[00:00:01] FIRST AGENDA IS CALLED TO ORDER. [1. Opening Items] THE TIME IS 10:34 ON TUESDAY, SEPTEMBER 24TH, 2024. WE HAVE A QUORUM, AND I GUESS THE FIRST DAY OF FALL WAS A COUPLE DAYS AGO, AND I KNOW WE'RE ALL JUST REALLY EXCITED ABOUT HOW COOL IT IS OUTSIDE, BUT CHANGE IS COMING, I PROMISE. THAT'S WHAT THEY THAT'S WHAT THEY SAY. ON BEHALF OF THE TABC AND ALL OF OUR EMPLOYEES, ALL OF OUR STAFF, ALL OF OUR PERSONNEL, ALL OF OUR PARTNERS, I'D LIKE TO WELCOME YOU HERE TODAY. BEFORE WE GET STARTED, I JUST WANTED TO GIVE YOU A QUICK UPDATE ON SOME ACTIVITIES THAT WE HAD LAST WEEK. ON SEPTEMBER 19TH, I HAD THE OPPORTUNITY TO JOIN SEVERAL OF OUR PERSONNEL ON THE BORDER, AND I VISITED OUR BORDER OPERATIONS IN LAREDO, TEXAS, AND I WOULD SAY THAT IT WAS AN EXTRAORDINARY EXPERIENCE, AS IT ALWAYS IS. OBVIOUSLY, THE BORDER IS A VERY IMPORTANT ISSUE IN THE STATE OF TEXAS AND INDEED IN THE UNITED STATES. NOT COINCIDENTALLY, CHIEF SWENSON WAS TESTIFYING IN THE CAPITOL ON OUR BORDER SECURITY AND OUR BORDER OPERATIONS AT THE SAME TIME, AND I WAS SO IMPRESSED WITH THE COMMITMENT OF OUR REVENUE COMPLIANCE OFFICERS. CHIEF RAINEY, PEOPLE OPERATE IN HARSH CONDITIONS. IN FACT, IT WAS 102 DEGREES WHEN I WAS THERE, AND OUR COMMS TEAM, I FILMED A PSA STANDING IN A SUIT IN 102 DEGREES, AND YET ALL OF OUR AGENTS WERE THERE, FULLY SUITED UP. SO, CHIEF OUR PERSONNEL, THEY THEY ARE SUCH A AND THEY'RE SUCH A HUGE ASSET BECAUSE PART OF THEIR JOB IS TO MAKE SURE THAT THE ALCOHOL AND TOBACCO THAT COMES INTO THE UNITED STATES, THAT COMES INTO THE STATE OF TEXAS IS COMPLIANT AND THEY HAVE WHAT I CALL A PHENOMENON CALLED DETERRENCE BY PRESENCE. WHEN WE HAVE UNIFORMED PERSONNEL THERE, I THINK IT ADDS TO THE SAFETY OF OUR STATE, AND SOME OF THE THINGS THEY'VE DONE HAS BEEN EXTRAORDINARY. SOME OF THE CRIMES THAT THEY'VE, IN COOPERATION WITH OUR STATE PARTNERS AT THE DEPARTMENT OF PUBLIC SAFETY, PARKS AND WILDLIFE, WE'VE BEEN ABLE TO STOP SOME SOME VERY BAD ACTORS FROM BRINGING BAD THINGS INTO THIS COUNTRY. SO TABC IS ON THE FRONT LINE. WE HAVE APPROXIMATELY 100 REVENUE COMPLIANCE OFFICERS AT EVERY PORT OF ENTRY IN THE STATE OF TEXAS, AND THEY DO AN INCREDIBLE JOB, AND I'M JUST SO DELIGHTED AND SO PROUD OF THEM, AND I THINK YOU ALL SHOULD BE TOO. I'D ALSO LIKE TO SAY THAT I HAD AN OPPORTUNITY TO SPEND QUITE A BIT OF TIME WITH OUR FEDERAL PARTNERS, CUSTOMS AND BORDER PROTECTION, AND I JUST WANT TO SAY FOR THE RECORD, THAT, YOU KNOW, THE RHETORIC THAT THEY'RE NOT DOING THEIR JOB IS WRONG. THE COMPLAINTS AGAINST THE BORDER PATROL, THEY'RE JUST THEY'RE WRONG, AND WHEN I SEE THE PROFESSIONALISM OF OUR FEDERAL PARTNERS WHO WORK DAY TO DAY WITH US ON THE BORDER, I'M REMINDED THAT THEY ARE PROFESSIONALS. THEY ARE LAW ENFORCEMENT OFFICERS. THEY ARE FEDERAL POLICE OFFICERS AND THEY'RE DOING THEIR BEST TO TRY TO PROTECT OUR COUNTRY, AND THE COMMENT THEY SAID IS THAT, YOU KNOW, AND I DON'T WANT TO GET POLITICAL, BUT THEY JUST SAID, WE WANT TO DO OUR JOB IF THEY WOULD JUST LET US DO OUR JOB. SO I JUST WANT TO GIVE A SHOUT OUT TO OUR FEDERAL LAW ENFORCEMENT PARTNERS ON THE BORDER FOR THE GOOD WORK THAT THEY'RE DOING AND FOR THE INCREDIBLY COOPERATIVE ATTITUDE THEY HAVE TOWARD US, AND I JUST HOPE THAT I HOPE THAT OUR FRIENDS IN WASHINGTON WILL COME UP WITH A POLICY