TITLE 16. ECONOMIC REGULATION

PART 3. TEXAS ALCOHOLIC BEVERAGE COMMISSION

CHAPTER 35. ENFORCEMENT

The Texas Alcoholic Beverage Commission (TABC) adopts new 16 TAC §35.5, relating to Prohibited Sales of Consumable Hemp Products to Minors, and §35.6, relating to Mandatory Age Verification for Consumable Hemp Product Sales. The new rules are adopted with changes to the proposed text as published in the December 5, 2025, issue of the Texas Register (50 TexReg 7818) and will be republished.

REASONED JUSTIFICATION. The new rules are necessary to implement Executive Order GA-56 (Sept. 10, 2025), which directs TABC to "immediately begin the rulemaking process to protect the public health, safety, and welfare by prohibiting the sale of hemp-derived products to a minor and requiring verification of the purchaser's age with government issued identification prior to completing the sale of any such product, on pain of cancellation of a permit, license, or registration issued by" TABC. The new rules prohibit a TABC licensee or permittee from selling, offering for sale, serving, or delivering consumable hemp products (CHPs) to a person younger than 21 years of age, and require a TABC licensee or permittee to inspect the identification of certain persons wanting to purchase or obtain CHPs to confirm their age. The new rules are intended to prevent minors from accessing and using CHPs that will negatively impact the health, general welfare, and public safety of minors in Texas, and to ensure the place and manner in which a permittee or licensee conducts its business is consistent with the general welfare, health, peace, morals, and safety of the people and the public sense of decency. See Tex. Alco. Bev. Code §§5.31(b)(1), 11.61(b)(7), 61.71(a)(16).

In response to a public comment, TABC has modified the proposed language in §35.5(e) and §35.6(f) to clarify the agency's intent behind those provisions. The purpose of the provisions is to prevent a license or permit holder (and certain associated persons) from being issued a new original license or permit from TABC for a designated time period if the holder had a license or permit cancelled under the proposed rules. The proposed rules are not intended to prevent the renewal of current licenses and permits that were not cancelled under the rules. The agency has inserted the term "original" in §35.5(e) and §35.6(f) to clarify that intent.

Also in response to a public comment, TABC has modified the proposed language in §35.5(e)(3)-(4) and §35.6(f)(3)-(4) to clarify that the provisions are not limited to entities organized as corporations. Instead, the cited provisions should cover all types of legal entities. The agency has inserted the phrase "or other legal entity" in the cited provisions to clarify the agency's intent and rules' impact. Corresponding changes have also been made to remove references to corporate stock ownership and replace them with references to general ownership interests.

EXPEDITED EFFECTIVE DATE. The new rules will replace the current emergency rules addressing CHP sales and age verification requirements that were previously adopted by TABC. See 50 TexReg 6577 (2025) (emerg. rules 16 Texas Administrative Code §§51.1, 51.2) (adopted Sep. 23, 2025) (Tex. Alco. Bev. Comm'n, Prohibited Sales of Consumable Hemp Products to Minors and Mandatory Age Verification for Consumable Hemp Product Sales). The emergency rules are set to expire on January 21, 2026, as provided by Texas Government Code §2001.034(c). The new rules must be effective upon the expiration of the emergency rules, otherwise minors' access to CHPs at TABC-licensed establishments may resume. Because of the dangers associated with minors' use of CHPs, allowing for the resumption of access to these products qualifies as an imminent peril to the public health, safety, or welfare. See 50 TexReg 6578 (citing harms associated with CHP use by minors). Therefore, the new rules will take effect on January 21, 2026, upon the expiration of the emergency rules. See Tex. Gov't Code 2001.036(a)(2) ("if a state agency finds that an expedited effective date is necessary because of imminent peril to the public health, safety, or welfare . . . a rule is effective immediately on filing with the secretary of state, or on a stated date less than 20 days after the filing date").

PUBLIC COMMENTS. TABC held a public hearing on December 11, 2025, to receive comments on the proposed rules. At the hearing, TABC received 12 comments from ten commenters. The agency also received 28 written comments during the 30-day comment period. Comments were submitted by Texans for Safe and Drug-Free Youth, Hemp Beverage Alliance, Texas Police Chiefs Association, Texas Hemp Business Council, BrackinShwartz & Associates, Martin Frost & Hill P.C., The Banks Law Firm P.A., Uniwyze, Inc., ECL Testing, Amy Harrison Consulting, Stages of Recovery, Inc., Bayou City Hemp Company, Inc., The Coalition, Inc., Seasons of Hope Center, Texas Package Store Association, Texas Food & Fuel Association, and 16 individuals.

COMMENT SUMMARY. One commenter suggests using "strong, evidence-based regulation to prevent youth access."

AGENCY RESPONSE. TABC appreciates the comment and believes the proposed rules are in line with the suggestion. By prohibiting TABC licensees and permittees from selling CHPs to minors, and requiring them to engage in age verification, the proposed rules should limit youth access to CHPs.

COMMENT SUMMARY. One commenter questions the scope of proposed §35.5(e) and §35.6(f), which prevent a license or permit holder (and certain associated persons) from being issued a TABC license or permit for a designated period of time if the holder had a license or permit cancelled for a violation of the proposed rules. Specifically, the commenter questions whether the rules are intended to prevent a license or permit holder with multiple licenses or permits from renewing any current licenses or permits that were not cancelled under the proposed rules for the designated period of time, or whether the rules are only intended to prevent the issuance of new original licenses and permits to such persons during the designated time period. If the latter, the commenter suggests modifications to the proposed language to clarify that intent.

AGENCY RESPONSE. As background, if a licensee or permittee with multiple licenses or permits violates the proposed rules, TABC may only suspend or cancel the retail-tier license or permit for the premises where the violation occurred. See Tex. Alco. Bev. Code §§ 11.66, 61.72. Therefore, it is possible for a retailer to have a single license or permit cancelled under the rules, while any remaining licenses or permits held by that person remain in effect. To the commenter's question, it is TABC's intent to deny the issuance of new original licenses and permits to such a person for the time period designated in proposed §35.5(e) or §35.6(f), not to deny the renewal of existing licenses or permits held by that person. See Proposal Preamble, 50 TexReg 7819 ("Additionally, if a license or permit is cancelled under §35.5, the license or permit holder, and certain other associated persons, will not be eligible for any new license or permit for five years from the date of cancellation. If a license or permit is cancelled under §35.6, the license or permit holder, and certain other associated persons, will not be eligible for any new license or permit for one year from the date of cancellation.") (emphasis added). As mentioned above, TABC has made a change to the referenced sections to clarify that intent.

