as I can remember. It is complicated and illogical to today’s times which results in violations. Sunset’s recommendation speaks to restrictions on the type, verbiage, and size of signs a business may display while still allowing the agency to prohibit advertisements that violate other provisions of the Code and cause more significant harm to public safety. The agency agrees with Sunset’s recommendation to pass rules giving more clarity to the regulations and policies regulating outdoor advertising.

Thanks for your time in staying informed. Please continue to check in as I bring you information concerning each of Sunset’s issues and recommendations for TABC.

Let us know your opinions in the comments below.

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