THAT WILL ALLOW US TO CONTINUE TO POLICE OUR BORDER IN THE PROPER WAY, AND THAT'S INTENDED FOR BOTH SIDES OF THE AISLE. IT'S NOT PICKING ON ANYONE. I THINK WE KNOW WE CAN ALL DO A BETTER JOB IN THAT REGARD. I'D ALSO LIKE TO SAY THAT THE FOCUS ON THE BORDER HAS BEEN TO DETER ORGANIZED CRIME. CARTELS ARE A REAL ISSUE. WE DON'T I DON'T THINK WE REALIZE HOW MUCH THEY ARE THE ENEMY, AND THEY ARE AN ENEMY TO HUMANITY. OUR PEOPLE ON THE BORDER ARE DOING THEIR BEST TO ENSURE THAT THEY DON'T INFILTRATE TABC LICENSED AGENCIES, WHICH, AS YOU KNOW, THEY ARE PRONE TO DO. THEY ARE WILLING TO DO; THEY WANT TO DO THAT. THEY WANT TO EXPLOIT LICENSED ESTABLISHMENTS FOR ILLEGAL ACTIVITY THAT DAMAGE THE INDUSTRY THAT WE REGULATE, AND I THINK PEOPLE DON'T REALIZE THAT PART OF OUR JOB IS TO PROTECT THE HONEST MEN AND WOMEN IN THIS STATE THAT RUN HONEST BUSINESSES [00:05:03] BY KEEPING ORGANIZED CRIME, WHICH IS A, WHICH IS A MISSION THAT WAS ESTABLISHED WHEN THIS AGENCY WAS CREATED. IF YOU GO BACK AND LOOK AT THE CODE IN 1935, WHEN THIS AGENCY WAS CREATED, ONE OF OUR PRIMARY MISSIONS WAS TO KEEP ORGANIZED CRIME OUT OF THE ALCOHOL INDUSTRY. SO IF I HARP ABOUT IT, THAT'S PART OF OUR HISTORY, LADIES AND GENTLEMEN, AND I AM ABSOLUTELY PROUD OF THE WORK THAT OUR ENFORCEMENT PEOPLE DO, OUR AUDIT PEOPLE, OUR COMPLIANCE PEOPLE TO THWART THAT EFFORT, AND IT IS A NEVER ENDING EFFORT, AND SO I'M JUST I WAS JUST HAPPY TO BE THERE. I'VE BEEN TO LAREDO TWICE. I'VE BEEN TO EL PASO TWICE. I INTEND TO GO DOWN TO THE RIO GRANDE VALLEY AND SEE OUR OPERATIONS THERE AS WELL. SO, CHIEF RANEY, THANK YOU. WHERE ARE YOU, CHIEF? THANK YOU, SIR, FOR ALL THE WORK YOUR PEOPLE DO DOWN THERE. IT'S HUMBLING. IT'S AMAZING, AND WE'RE SO INDEBTED TO THEM. SO I ENCOURAGE EVERYONE TO KEEP THEM IN YOUR THOUGHTS AND PRAYERS. IT'S A DANGEROUS PLACE AT TIMES, SO THANK YOU ALL. WITH THAT, I'LL TURN IT OVER TO OUR FEDERAL COMMISSIONERS WHO HAVE ANY OPENING COMMENTS. THAT'S HARD TO FOLLOW WHAT YOU JUST SAID, BUT I WOULD ECHO EVERYTHING THAT YOU SAID, AND I DON'T HAVE ANYTHING ADDITIONAL TO ADD. ANYBODY? I DON'T KNOW IF YOU CAN SEE ME OR IF I. OKAY. ARE WE GOOD? EL PASO, SAN ANTONIO. WE ARE GOOD. THANK YOU FOR THE COMMENTS. YES, SIR, AND DITTO ON EVERYTHING YOU SAID. ALRIGHTY. WELL, LET'S MOVE TO OUR NEXT ITEM. PLEASE JOIN ME IN RECITING THE PLEDGE OF ALLEGIANCE. THE NEXT ITEM IS APPROVAL OF COMMISSION MEETING MINUTES OF JULY 23RD, 2024. I SO MOVE. IS THERE A SECOND? SECOND. THANK YOU SIR. WE HAVE A SECOND. THE MINUTES ARE APPROVED. VOTES HAVE BEEN. OH, WELL, WE WILL NOW VOTE. EXCUSE ME. ALL OPPOSED. MOTION CARRIES. NEXT AGENDA ITEM WILL BE AN AIMS UPDATE. [2. Reports] DEPUTY DIRECTOR SANCHEZ, WELCOME. ALL RIGHT. GOOD MORNING. CHAIRMAN. COMMISSIONERS. MY NAME IS LAURI SANCHEZ, DEPUTY DIRECTOR OF IT, AND I'LL BE PRESENTING OUR AIMS UPDATE. SO SINCE AIMS WENT LIVE THROUGH SEPTEMBER 11TH OF THIS YEAR, WE'VE HAD APPROXIMATELY 45,000 ORIGINAL APPLICATIONS SUBMITTED, 87,000 RENEWAL APPLICATIONS. 