COMMENT SUMMARY. One commenter asks whether the term "corporation" in §35.5(e)(3)-(4) and §35.6(f)(3)-(4) covers legal entities that may not technically be organized as a corporation.

AGENCY RESPONSE. The term "corporation" in the cited sections is not intended to be limited strictly to entities organized as corporations, as defined in the Business Organizations Code. See Tex. Bus. Org. Code §1.002(14) (defining "corporation" as used in that code). The public safety purpose of these rules requires a broad interpretation, and the cited sections should also cover other types of entities, regardless of how they are organized. As such, and as mentioned above, TABC has made changes to the cited sections so that each will cover other types of legal entities.

COMMENT SUMMARY. One commenter requested that the agency clarify the meaning of the phrase "a person who held an interest in the license or permit" in §35.5(e)(2) and §35.6(f)(2).

AGENCY RESPONSE. The phrase "person who held an interest in the license or permit" in §35.5(e)(2) and §35.6(f)(2) is based on substantially similar phrases used in multiple statutes within the Alcoholic Beverage Code. See, e.g., Tex. Alco. Bev. Code §§ 11.10, 11.70(a), 28.16, 37.07(1), 102.01(c), 102.18(b) 109.59(c). In a 2017 proposal for decision from the State Office of Administrative Hearings, an administrative law judge concluded that "under the [Alcoholic Beverage] Code, a 'person having an interest in a permit' is one who in some fashion holds a 'personal privilege' (like a partner, spouse, or trustee in bankruptcy) to conduct an enterprise or business in the manufacture, sale, distribution, transportation, and possession of alcoholic beverages at the manufacturing, wholesaling, and retailing levels." See McLane Co. v. Renewal Application of Core-Mark Midcontinent, Inc., Proposal for Decision, 2017 WL 4174371 (2017); see also Cadena Comercial USA Corp. v. TABC, 518 S.W.3d 318, 327-331 (Tex. 2017) (discussing the term "interest" as used in similar contexts). TABC ultimately adopted the proposal for decision without changes to the administrative law judge's interpretation of that phrase. See Commission Order, Docket No. 641578 (March 14, 2018). Applying that same approach here, the phrase "a person who held an interest in the license or permit" in §35.5(e)(2) and §35.6(f)(2) implicates a person who in some fashion holds a personal privilege (like a partner, spouse, or trustee in bankruptcy) to conduct an enterprise or business authorized by the license or permit.

COMMENT SUMMARY. One commenter requests that the agency reaffirm that the proposed rules apply only to TABC-licensed or permitted premises and do not apply to CHP-retailers registered solely with the Department of State Health Services (DSHS).

AGENCY RESPONSE. The proposed rules apply only to persons who have a TABC license or permit. If a person is registered with DSHS as a CHP-retailer, but the person does not also have a TABC license or permit, the proposed rules do not apply to that person.

COMMENT SUMMARY. One commenter acknowledges that the proposed rules appropriately cross-reference DSHS' definition of "consumable hemp product," but suggests that "TABC track the operative statutory and regulatory language more closely" to avoid confusion.

AGENCY RESPONSE. The proposed rules use DSHS' definition of CHP, as defined in that agency's rules. That definition is currently set in 25 TAC §300.101(8), but DSHS has recently proposed to move the definition to §300.101(11) and amend it to read as follows: "Consumable hemp product (CHP)--Any product processed or manufactured for consumption that contains hemp, including food, a drug, a device, and a cosmetic, as defined by Texas Health and Safety Code §431.002. The definition excludes any hemp product containing a hemp seed or hemp seed-derived ingredient that the FDA has designated as Generally Recognized as Safe (GRAS)." 50 TexReg 8488 (2025). TABC believes it is appropriate to defer to DSHS' definition as it is the Texas agency charged with primary regulatory authority over CHPs, and enforcement of both agencies' rules requires consistency in what constitutes a "consumable hemp product." TABC's proposed rules directly reference DSHS' definition for that reason. Any suggested changes to the definition should be addressed to DSHS.

COMMENT SUMMARY. Several commenters agree with the proposed rules' prohibition on selling CHPs to minors and age-gating requirements, but they question the severity of the administrative sanctions for violating the proposed rules. Some commenters question why the sanctions are more severe than the administrative sanctions for selling alcoholic beverages to minors. The commenters believe the sanctions for selling CHPs to minors and selling alcoholic beverages to minors should be in line with each other. Other commenters believe that the agency should allow the payment of civil monetary penalties in lieu of any license or permit suspension or cancellation, and that cancellation should be reserved for willful, repeated, or egregious conduct. Still another commenter argues that the five-year prohibition on issuing a new license or permit in §35.5(e) should be reduced to one year, and the one-year prohibition in §35.6(f) should be removed. But another commenter believes that the agency should cancel the license or permit for even a first violation of the proposed rules, as provided in the emergency rules, and impose a permanent ban on obtaining a new license or permit.

AGENCY RESPONSE. The agency disagrees with the commenters' suggestion to lessen the sanctions for violating the proposed rules, including by allowing the payment of civil penalties instead of any license or permit suspension or cancellation. Selling alcoholic beverages to minors is a serious offense that can lead to license or permit suspension or cancellation. See 16 TAC § 34.2. But while the suggested duration of license or permit suspension for selling alcoholic beverages to minors in TABC's current rules is generally less than that for selling CHPs to minors in the proposed rules, the Alcoholic Beverage Code also makes it a Class A misdemeanor to sell alcoholic beverages to minors. See Tex. Alco. Bev. Code §106.03(c). Class A misdemeanors carry a punishment of a fine not to exceed $4,000 and/or confinement in jail for a term not to exceed one year. See Tex. Pen. Code §12.21. Additionally, it is a crime for a minor to purchase or consume alcoholic beverages. Tex. Alco. Bev. Code §§106.02, 106.03. The combination of criminal penalties for both the retailer and minor, coupled with the listed administrative sanctions, serve as a significant deterrent to selling alcoholic beverages to minors and purchasing such beverages by minors.

The agency seeks to establish a similarly significant deterrent to selling CHPs to minors as well, but Texas law does not currently proscribe a criminal offense for selling those products to minors or for minors who purchase such products (though once the proposed rules are effective, a violation of agency rules amounts to a violation of the Alcoholic Beverage Code, see id. §101.61). Without the weight of potential criminal sanctions, the agency must rely on administrative sanctions in order to establish a significant deterrent to selling CHPs to minors. The agency believes those administrative sanctions must be severe in order to have the intended effect. The suspension of a license or permit for a week or more, or the cancellation of a license or permit, is a severe sanction and TABC believes it will serve as the desired deterrent. To allow a licensee or permittee (many of whom have significant financial resources) to avoid license or permit suspension or cancellation by paying a civil fine instead would weaken the effectiveness of the rules.

The prohibition on selling alcoholic beverages to minors has also been in place for many decades, and both the public and alcoholic beverage industry are familiar with it. But prior to the adoption of TABC's emergency rules, no state law or rule prohibited retailers from selling CHPs to minors. This is a new restriction, and TABC believes establishing severe penalties for violations will garner more attention from the industry, thus amplifying the proposed rules' deterrent effect.

While the agency's intent is that these rules provide a strong deterrent, TABC recognizes that violations may occur despite best efforts taken by a license or permit holder. That is why the rules now allow the agency to impose license or permit suspension as a sanction, instead of just cancellation as the emergency rules did.

Finally, it is the agency's intent that the sanction of license or permit cancellation be reserved for repeated or egregious conduct, as some commenters suggest. Proposed §35.6(d) allows for license or permit cancellation only upon the fourth violation of failing to check a CHP purchaser's or recipient's proof of identification. Proposed §35.5(c) does allow for license or permit cancellation for a first or second violation of selling CHP to a minor, but TABC does not intend to seek cancellation for a first or second violation unless the facts of a particular case are serious enough to warrant that outcome. Facts that may militate against cancellation for a first or second violation include good faith efforts taken by a retailer to ensure its employees abide by the proposed rules, a retailer's use of proper electronic age-verification technology, and self-reporting of violations and prompt corrective action taken by a retailer. The additional restrictions in proposed §35.5(e) and §35.6(f) that prohibit the agency from issuing a new original license or permit to certain persons for five years or one year, respectively, are only effective upon the cancellation of a license or permit. So those provisions will also only be implemented for egregious or repeated violations. For the same reasons articulated above (e.g. deterrent effect), the agency disagrees with the comment arguing that the five-year prohibition on issuing a new license or permit in §35.5(e) should be reduced to one year and the one-year prohibition in §35.6(f) should be removed.

Finally, the agency acknowledges that at least one commenter believes license or permit cancellation and a permanent ban on obtaining a new license or permit should be imposed for any CHP sale to a minor. After careful consideration, however, TABC believes it should retain some discretion in imposing such a severe sanction for a first or second violation. Further, license or permit suspension is the minimum sanction under the proposed rules, and that itself is a significant penalty that the agency believes will serve as a strong deterrent.

COMMENT SUMMARY. Multiple commenters suggest that in those scenarios where a license or permit holder's employee sells CHPs to a minor or fails to comply with the rule's age-gating requirements, the agency should hold the employee accountable, not the employer. These commenters point to the "safe harbor" provision in Alcoholic Beverage Code §106.14 and suggest the proposed rules provide similar protection for employers. Other commenters insist that the rules must hold the employer accountable.

AGENCY RESPONSE. The Alcoholic Beverage Code and the agency have historically held license and permit holders accountable for the actions of their employees in many instances, see Tex. Alco. Bev. Code §1.04(11) and (16) (defining "licensee" and permittee" to include employees), and TABC believes that same approach is warranted here in order to enhance the deterrent effect of the rules. It is incumbent on the license or permit holder to ensure its employees abide by agency rules, especially rules like those proposed here that are designed to protect public safety. Furthermore, the agency is limited in what administrative sanctions it may impose directly on a license or permit holder's employees because the employees are not licensed by TABC.

Section 106.14 of the Alcoholic Beverage Code does provide a "safe harbor" where the actions of an employee will not be attributed to their employer if certain conditions are met, but that "safe harbor" only applies to employee actions involving the sale, provision, or delivery of alcoholic beverages. One of the conditions to qualify for that "safe harbor" is that the employee attend a TABC-approved seller training program. But such programs do not address CHP sales at this time, so there is no equivalent basis on which to establish a similar "safe harbor" in the proposed rules. If TABC approves a seller training program that does address CHP sales, the agency may revisit whether to establish a "safe harbor" at that time.

COMMENT SUMMARY. Multiple commenters state that the rules should require or provide incentive to use electronic scanning of proof of identification prior to any CHP sales and deliveries, with some commenters stating that entry onto premises where CHPs are sold should be limited to those at least 25 years old and electronic ID verification should be required for entry onto the premises. Other commenters suggest that entry onto such a premises should be limited to those 21 years old and older.

AGENCY RESPONSE. The agency disagrees with the commenters' suggestion to mandate that licensees and permittees (including delivery services) use electronic scanning of IDs to verify a CHP purchaser's or recipient's age. Many of the TABC licensees and permittees that currently engage in the retail sale of CHPs will be required to electronically scan IDs during the retail sale of alcoholic beverages, though enforcement of that requirement does not begin until September 1, 2027. See Tex. Alco. Bev. Code §109.61(a-1), (a-4). TABC suspects that many of those same licensees and permittees will likely engage in electronic scanning of IDs during the sale of CHPs as well since they will already have the technology to do so and the sanctions for violating the proposed rules are severe. But, for those remaining licensees and permittees not subject to §109.61(a-1), obtaining an electronic scanner may be cost prohibitive or logistically difficult. TABC believes it is sufficient that properly trained staff physically inspect the IDs of CHP purchasers and recipients, but the agency will monitor the effectiveness of this approach and revisit the rules if necessary. However, as previously noted, the agency will consider the use of electronic verification as a factor in determining an appropriate sanction.