80,000 PRODUCT REGISTRATIONS AND 28,000 ACCOUNT BUSINESS TRANSACTIONS, AND AS A REMINDER, THOSE ACCOUNT BUSINESS TRANSACTIONS ARE FOR THINGS LIKE CHANGE OF TRADE NAME, CHANGE OF LOCATION, AND OTHER SELF-SERVICE TRANSACTIONS TO CONTINUE TO SHOW THE ONGOING USE OF AIMS. THERE'S BEEN APPROXIMATELY 2.3 MILLION LOGINS INTO THE SYSTEM SINCE IT WENT LIVE. WE'RE CONTINUING TO WORK ON PHASE TWO SCOPE OF AIMS. SINCE MARCH, NO NEW FUNCTIONALITY HAS BEEN IMPLEMENTED, BUT WE CONTINUE TO WORK ON THE EXPUNGEMENT MODULE, WHICH WILL ALLOW USERS TO EXPUNGE DATA REQUIRED BY LEGAL ORDER AND OPEN RECORDS REQUEST FUNCTIONALITY, WHICH ALLOWS USERS TO EXTRACT INFORMATION FROM AIMS TO FILL OPEN RECORDS REQUESTS. THROUGH THE SECOND PHASE OF AIMS, WE'VE FACED CHALLENGES AND ARE CURRENTLY FACING IMPACTS OF THOSE CHALLENGES. FOR EACH CHALLENGE A REALIZED RISK, WE FOCUS ON THE HIGH IMPACT AND HIGH PROBABILITY ITEMS. THIS APPROACH HAS ALLOWED AIMS TO CONTINUOUSLY BE DEVELOPED BY CONSTANTLY EVALUATING RISK, EVALUATING IMPACT ON STAFF AND INDUSTRY, AND CONSIDERING BUDGET LIMITATIONS. SO CURRENT KEY CHALLENGES FOR PHASE TWO ARE THE DESIGN REQUIREMENTS AND EXPECTATIONS, AND THERE'S OPPORTUNITIES FROM BOTH THE VENDOR AND TABC TO IMPROVE ON THIS POINT AND DEVELOPMENT QUALITY AND VENDOR QUALITY ASSURANCE TESTING ARE ALSO THE OTHER CHALLENGES WE'RE FACING. WE'VE TAKEN SOME ACTIONS TO ADDRESS THESE CHALLENGES. [00:10:02] THE VENDOR HAS CONDUCTED SHADOW SESSIONS WITH END USERS TO UNDERSTAND THE DEFECTS FIRSTHAND. THE EXECUTIVE TEAM IS CONDUCTING MEETINGS WITH THE VENDOR TO DISCUSS THESE CHALLENGES, AND THE VENDOR HAS REVISED THEIR QA PLAN, WHICH IS INCLUDED IN THE PROJECT MANAGEMENT PLAN, WHICH WAS EXECUTED AS PART OF THE MOST RECENT CONTRACT AMENDMENT. WE'VE REVISED OUR REQUIREMENTS AND DESIGN PROCESS FOR PHASE THREE, WHICH HAS BEEN UPDATED ALSO WITHIN THE PROJECT MANAGEMENT PLAN. AS WE TRANSITION INTO PHASE THREE, WE CONTINUE TO MAKE CHANGES TO OUR INTERNAL PROCESSES TO ENSURE THE SUCCESS FOR AIMS FOR STAFF AND INDUSTRY. WE'RE WORKING ON COMPLETING PHASE TWO SCOPE AND APPLYING THESE NEW PROCESSES TO IMPROVE EXPECTATIONS AND QUALITY. WE'VE CREATED AN ALL INCLUSIVE. IT PROJECT GOVERNANCE COUNCIL, WHICH IS CALLED THE TECHNOLOGY PROJECT OVERSIGHT COUNCIL, OR WHAT WE CALL TPOC. THIS IS AN INTERNAL TO TABC COUNCIL AND THEY REVIEW, PRIORITIZE AND MAKE DECISIONS ON ALL IT, EXCUSE ME ON ALL IT PROJECTS SCOPE INCLUDING AIMS. THEY REVIEW RISK AND POTENTIAL CHANGE REQUESTS AND THEY HAVE PRIORITIZED AND CONTINUE TO PRIORITIZE AIMS. PHASE THREE SCOPE. AS A RESULT OF AN INTERNAL AUDIT IN A THIRD PARTY VENDOR RISK ASSESSMENT, WE CONTINUE TO REVISE OUR VENDOR MANAGEMENT. WE HAVE COMPLETED OUR CONTRACT AMENDMENT AND UPDATES TO OUR PROJECT MANAGEMENT PLAN. THESE UPDATES PROVIDE A CLEAR UNDERSTANDING AND EXPECTATION WITH OUR VENDOR, AND WE WILL CONTINUE TO WORK ON REVISING VENDOR MANAGEMENT THROUGH PROJECT RETROSPECTIVES, AND LASTLY, WE'RE REVISING OUR COMMUNICATION PLAN. SO WE'VE UPDATED THE OVERALL COMMUNICATION PLAN IN THE PMP, AND THEN WE CONTINUE TO WORK ON IDENTIFYING FUNCTIONALITY ENHANCEMENTS. SO WE CONTINUE TO WORK WITH OUR BUSINESS UNITS TO UNDERSTAND THE GAPS IN FUNCTIONALITY THAT ARE NECESSARY TO IMPROVE PROCESS PERFORMANCE, AND AS A REMINDER, TABC HAS CONTRACTED WITH THE THIRD PARTY VENDOR TO CONDUCT INDEPENDENT VERIFICATION AND VALIDATION OR WHAT IS KNOWN AS IV&V, AND THEY WILL PROVIDE A THIRD PARTY, IMPARTIAL ASSESSMENT OF THE PROCESS AND THE PRODUCT USING INDUSTRY STANDARDS AND BEST PRACTICES. THEY DETERMINE IF THE PRODUCT FULFILLS EACH SOFTWARE DEVELOPMENT LIFECYCLE PHASE, AND THEY DETERMINE IF WE'VE RECEIVED WHAT WAS AGREED UPON. FROM PHASE THREE SCOPE, WE HAVE IMPLEMENTED COMPLIANCE REPORTING ADDITIONAL LICENSE AND PERMITS. SO THIS IS AN ENHANCEMENT FOR COMPLIANCE REPORTING TO ALLOW FOR TEN LICENSE AND PERMIT SUBORDINATE COMBINATIONS TO COMPLETE AND SUBMIT COMPLIANCE REPORTS IN AIMS. CURRENTLY, WE'RE WORKING ON ENHANCEMENTS TO THE PAYMENT PROCESSING MODULE, WHICH INCLUDE THINGS LIKE AUTOMATING THE MANUAL PAPER CHECK PROCESS OF MONEY MATCHING, AND ADDITIONAL MODIFICATIONS TO THE CREDIT ENTRY FUNCTIONALITY TO INCLUDE THINGS LIKE EDIT AND DELETE CAPABILITIES, AND THEN LASTLY, WE HAVE A NEW ITEM FROM THE DEPARTMENT OF INFORMATION RESOURCES. SO DIR HAS COMMUNICATED THAT THE TEXAS.GOV PAYMENT PROVIDER IS CHANGING, AND IN ORDER FOR TABC TO CONTINUE TO ACCEPT ELECTRONIC PAYMENTS, WE MUST ALSO TRANSITION TO THEIR NEW PROVIDER. SO THIS IMPACTS THE AIMS SYSTEM, AIMS PORT PASS, PORT OF ENTRY, POINT OF SALE AND THE POINT OF SALE HARDWARE, WHICH IS SPECIFICALLY THE CARD READERS. THE FOLLOWING PHASE THREE ITEMS ARE PLANNED TO BE IMPLEMENTED THIS BIENNIUM. THE THREE THAT DIRECTLY IMPACT INDUSTRY ARE THE CASH CREDIT LAW MODULE, WHICH ALLOWS DISTRIBUTORS AND WHOLESALERS TO REPORT CASH AND CREDIT LAW VIOLATIONS ON RETAIL LICENSEES. RETAIL LICENSEES WILL BE NOTIFIED OF THE RESPECTIVE VIOLATIONS THROUGH AIMS. THEN ORDER MANAGEMENT, WHICH ALLOWS THE ABILITY TO INTAKE ORDERS FOR PRIVATE CLUB MEMBERSHIP CARDS FOR PRIVATE CLUB LICENSEES, AND THEN LASTLY THE CITY AND COUNTY DATA UPDATE. SO THIS IS AN ENHANCEMENT TO THE SYSTEM. THE SYSTEM'S APPLICATION SUMMARY OF ELEMENTS AND THE LAYOUT FOR CITY AND COUNTY AND CONTROLLER CERTIFICATION PROCESS. THE REMAINING ITEMS YOU SEE PRIMARILY FOCUS ON INTERNAL STAFF FUNCTIONALITY, WHICH WILL INADVERTENTLY CREATE EFFICIENCIES FOR INDUSTRY, AND THOSE ITEMS ARE THE AUDIT CASE WORKSHEETS, EXCISE TAX RECONCILIATION, AUTOMATED REFUND WORKFLOW, BOND GROUPING MANAGEMENT, RECORD RETENTION, AUTOMATED MANAGEMENT REVIEW AND CASE MANAGEMENT REFINEMENT. FOR SCOPE NOT COMPLETED THIS BIENNIUM, TABC HAS A RIDER REQUEST FOR UNEXPENDED BALANCES IN THE LAR, AND OUR CFO WILL SPEAK MORE TO THIS DURING HIS PRESENTATION TODAY. I WOULD LIKE TO TAKE THIS OPPORTUNITY TO JUST HAVE A THANK YOU TO OUR HARDWORKING AND DEDICATED IT STAFF. SO THEY WORK EVERY DAY TO KEEP CRITICAL TOOLS FUNCTIONING FOR AGENCY PROCESSES AND BUSINESS PROCESSES, AND I WANT TO JUST SAY THANK YOU, AND I APPRECIATE ALL OF THEIR HARD WORK WITH ALL OF THE WORK THAT WE HAVE TO DO, AND TO KIND OF HIGHLIGHT SOME OF THE OTHER THINGS THAT THE IT TEAM IS CURRENTLY WORKING ON. IN ADDITION TO THEIR DAILY OPERATION ACTIVITIES AND OTHER STRATEGIC AND MAINTENANCE PROJECTS. I'VE JUST KIND OF HIGHLIGHTED A FEW OF THE TECHNOLOGY PROJECTS THAT WE'RE WORKING ON. SO THE FIRST ONE IS THE ENTERPRISE DATA SOLUTION. THIS IS PART OF OUR OVERALL TECHNOLOGY TRANSFORMATION. [00:15:01] THE PURPOSE OF THE EDITORS IS TO CREATE A MODERN DATA WAREHOUSE SOLUTION FOR FORWARD THINKING BUSINESS ANALYTICS, TO ENHANCE THE AGENCY'S ABILITY TO LICENSE AND REGULATE THE ALCOHOLIC BEVERAGE INDUSTRY. WE HAVE SHAREPOINT ONLINE, WHICH WILL INCREASE THE EFFICIENCIES THROUGH MODERNIZED TECHNOLOGY, AND IT HELPS TEAM MEMBERS COLLABORATE AND