Additionally, TABC disagrees with the suggestions to limit access to CHP retailers' premises to those 25 or 21 years old and older. Most retailers subject to these rules sell multiple types of non-hemp products and provide a wide range of services unrelated to CHPs. To limit access to these premises as suggested would have a significant economic impact on the retailers and create potential hardships for consumers under the age of 25 or 21, with limited benefit because the retailers will already be required to verify ages prior to completing CHP sales and deliveries. TABC believes that protection is sufficient to carry out the governor's order and limit CHP access to minors.

COMMENT SUMMARY. One commenter suggests that the proposed rules recognize and allow for the use of "digital drivers licenses," consistent with the Transportation Code, for age-gating purposes.

AGENCY RESPONSE. TABC is not aware of any digital identification or driver's license issued by the Department of Public Safety (DPS) under the Transportation Code. Nevertheless, the proposed rules require retailers to carefully inspect a valid government-issued proof of identification. If digital identification or driver's licenses are issued by DPS, then the proposed rules would allow for their use.

COMMENT SUMMARY. One commenter asks that the agency: (1) affirm that it will coordinate with DSHS and the Comptroller of Public Accounts (CPA) on CHP definitions and packaging, labeling, and testing requirements so that the industry is not subject to divergent standards for the same product; and (2) clarify that the proposed rules do not supplant DSHS' CHP-related registration or enforcement requirements.

AGENCY RESPONSE. The agency will coordinate with any other state agency with primary or concurrent jurisdiction in the area of CHPs, as directed by the governor. DSHS is the primary agency charged with regulating the manufacture, distribution, and sale of CHPs under Chapter 443 of the Texas Health and Safety Code, while the CPA is the primary agency charged with enforcing prohibitions on e-cigarettes under Chapter 161 of the Texas Health and Safety Code. See Tex. Health & Safety Code §161.0876(b)(4) (e-cigarette may not contain cannabinoids). TABC will coordinate with these agencies (and any others) as appropriate to ensure TABC's consistent application of standards. Furthermore, the proposed rules are not intended to supplant DSHS' CHP-related rules. The proposed rules do not regulate CHPs, per se, but instead regulate the conduct of TABC licensees and permittees if and when they engage in CHP sales and deliveries in order to limit minors' access to such products.

COMMENT SUMMARY. One commenter expresses concern that minors may still purchase CHPs online and receive delivery of the products in Texas without undergoing age verification. The commenter requests that TABC, along with DSHS and other law enforcement agencies, ensure age verification standards apply to such purchases made at brick-and-mortar establishments and through online channels.

AGENCY RESPONSE. The age verification requirements in the proposed rules do not distinguish between CHP sales made in-person or online. The rules also apply to any TABC-licensed person that delivers CHPs in Texas. Therefore, if a Texas resident purchases CHPs online from an out-of-state retailer, the person delivering the products in Texas still must comply with the rules' age verification requirements before completing the delivery. But again, these rules only apply to persons licensed by TABC. Many, but not all, delivery carriers are licensed by TABC. TABC does not have the authority to require carriers that are not licensed by the agency to comply with the proposed rules.

COMMENT SUMMARY. One commenter asks that TABC provide "real-world examples" of how the rules will be enforced. The commenter expresses concern about the "doubling up" of sanctions for violations.

AGENCY RESPONSE. Each of the proposed rules and their corresponding sanctions stand-alone from one another. Section 35.5 generally prohibits the sale of CHPs to minors, while §35.6 establishes age-gating requirements. Depending on the facts, a particular sale or delivery of CHPs may violate one, both, or neither of the rules. If a retailer violates both rules, sanctions may be imposed under both rules.

Example 1: A TABC-licensed retailer sells CHPs to a 35-year old customer without inspecting the customer's government-issued proof of identification. That retailer has violated §35.6, but not §35.5. If this is the retailer's first violation, the retailer's TABC license is subject to at least a seven-day suspension under §35.6(d)(1).

Example 2: A TABC-licensed retailer sells CHPs to a 20-year old customer without inspecting the customer's government-issued proof of identification. That retailer has violated both §35.5 and §35.6. As previously noted, §35.5(c) does allow for license cancellation for a first violation of selling CHP to a minor, but TABC does not intend to seek cancellation for a first violation unless the facts of a particular case are serious enough to warrant that outcome. In this example we will presume the facts do not warrant cancellation. Thus, the retailer's license is subject to at least a 30-day suspension for selling CHPs to a minor and at least a seven-day suspension for failing to inspect the customer's proof of identification. TABC could seek to impose the suspensions consecutively, but TABC would typically seek to impose the suspensions concurrently, meaning the retailer's license would only be suspended for at least 30 days.

Example 3: A TABC-licensed retailer sells CHPs to a customer that claims to be 21-years old, but is actually just 20 years old. The retailer inspected the customer's proof of identification and otherwise complied with the age-gating requirements in §35.6 and reasonably believed the customer was 21 years old. There is no violation of either rule. Even though the retailer sold CHPs to a minor, the exception provided for in §35.5(f) applies.

COMMENT SUMMARY. One commenter states that the rules should: (1) prohibit the placement of CHPs near youth-oriented products; (2) restrict youth-appealing flavors and packaging for CHPs; (3) require age-gating for CHP-related digital marketing and social media; (4) prohibit the sale of CHPs within 1000 feet of schools, playgrounds, and youth facilities; (5) require strong youth-focused warning labels on CHPs; (6) prohibit CHP placement near, and mixing with, alcoholic or high-caffeine beverages; (7) prohibit CHP advertising near youth spaces; (8) prohibit CHP advertising on gas station fuel pumps; and (9) implement strong licensing penalties for CHP sales to minors. Other commenters suggest that TABC prohibit THC-infused foods and beverages because these products violate federal food safety laws, appeal to minors, and are involved in accidental ingestion.