IMPROVE TRANSPARENCY ACROSS THE AGENCY. IMPLEMENTATION OF THIS FUNCTIONALITY ALLOWS THE AGENCY TO APPLY AUTOMATED RETENTION POLICIES ON DOCUMENTATIONS. THEN WE HAVE THE SELLER SERVER MODERNIZATION. SO TABC HAS THE A RESPONSIBILITY TO PROTECT PUBLIC SAFETY THROUGH TRAINING AND CERTIFICATION OF INDIVIDUALS WHO SELL, SERVE AND DELIVER ALCOHOL TO CONSUMERS. TABC IS WORKING TO TRANSITION FROM A LEGACY SYSTEM TO A MODERN SOLUTION TO CONDUCT SELLER SERVER ACTIVITIES. WE HAVE THE NEW TEXAS GOV PAYMENT PROVIDER. SO AS I JUST MENTIONED A FEW MINUTES AGO, THE DIR IS TRANSITIONING TO A NEW TEXAS.GOV PAYMENT PROVIDER, WHICH REQUIRES TABC TO ALSO TRANSITION IN ORDER TO CONTINUE TO ACCEPT ELECTRONIC PAYMENTS. SO THIS WILL REQUIRE SOME THIRD PARTY VENDOR CONFIGURATION UPDATES FOR SOME OTHER APPLICATIONS. THAT'S NOT SPECIFICALLY AIMS. THEN WE HAVE OUR PC REFRESH. DUE TO SOME LEASE EXPIRATIONS, THE AGENCY HAS TAKEN THE OPPORTUNITY TO TRANSITION TO NEW RUGGED DEVICES FOR THE ENFORCEMENT TEAM AS WELL AS NEW DEVICES FOR THE COMMUNICATIONS TEAM, AND THEN LASTLY, WE HAVE THE MOBILE DEVICE REFRESH. SO DUE TO DEGRADATION OF EQUIPMENT, THE AGENCY IS UPGRADING TO MOBILE. IT'S UPGRADING ITS MOBILE DEVICES AND TRANSITIONING TO RUGGED DEVICES FOR THE ENFORCEMENT TEAM. THAT'S ALL I HAVE TODAY, SO I'M HAPPY TO ANSWER ANY QUESTIONS. COMMISSIONER ADKINS. NO QUESTIONS, BUT JUST A COMMENT. I MEAN, THIS IS A MASSIVE, MULTIYEAR UNDERTAKING THAT WE'RE DOING, AND I KNOW IT'S HARD. I KNOW IT'S EXHAUSTING, BUT I JUST WANT TO SAY THAT YOU ALL ARE DOING A GREAT JOB AND TO KEEP UP THE GOOD WORK. THANK YOU. THANK YOU. GREAT. APPRECIATE IT. THANK YOU. NEXT AGENDA ITEM WILL BE FISCAL YEAR END CFO SWAN. AS YOU'RE COMING UP, THOUGH, THERE WAS I WAS REMISS IN THAT I NEGLECTED TO RECOGNIZE A A LONG-TIME MEMBER OF OUR TEAM WHO IS NO LONGER WITH US. WE WERE ALL SADDENED BY THE PASSING OF ED SWEDBERG, WHO WAS THE DEPUTY EXECUTIVE DIRECTOR AND THEN ACTING EXECUTIVE DIRECTOR. WHEN I CAME ON BOARD A FEW YEARS AGO I BELIEVE ED WAS A PUBLIC SERVANT OF THE HIGHEST ORDER. HE WAS A RETIRED AIR FORCE COLONEL. HE WAS A CERTIFIED PEACE OFFICER, AND CONSEQUENTLY, HIS ENTIRE LIFE WAS DEDICATED TO SERVING HIS COUNTRY AND HIS STATE, AND SO WE WISH YOU WELL. WE'LL KEEP IT FROM HERE. THANKS, ED. ALL RIGHT. ALL RIGHT. FOR THE RECORD, CONRAD SWAN, CFO, AND I'M HAPPY TO HAVE THIS OPPORTUNITY TO TALK ABOUT THE DEDICATION THAT OUR BSD STAFF HAS TO SPEAK ABOUT WHAT THEY ACCOMPLISHED AT THE END OF YEAR. I'VE WORKED AT THIS IS MY THIRD AGENCY NOW, I THINK, FINANCIAL SHOPS CELEBRATE A FISCAL YEAR END THE MOST OUT OF ANY OTHER SHOP. THE CYCLICAL NATURE OF WHAT THEY DO TENDS TO SEND THEM THROUGH A GANTLET RIGHT THERE AT THE END OF THE YEAR. SO IF YOU'VE EVER RUN INTO A STAFF MEMBER IN A FINANCE SHOP ON NINE ONE, YOU'LL HEAR THEM SAY, HAPPY FISCAL NEW YEAR AND THEY'LL HAVE A GLINT IN THEIR EYE. THEY REALLY MEAN THAT, AND SO I'M HAPPY TO HAVE THIS OPPORTUNITY TO KIND OF TALK ABOUT THE GANTLET THAT SOME OF MY SECTIONS RAN THROUGH RIGHT THERE AT THE END OF THE YEAR. I WON'T DO TOO MUCH BRAGGING ON THEM, BUT JUST A BULLET OR TWO ON EACH. IT'S OKAY. ALL RIGHT. GOOD. SO OUR PROCUREMENT TEAM, THESE ARE OUR BUYERS. THEY ACTUALLY SET UP 237 RENEWAL REQUISITIONS RIGHT THERE IN JULY AND AUGUST. AT THE END