AGENCY RESPONSE. The agency appreciates the commenter's suggestion to implement strong licensing penalties for CHP sales to minors. The agency believes the proposed rules provide strong penalties (even stronger than suggested by the commenter), so no changes will be made in response to this comment.

The remaining suggestions are beyond the scope of this rulemaking, and some are likely beyond TABC's authority. As previously noted, the proposed rules implement Governor Abbott's executive order by prohibiting TABC licensees and permittees from selling CHPs to minors and requiring the licensees and permittees to verify a purchaser's or recipient's age by checking their proof of identification. The governor's directive to TABC regarding rulemaking did not go beyond that prohibition and requirement, and TABC does not believe it is appropriate to engage in any regulation in the CHP sphere beyond that directive. Furthermore, TABC does not have broad authority over CHPs in general. Instead, the agency is exercising its existing regulatory authority over its licensees and permittees to ensure the place and manner in which they conduct their business is consistent with the general welfare, health, peace, morals, and safety of the people, and the public's sense of decency. See Tex. Alco. Bev. Code §§11.61(b)(7), 61.71(a)(16). The agency believes selling CHPs to minors and failing to verify a purchaser's or recipient's age clearly does not meet that standard. TABC is mindful that its regulatory authority is centered on the conduct of its licensees and permittees, not the products themselves. As previously noted, DSHS is the primary agency charged with regulating the manufacture, distribution, and sale of CHPs under Chapter 443 of the Texas Health and Safety Code. That agency is also engaging in rulemaking in response to the governor's order, and TABC believes the commenter's remaining suggestions should be directed to DSHS. Furthermore, to the extent the sale of any particular product is prohibited by federal or state law, the proposed rules do not authorize its sale. Any TABC licensee or permittee that sells or delivers an illegal product commits a violation.

COMMENT SUMMARY. Multiple commenters suggest that the proposed rules prohibit the sale of CHPs to anyone under the age of 25, while one commenter suggests that the rules require any person selling or providing CHPs be at least 25 years of age as well.

AGENCY RESPONSE. The agency acknowledges the existence of research and anecdotal evidence showing the harms associated with CHP use in those under the age of 25, but TABC still disagrees with the commenter's suggestion. First, there is also evidence demonstrating the harms associated with alcohol use in all ages, but the state still permits those 21 years of age and older to purchase alcohol. TABC employs that same rationale here. Next, the governor's executive order specifically directs TABC to limit CHP access for "minors" (those 21 and older), and as noted above, TABC does not believe it is appropriate to engage in regulation beyond the scope of the governor's order. Finally, this agency is tasked with enforcing the Alcoholic Beverage Code, which prohibits the sale of alcoholic beverages to anyone under the age of 21. The agency and the industry it regulates are familiar with this prohibition and its application to those under the age of 21. For TABC to employ different age restrictions for alcoholic beverages and CHPs could lead to confusion by agency staff and the industry. For these reasons, TABC believes it is appropriate to apply a consistent age restriction on the purchase of both alcoholic beverages and CHPs. Regarding the suggestion that TABC require individuals selling CHPs to be a minimum of 25 years old, the agency is limited in its authority because the Alcoholic Beverage Code already establishes minimum age requirements to work at TABC-licensed locations. See Tex. Alco. Bev. Code §§25.04, 26.03, 61.71, 74.04, 106.09. TABC cannot impose restrictions that are inconsistent with those statutes.

COMMENT SUMMARY. Multiple commenters suggest that the sale of illegal controlled substances or products not approved by the Food and Drug Administration should result in mandatory license or permit cancellation, and that mandatory compliance checks and sting operations should be conducted on a regular basis.

AGENCY RESPONSE. The agency appreciates the commenters' suggestions to mandate compliance checks. TABC uses a risk-based approach to conducting enforcement activities and inspections, as required by law. Tex. Alco. Bev. Code §5.361. The agency does intend to conduct routine compliance checks and undercover stings to enforce the proposed rules, but the agency does not believe codifying the agency's enforcement plans into these rules is warranted. The agency must retain flexibility to marshal its resources where and when it deems appropriate. The remaining suggestion regarding the loss of a license for selling illegal controlled substances or unapproved products is not within the scope of this rulemaking. TABC already has rules providing sanctions for selling illegal substances, see 16 TAC §34.2(e), and the proposed rules do not impact those sanctions. As such, no changes will be made in response to this comment.

COMMENT SUMMARY. Multiple commenters suggest that any government-issued license held by a retailer should be at risk if the retailer violates the rules, and state and local licensing agencies should coordinate enforcement activities with each other.

AGENCY RESPONSE. TABC appreciates the comment, but TABC only has authority to take administrative action against TABC-issued licenses and permits. To the extent the commenters suggest TABC take action against other types of licenses, the comment is beyond TABC's authority and the scope of this rulemaking. TABC will be coordinating enforcement activities with DSHS and the Department of Public Safety, as directed in Governor Abbott's executive order, and the agency intends to work and share information with local law enforcement agencies where appropriate. TABC does not, however, have authority to mandate that other agencies share information with TABC.

COMMENT SUMMARY. One commenter states that TABC-issued licenses and permits should not be in jeopardy for violations related to CHPs because they are non-alcoholic products.

AGENCY RESPONSE. The agency disagrees with the comment. As previously noted, the agency is exercising its existing regulatory authority over its licensees and permittees to ensure the place and manner in which they conduct their business is consistent with the general welfare, health, peace, morals, and safety of the people, and the public's sense of decency. See Tex. Alco. Bev. Code §§11.61(b)(7), 61.71(a)(16). That authority is not limited to issues involving alcoholic beverages. See 16 TAC §34.3(c) (A licensee or permittee violates the Alcoholic Beverage Code if it violates "any law, regulation or ordinance of the state or federal government or of the county or municipality in which the licensed premises is located, violation of which is detrimental to the general welfare, health, peace and safety of the people."). The agency believes selling CHPs to minors and failing to verify a purchaser's or recipient's age clearly does not meet the statutory standard. The agency's focus is on the conduct of its licensees and permittees, not the products themselves. Finally, the governor's order directed TABC to take enforcement action against licenses and permits issued by the agency. The order was not limited to just CHP-related licenses issued by DSHS.