OF THE YEAR, THAT'S ABOUT $3.1 MILLION OF KEEPING THE LIGHTS ON FOR SPENDING OF OUR AGENCY, AND THOSE TOTALS THAT THEY WERE WORKING ON RIGHT THERE AT JULY AND AUGUST DON'T EVEN INCLUDE THE END OF YEAR ACTIVITY THAT THEY HAVE TO DO TO SORT OF PUT THIS AGENCY WHERE IT NEEDS TO BE TO FINISH OUT A YEAR. SO JOB WELL DONE IN THAT SHOP. OUR FISCAL SERVICES SHOP, THESE ARE OUR ACCOUNTANTS, OUR BOOKKEEPERS. THEY STARTED THE ITERATIVE PROCESS OF BUILDING OUR ANNUAL FINANCIAL REPORT. IT FEELS LIKE IT GOES ON FOREVER, BUT IT TRULY IS ITERATIVE IN THAT WAY. THEY STARTED IN AUGUST AND IT DOESN'T GET SUBMITTED UNTIL THE END OF SEPTEMBER. SO IT'S A TWO MONTH LONG PROCESS FOR THEM. SO THAT GOT STARTED. WE'RE WELL ON OUR WAY TO SUBMITTING THAT. ALSO, A PART OF THAT MEANS WE HAVE TO GET THE BOOKS CLOSED AND READY, AND A BIG PART OF THAT IS REVENUE ACTIVITY. [00:20:07] SO ALL OF THAT HARD WORK FOR OUR FISCAL SERVICES TEAM, SORT OF GETTING THE TREASURY, THE CPA FUNDS CLEARED AND THEN THEIR FINAL DISPOSITION, THEY WERE UP TO THAT AT THE END OF THE YEAR, AND THEN MY PROPERTY MANAGEMENT GROUP TALKING ABOUT BIG EFFORTS, THE FISCAL OR THE ANNUAL PHYSICAL INVENTORY THAT DID GET COMPLETED THERE AT THE END OF THE YEAR, THANKS TO THAT TEAM, AND THEN FINALLY, MY BUDGET TEAM, THEY'VE CREATED AN INITIAL INTERNAL OPERATING BUDGET. WE'RE STILL GOING THROUGH VETTING THAT BUDGET, BUT WE'LL HAVE THAT COMPLETED AND PROBABLY WILL BE PRESENTED TO YOU HERE IN THE NEAR FUTURE FOR 2025, AND THEN WHAT I'LL BE SPEAKING TO HERE SOON IN MY NEXT PRESENTATION IS WE DID GET THE LAR SUBMITTED IN AND ON TIME AT THE END OF AUGUST THERE, AND THAT WILL GIVE YOU A NICE PEEK AT WHAT WE WERE DOING THERE AT THE END OF THE YEAR. I'M HAPPY TO TAKE ANY QUESTIONS AND BRAG A LITTLE MORE IF YOU GOT THEM. CHAIRMAN, COMMISSIONERS, THEY REALLY WORK HARD, ESPECIALLY AT THE END OF THE FISCAL YEAR FOR US, AND THAT ON TOP OF SUBMITTING AN LAR AND MAKING SURE ALL OUR NUMBERS ADD UP THE RIGHT WAY, WE JUST GOT A REALLY GOOD TEAM OVER THERE UNDER CONRAD. SO I JUST WANT TO SAY THANK YOU. WELL DONE. HAPPY FISCAL YEAR END. THANK YOU. WELL DONE, CONRAD. GOOD JOB. THANK YOU. ALL RIGHT. STILL ME, CONRAD SWAN, CFO. WANTED TO DEFINITELY GIVE YOU GUYS AN UPDATE ON HOW THE LAR FINISHED. CHAIRMAN LILLY, LAST TIME I PRESENTED, I THINK IN JULY, I USED THE WORD DRAFT AND ESTIMATED A LOT. I WASN'T SURE IF COMMISSIONER ATKINS OR COMMISSIONER MARINO WERE GOING TO KICK ME OUT OF THE CHAIR FOR USING DRAFT AND ESTIMATE AS MANY TIMES AS I DID, BUT AT THIS STAGE, WE KNOW EXACTLY WHAT OUR NUMBERS ARE AND WANTED TO CIRCLE BACK TO GIVE YOU AN IDEA OF WHERE THINGS LANDED, AND SO THIS PAGE IS A NICE AT A GLANCE JUST TO SPEAK TO WHERE OUR NUMBERS ARE FINALIZED. WHAT I WOULD POINT OUT ON THAT FIRST ROW IS WHEREAS BEFORE WE WERE SHOWING YOU WHAT WE THOUGHT WE WOULD RECEIVE FROM THE LBB AS OUR BASE FOR GR, NOW WE'RE SHOWING YOU OUR ENTIRE ASK WITH GR, FED FUNDS AND APPROPRIATED RECEIPTS. SO THAT'S 112.4 MILLION. THAT'S PRETTY CLOSE TO THE NUMBER THAT WE WERE SHOWING YOU BEFORE. SOME OF THAT WAS SCIENCE. SOME OF THAT WAS LUCK. THE LUCK PART OF IT, WELL ACTUALLY THE PART THAT WE DIDN'T ANTICIPATE WAS THE LBB DID A UPDATED EVALUATION OF HOW MUCH THIS AGENCY NEEDED FOR ITS 5%. SO THEY TRUED THAT UP, AND SO THAT'S REALLY WHERE YOUR NUMBER GREW WAS FOR THE LBB TRUE-UP OF SALARY FUNDING FROM 5% INCREASES. WE STILL HAVE 620 FTES. NOW THAT NEXT SECTION THAT YOU SEE THAT BLOCK FOR EXCEPTIONAL ITEMS REQUEST. NOT A LOT CHANGED THERE. WE WARNED YOU THAT WE MIGHT TOY AROUND WITH SOME NEW TITLES, THAT THE NUMBERS MAY CHANGE. THE NUMBERS DIDN'T CHANGE. ITEMS FOUR AND FIVE DID. LET ME ACTUALLY CHANGE THAT. ITEMS FOUR AND FIVE. WE TWEAKED THOSE NUMBERS JUST A LITTLE BIT, BUT IN LARGE PART IT'S ALL OF THE TITLES THAT YOU SEE. WE DEFINITELY WORKED ON THOSE. WE TALKED ABOUT HOW WE MAY REARRANGE THE PRIORITY OF THOSE EXCEPTIONAL ASKS. WE ACTUALLY LIKE THE ORDER THAT WE HAD THEM IN. SO IN ORDER OF PRIORITY FOR US ONE THROUGH FIVE, THOSE REMAIN THE SAME, BUT LET'S TALK ABOUT THOSE NUMBER CHANGES. SO ON YOUR ITEM NUMBER FOUR, WHICH IS NOW TITLED INTEGRATE AND SUPPORT TECHNOLOGY SOLUTIONS, WE ADDED $1 MILLION TO THAT, AND THAT WAS DIVIDED OUT $500,000 IN EACH YEAR, AND THAT WAS FOR SOME ADDITIONAL PROFESSIONAL FEES AND SERVICES. CONTRACT WORKERS THAT WE SAW WERE GOING TO BE NECESSARY FOR US. SO THAT TOTAL IS NOW 3 MILLION, WHEREAS LAST TIME IT WAS AROUND TWO, AND THEN THAT LAST ONE, WHICH IS NOW TITLED TECHNOLOGY LICENSING AND SUPPORT, WE ADDED ABOUT $250,000 TO THAT. WE REALIZED THAT WE HAVE SOME LEGACY SYSTEMS THAT WE'RE KEEPING INTO 26 AND 27, AND THE COST OF THOSE LEGACY SYSTEMS ARE GROWING JUST A BIT, AND WE CAN'T FUND THOSE. SO WE WANTED TO PUT THAT UNFUNDED COST IN OUR EXCEPTIONAL ITEM AT ABOUT $250,000 AND SO WITH THE SMALL CHANGE TO OUR BASE FIGURE THERE AND THAT EXTRA MILLION POINT THREE THAT WE ADDED, WE HAVE A BIENNIAL BUDGET OF $125.9 MILLION WITH 629 FTES. SO THIS TIME, WE WANT TO TAKE AN OPPORTUNITY TO SHOW YOU SORT OF WHERE THAT BUDGET IS GOING TO BE DISTRIBUTED SPECIFICALLY BY STRATEGY. SO THIS NEXT SLIDE JUST GIVES YOU AN OPPORTUNITY TO SEE THAT ENFORCEMENT IS STILL THE LARGEST PART OF OUR SPENDING THERE AT $64 MILLION, AND THEN WE'RE SHOWING [00:25:05] YOU THAT'S ABOUT 300 FTES, AND YOU CAN SEE AS WELL 11.9 FOR LICENSING $15 MILLION FOR COMPLIANCE. SO THOSE NUMBERS ARE THERE FOR YOU TO SEE. I WOULD POINT OUT JUST ONE THING. WE INCLUDED OUR EXCEPTIONAL ITEMS SPENDING IN THOSE NUMBERS. SO YOU'RE STILL SEEING US BREAKING OUT 125.9. WE AREN'T GUARANTEED TO BE APPROPRIATED 125.9, BUT WE CAN ANTICIPATE WE'LL GET OUR BASE REQUEST, WHICH WAS THAT, $112 MILLION. SO WE'RE SHOWING YOU THE 13 MILLION AND SORT OF WHERE IT WOULD LAND WITHIN OUR STRATEGIES. THAT ISN'T REALLY AN UPDATE. IT'S JUST A REMINDER BECAUSE WE DIDN'T CHANGE ANYTHING THAT WE PRESENTED TO YOU PRIOR ABOUT WHAT WE WERE GOING TO DO WITH OUR RIDERS. SO JUST AS A REMINDER, WE WERE SEEKING TO REMOVE TWO OF OUR EXISTING RIDERS, RIDER 13, WHICH LIMITS OUR ABILITY TO TRAVEL OUT OF STATE. WE'RE ASKING FOR THAT TO BE REMOVED AND WE ACHIEVED THE WINERY PERMIT STUDY, SO THERE'S NO NEED FOR THAT TO STAY. SO WE'RE SEEKING FOR THAT TO BE REMOVED, AND THEN JUST AS A REMINDER, WE ARE ASKING FOR A BRAND NEW RIDER, WHICH IS REALLY JUST FOR TRANSPARENCY SAKE, TO SPEAK ABOUT HOW WE ARE ASSIGNING YEARS OF EXPERIENCE FOR OUR CPOS, WHETHER IT BE THEIR FEDERAL, LOCAL, STATE EXPERIENCE, WE WANT OUR RIDER TO SORT OF SPEAK TO THAT. WE'RE GOING TO BE USING THAT EXPERIENCE IN ASSIGNING THEM TO THEIR PAY