COMMENT SUMMARY. Multiple commenters support a grant program for local compliance checks funded through penalties for non-compliance and requiring accurate product labeling, third-party testing, and certificates of analysis for CHPs. One commenter suggests that in-state facilities should be used for testing, while another suggests that CHPs should be subject to product registration and CHP retailers should be subject to large annual license fees. And yet another commenter states that all CHPs should go through FDA approval prior to entry into the Texas market.

AGENCY RESPONSE. TABC appreciates the comments, but these suggestions are beyond the scope of this rulemaking and TABC's authority. TABC does not have authority to make CHP-related grants, and DSHS, not TABC, is the agency charged with regulating CHP licensing, labeling, testing, etc. See generally Tex. Health & Safety Code ch. 443.

COMMENT SUMMARY. One commenter claims "the proposed rules would permit substantial youth exposure to the marketing of" CHPs.

AGENCY RESPONSE. The proposed rules do not address exposure to CHP marketing, so it is unclear to TABC how the rules permit such exposure beyond what is already allowed under current law. As previously noted, the proposed rules implement Governor Abbott's executive order by prohibiting TABC licensees and permittees from selling CHPs to minors and requiring the licensees and permittees to verify a purchaser's or recipient's age by checking their proof of identification. The governor's directive to TABC regarding rulemaking did not go beyond that prohibition and requirement, and TABC does not believe it is appropriate to engage in any regulation in the CHP sphere beyond that directive. Furthermore, TABC does not have broad authority over CHPs in general. DSHS is the primary agency charged with regulating the manufacture, distribution, and sale of CHPs under Chapter 443 of the Texas Health and Safety Code.

COMMENT SUMMARY. One commenter opposes age-gating because she believes that age-gating CHPs sends a message that the products are fine to use.

AGENCY RESPONSE. TABC appreciates the comment. That is certainly not the agency's intended message, but TABC accepts that reasonable people may see it differently. Though TABC believes it is important to note that many of the CHPs in the market are not illegal to sell under current law. So, without age-gating requirements like those imposed in these rules, there would be no limit on youth access to such products. As the governor's order acknowledged, age-gating is an important tool that is within the agency's authority to require for its licensees and permittees.

COMMENT SUMMARY. Multiple commenters suggest that TABC should align or harmonize the proposed rules and definitions with corresponding federal laws and rules on the subject. Some commenters note that Congress recently amended the statutory definition of "hemp" in 7 U.S.C. §1639o to effectively outlaw many of the CHPs in the market today. See Agriculture Appropriations Act, P.L. 119-37, Division B, §781. Other commenters note that the federal changes do not go into effect until November 12, 2026, and legislation has been or will likely be filed to make further changes on the subject. These commenters caution against tying the proposed rules to the federal law as it stands now.

AGENCY RESPONSE. The agency disagrees with those commenters that suggest the proposed rules should align with the recent changes in federal law. First, as other commenters have noted, the relevant changes in federal law do not go into effect until late this year. Second, the proposed rules do not effectively legalize any product that is prohibited under federal law (now or under the recently passed federal law), as some suggest. As noted several times before, the proposed rules merely prohibit TABC licensees and permittees from selling CHPs to minors and require them to verify the age of persons wanting to purchase or obtain CHPs, as directed by the governor. If a particular CHP is not legal under federal or state law, retailers would still be prohibited from selling that product. The proposed rules do not change that fact. Furthermore, TABC has aligned its definition of a CHP with DSHS' definition to ensure consistency at the state level. If DSHS believes changes in federal law warrant making changes to its definition, TABC will automatically follow suit.

COMMENT SUMMARY. Multiple commenters suggest that "THCA flower" should be prohibited from being imported into Texas and sold at retail because its "retail availability enables circumventing of THC limits."

AGENCY RESPONSE. The comment is beyond the scope of this rulemaking. As previously noted, DSHS is the primary agency charged with regulating the manufacture, distribution, and sale of CHPs under Chapter 443 of the Texas Health and Safety Code. TABC does not have authority to limit the importation of "THCA flower." TABC also defers to DSHS to determine what CHPs may be sold in Texas. If "THCA flower" is authorized for retail sale by DSHS, TABC will not limit its sale at TABC-licensed locations (as previously noted, if the product cannot be legally sold in Texas, the proposed rules do not change that fact). Again, TABC's regulatory authority is centered on the conduct of its licensees and permittees, not the products themselves. Questions and comments regarding the legal status of certain types of CHPs should be directed to DSHS.

COMMENT SUMMARY. One commenter requests that procedures for license and permit cancellation be established to provide transparency and predictability.

AGENCY RESPONSE. The procedures for sanctions imposed under the proposed rules will follow the agency's standard process for addressing violations. See 16 TAC §37.2. As with all licensing actions, the agency will abide by the Administrative Procedure Act and the Alcoholic Beverage Code, which generally require notice and an opportunity for a hearing on an alleged violation. See Tex. Alco. Bev. Code §§11.61(b), 61.71(a); Tex. Gov't Code §2001.051. If a licensee or permittee requests a hearing on an alleged violation, it will be held by the State Office of Administrative Hearings, and the Commission (as opposed to the executive director) will render the final decision on any sanction. See Tex. Alco. Bev. Code §§5.363(b), 5.43.

COMMENT SUMMARY. Multiple commenters made broad statements concerning the legal status of hemp, tetrahydrocannabinol, and marijuana products in this state. For example, one commenter states that hemp should be legal in Texas, another opposes anything "that would limit the sale, availability, or consumer choice regarding THC products[,]" while another supports a "full ban on harmful THC products."

AGENCY RESPONSE. TABC appreciates the comments, but the subject matter of these statements is beyond the scope of this rulemaking. The rules merely prohibit TABC licensees and permittees from selling CHPs to minors, require them to verify the age of persons wanting to purchase or obtain CHPs, and establish consequences for violations. Because the comments do not address the proposed rules, TABC will make no changes in response to these comments.

COMMENT SUMMARY. One commenter suggests that TABC utilize the commenter's "patented technology-enabled, risk-based regulatory system to support effective oversight of" CHPs.

AGENCY RESPONSE. TABC appreciates the comment, but the agency is not in the market for such a system. Furthermore, if TABC does decide it needs a system to assist in its regulatory responsibilities, it will abide by all applicable procurement and solicitation requirements imposed by law and rule.

STATUTORY AUTHORITY. TABC adopts the new rules pursuant to TABC's rulemaking authority under Texas Alcoholic Beverage Code §§5.31 and 5.33. Section 5.31 provides that "the commission may exercise all powers, duties, and functions conferred by this code, and all powers incidental, necessary, or convenient to the administration of this code," and further states that "it may prescribe and publish rules necessary to carry out the provisions of this code." Section 5.33 provides that "the commission shall supervise and regulate licensees and permittees and their places of business in matters affecting the public." And that "this authority is not limited to matters specifically mentioned in [the] code."

§35.5. Prohibited Sales of Consumable Hemp Products to Minors.

(a) Definitions. In this section and §35.6 of this chapter:

(1) "Consumable hemp product" has the meaning assigned by 25 TAC §300.101 or a successor rule adopted by the Department of State Health Services;

(2) "Licensee" and "permittee" have the meaning assigned by Alcoholic Beverage Code §1.04; and

(3) "Minor" means a person under 21 years of age.

(b) A licensee or permittee violates Alcoholic Beverage Code §§11.61(b)(7) or 61.71(a)(16), as applicable, if the licensee or permittee sells, offers to sell, serves, or delivers a consumable hemp product to a minor.

(c) Notwithstanding Chapter 34 of this title, the commission shall impose the following sanctions for a violation of subsection (b) of this section:

(1) suspend for no less than 30 days or cancel the license or permit for a first violation;

(2) suspend for no less than 60 days or cancel the license or permit for a second violation; and

(3) cancel the license or permit for any subsequent violation.

(d) The licensee or permittee does not have the option to pay a civil penalty in lieu of suspension or cancellation under subsection (c) of this section.

(e) If a license or permit was cancelled under subsection (c) of this section, the following persons are not eligible to apply for, and may not be issued, any TABC-issued original license or permit for a period of five years after cancellation:

(1) the license or permit holder;

(2) a person who held an interest in the license or permit;

(3) if the cancelled license or permit holder is a corporation or other legal entity, a person who held a 50 percent or more ownership interest, directly or indirectly, in the corporation or entity;

(4) a corporation or other legal entity, if a person holding a 50 percent or more ownership interest, directly or indirectly, in the corporation or entity is disqualified from obtaining a license or permit under this subsection; and

(5) a person who resides with a person who is disqualified from obtaining a license or permit under this subsection.

(f) A licensee or permittee that sells, offers to sell, serves, or delivers a consumable hemp product to a minor does not violate subsection (b) of this section if the minor falsely claims to be 21 years of age or older, the permittee or licensee otherwise complies with §35.6 of this chapter, and the permittee or licensee reasonably believes the minor is actually 21 years of age or older.

§35.6. Mandatory Age Verification for Consumable Hemp Product Sales.

(a) Except as provided in subsection (c) of this section, a licensee or permittee may not sell, serve, or deliver a consumable hemp product to a person unless the person presents an apparently valid,

unexpired proof of identification issued by a governmental agency that contains a physical description and photograph consistent with the person's appearance and that purports to establish that the person is 21 years of age or older.

(b) Except as provided by subsection (c) of this section, before completing the sale, service, or delivery of a consumable hemp product to an ultimate consumer, a licensee or permittee shall verify that the purchaser or recipient is 21 years of age or older by carefully inspecting the provided proof of identification.

(c) It is a defense to an enforcement action under subsection (d) of this section that the ultimate consumer is 40 years of age or older.

(d) Notwithstanding Chapter 34 of this title, if a licensee or permittee fails to abide by the requirements of this section, the licensee or permittee violates Alcoholic Beverage Code §§11.61(b)(7) or 61.71(a)(16), as applicable, and the commission shall:

(1) suspend the license or permit for no less than seven days for a first violation;

(2) suspend the license or permit for no less than 14 days for a second violation;

(3) suspend the license or permit for no less than 30 days for a third violation; and

(4) cancel the license or permit for any subsequent violation.

(e) The licensee or permittee does not have the option to pay a civil penalty in lieu of suspension or cancellation under subsection (d) of this section.

(f) If a license or permit was cancelled under subsection (d) of this section, the following persons are not eligible to apply for, and may not be issued, any TABC-issued original license or permit for a period of one year after cancellation:

(1) the license or permit holder;

(2) a person who held an interest in the license or permit;

(3) if the cancelled license or permit holder is a corporation or other legal entity, a person who held a 50 percent or more ownership interest, directly or indirectly, in the corporation or entity;

(4) a corporation or other legal entity, if a person holding a 50 percent or more ownership interest, directly or indirectly, in the corporation or entity is disqualified from obtaining a license or permit under this subsection; and

(5) a person who resides with a person who is disqualified from obtaining a license or permit under this subsection.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 20, 2026.

TRD-202600190

Matthew Cherry

Senior Counsel

Texas Alcoholic Beverage Commission

Effective date: January 21, 2026

Proposal publication date: December 5, 2025

For further information, please call: (512) 206-3491

CHAPTER 41. AUDITING

The Texas Alcoholic Beverage Commission (TABC) adopts amendments to 16 TAC §41.37, relating to Destructions; §41.43, relating to Sale after Cancellation, Expiration, or Voluntary Suspense of License or Permit; §41.50, relating to General Provisions; §41.52, relating to Temporary Memberships; §41.53, relating to Pool Systems; and §41.65, relating to Contract Distilling Arrangements and Distillery Alternating Proprietorships. TABC also adopts new 16 TAC §41.57, relating to Purchase of Certain Alcoholic Beverages, to be codified in Chapter 41, Subchapter E. The amendments and new rule are adopted without changes to the proposed text as published in the December 5, 2025, issue of the Texas Register (50 TexReg 7821). The amendments and new rule will not be republished.

REASONED JUSTIFICATION. The amendments and new rule fix clerical errors and provide non-substantive changes clarifying current agency practices. The amendment to §41.37(a) removes a reference to a repealed statute. The amendment to §41.43(a) removes the "in bulk" requirement for inventory sales when a license or permit is cancelled, expires, or is voluntarily suspended. Removal of this requirement aligns with current agency practices and is intended to provide flexibility to businesses disposing of their alcoholic beverage inventory when ceasing operations.

The amendment to §41.50(b) corrects a previous clerical error. The amendment to §41.52(b)(1) more accurately states the temporary membership card requirements for private club registration permit holders in Alcoholic Beverage Code §32.09. The amendment to §41.53 repeals subsection (e), which has been moved to new §41.57. New §41.57 reflects the current requirement in §41.53(e), but the text has been revised for clarity without making any substantive changes to the current requirement in repealed §41.53(e). Lastly, the amendment to §41.65(e) clarifies that authorized wholesalers and carriers may pick up product directly from a contract distiller's facility.

SUMMARY OF COMMENTS. TABC did not receive any comments on the amendments and new rule.

SUBCHAPTER C. EXCISE TAXES

STATUTORY AUTHORITY. TABC adopts the amendments and new rule pursuant to TABC's rulemaking authority under Texas Alcoholic Beverage Code §§5.31, 14.10(e), 32.09, and 37.011(d). Section 5.31 authorizes TABC to prescribe and publish rules necessary to carry out the provisions of the Alcoholic Beverage Code. Sections 14.10(e) and 37.011(d) direct the agency to "adopt rules regulating the shared use of [distillery] premises." Section 32.09 provides that "temporary memberships shall be governed by rules promulgated by the commission."

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 20, 2026.

TRD-202600181

Matthew Cherry

Senior Counsel

Texas Alcoholic Beverage Commission

Effective date: February 9, 2026

Proposal publication date: December 5, 2025

For further information, please call: (512) 206-3491

SUBCHAPTER D. SALES OF ALCOHOLIC BEVERAGES NOT IN REGULAR COURSE OF BUSINESS

STATUTORY AUTHORITY. TABC adopts the amendment pursuant to TABC's rulemaking authority under Alcoholic Beverage Code §5.31, which authorizes TABC to prescribe and publish rules necessary to carry out the provisions of the Alcoholic Beverage Code.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 20, 2026.

TRD-202600184

Matthew Cherry

Senior Counsel

Texas Alcoholic Beverage Commission

Effective date: February 9, 2026

Proposal publication date: December 5, 2025

For further information, please call: (512) 206-3491

SUBCHAPTER E. PRIVATE CLUBS

STATUTORY AUTHORITY. TABC adopts the amendments and new rule pursuant to TABC's rulemaking authority under Alcoholic Beverage Code §§5.31 and 32.09. Section 5.31 authorizes TABC to prescribe and publish rules necessary to carry out the provisions of the Alcoholic Beverage Code. Section 32.09(d) provides that "temporary memberships shall be governed by rules promulgated by the commission."

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 20, 2026.

TRD-202600182

Matthew Cherry

Senior Counsel

Texas Alcoholic Beverage Commission

Effective date: February 9, 2026

Proposal publication date: December 5, 2025

For further information, please call: (512) 206-3491

SUBCHAPTER G. OPERATING AGREEMENTS BETWEEN PERMIT AND LICENSE HOLDERS

STATUTORY AUTHORITY. TABC adopts the amendments pursuant to TABC's rulemaking authority under Alcoholic Beverage Code §§14.10(e) and 37.011(d), which direct the agency to "adopt rules regulating the shared use of premises."

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 20, 2026.

TRD-202600183

Matthew Cherry

Senior Counsel

Texas Alcoholic Beverage Commission

Effective date: February 9, 2026

Proposal publication date: December 5, 2025

For further information, please call: (512) 206-3491

CHAPTER 45. MARKETING PRACTICES

SUBCHAPTER G. REGULATION OF CASH AND CREDIT TRANSACTIONS

The Texas Alcoholic Beverage Commission (TABC) adopts amendments to 16 TAC §45.130, relating to Credit Law and Delinquent List; and §45.131, relating to Cash Law. The amendments are adopted without changes to the proposed text as published in the December 5, 2025, issue of the Texas Register (50 TexReg 7824). The amended rules will not be republished.

REASONED JUSTIFICATION. The amendments make non-substantive and clarifying revisions reflecting current agency practices that were identified as part of the agency's quadrennial rule review in accordance with Government Code §2001.039. The amendments also make fixes to previous clerical errors.

The amendment to §45.130(b) more accurately lists the applicable permit types subject to Alcoholic Beverage Code §102.32, which governs liquor sales and credit restrictions between wholesalers and retailers. The amendment to §45.130(c) adds identification stamps to the invoice requirement to better align with the recordkeeping requirements in Alcoholic Beverage Code §206.01. The amendments to §45.130(d) clarify that the payment dates are calculated using business days to more accurately track the statutory text in Alcoholic Beverage Code §102.32. The amendment to §45.130(h) codifies the long-standing practice that disputed delinquencies must be approved by the agency before a business is removed from the delinquent list. The amendment to §45.131(b) more accurately lists the applicable permit types subject to the requirements of Alcoholic Beverage Code §102.32. The amendment to §45.131(c) fixes clerical errors in the current rule text.

SUMMARY OF COMMENTS. TABC did not receive any comments on the proposed amendments.

STATUTORY AUTHORITY. TABC adopts these amendments pursuant to the agency's rulemaking authority under Texas Alcoholic Beverage Code §§5.31, 102.31(e), and 102.32(f). Section 5.31 authorizes TABC to prescribe and publish rules necessary to carry out the provisions of the Alcoholic Beverage Code. Sections 102.31(e) and 102.32(f) direct the agency to adopt rules to effectuate the code's cash and credit law requirements.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on January 20, 2026.

TRD-202600185

Matthew Cherry

Senior Counsel

Texas Alcoholic Beverage Commission

Effective date: February 9, 2026

Proposal publication date: December 5, 2025

For further information, please call: (512) 206-3491