SCALE IN ARTICLE NINE, AND FINALLY, AS DEPUTY DIRECTOR SANCHEZ MENTIONED, WE ARE SEEKING A RIDER. WE SAW IN HER PRESENTATION SOME OF THOSE CHALLENGES, SOME OF THE THINGS THAT WE'RE TRYING TO DO IN THE CONTRACTING, WHICH HAS PUT US, I THINK WE CAN SAY, PREDICTABLY, A LITTLE BIT BEHIND THE SCHEDULE OF SPENDING, ALL OF OUR APPROPRIATIONS. SO WE ARE ASKING FOR THAT FINAL BULLET, A RIDER THAT WILL LET US UV FORWARD, ANY FUNDING THAT WE HAVE AT THE END OF THIS BIENNIUM IN OUR IT TRANSFORMATION CAPITAL PROJECT, ONLY TAKING THAT INTO 26, AND SO, JUST AS A REMINDER, THOSE ARE OUR TWO SORT OF NEW RIDERS THAT WE'RE SEEKING. HAS THERE BEEN ANY FEEDBACK ON OR ANY DISCUSSIONS WHERE YOU CAN KIND OF GARNER IF WE'RE GOING TO BE SUCCESSFUL IN THAT REGARD? YES, CERTAINLY. I'VE BEEN IN THE ROOM FOR TWO CONVERSATIONS, AND I KNOW OUR EXECUTIVE LEADERSHIP HAVE HAD SOME ADDITIONAL CONVERSATIONS THROUGHOUT THE CAPITOL. I THINK THE INITIAL RETURNS ARE THEY SEE THIS AS A GOOD IDEA. THEY UNDERSTAND THAT IT PROJECTS HAVE THIS COST ELEMENT TO IT OR HAVE A SCHEDULING ELEMENT TO IT, WHERE WHEN YOU HAVE, AS COMMISSIONER ATKINS SAID, A BIG UNDERTAKING, A BIG IT PROJECT, THAT IT'S HARD TO PREDICT THOSE THINGS, AND I THINK THE INITIAL RETURNS THAT WE'VE HAD IS THEY'RE ON THE SAME PAGE WITH US. YEAH, IT'S WE'RE NOT THE ONLY ONES IN THAT BOAT. I THINK EVERYBODY IS REALIZING OUT THERE DOING SIMILAR PROJECTS THAT THEY TAKE A LITTLE BIT LONGER WHEN WE'RE DOING THIS KIND OF WORK. SO WE'RE NOT ASKING FOR MORE MONEY. WE'RE JUST ASKING TO MOVE FORWARD WHAT THEY GAVE US ALREADY, BUT SO FAR THE FEEDBACK HAS BEEN THAT SEEMS TO BE HAPPENING IN MULTIPLE PLACES, AND IT'S THE FEEDBACK HAS BEEN GOOD FOR US. GOOD. SO FAR, SO GOOD. CONRAD GO AHEAD. LAST SLIDE WE WANT TO SHOW YOU IS SOMETIMES YOU MAY HEAR IT REFERRED TO AS THE L CHART. WE WANTED TO SHOW YOU THE AMOUNT OF REVENUE WE ESTIMATED IN OUR LAR, AND THEN WE WANTED TO PUT THAT TO THE SIDE TO SHOW WHAT DOES OUR RIDER 7 SAY THAT WE WOULD POTENTIALLY COLLECT THAT COUNTS TOWARDS OUR APPROPRIATION AND SHOW YOU, YOU KNOW, WHAT IT LOOKS LIKE IF WE WERE TO GET ALL OF OUR EXCEPTIONAL ITEMS. THE ONE CAVEAT I WOULD SAY, IN CASE YOU WERE COMPARING THIS NUMBER, THE NUMBERS HERE TO SOME OF THOSE PRIOR SLIDES IS THIS TIME WE'RE SHOWING YOU OUR GENERAL REVENUE ONLY. SO EVENTUALLY THAT GREEN BAR CHART AND THAT PURPLE BAR CHART HAVE EXCLUDED SOME NUMBERS THAT WERE IN THOSE PRIOR SLIDES TO SHOW YOU FED FUNDS AND APPROPRIATED RECEIPTS AND THINGS OF THAT NATURE, BUT YOUR LAR THAT BLUE COLUMN WE ARE ESTIMATING ABOUT $776 MILLION IN REVENUE. THAT INCLUDES YOUR TAXES AS WELL AS YOUR LICENSING REVENUE, BUT ONCE YOU GET RID OF EXCISE TAXES AND YOU START COUNTING THE REVENUE THAT IS IN YOUR RIDER 7. WE THINK WE'RE COLLECTING SOMEWHERE AROUND $222 MILLION. SO OUR SPENDING THAT WE'RE SEEKING FROM BASE GR ONLY OF 111. THIS ESTIMATE IS SHOWING THAT WE WOULDN'T BE IN DANGER OF NOT COLLECTING WHAT WE'RE SPENDING, AND THEN FINALLY, JUST ANOTHER LOOK. IF YOU PUT THAT $13 MILLION OF EXCEPTIONAL ITEMS BACK ONTO OUR GR BASE, WE WOULD BE AT ABOUT $124.9 MILLION, AND AGAIN, THAT APPEARS TO BE AFFORDABLE WITHIN OUR ESTIMATE FOR GR OF 222.9 MILLION. [00:30:03] SO WE WANTED YOU TO HAVE THAT LOOK. SO I HAVE A QUESTION FOR YOU. THE I GUESS THE ORANGE VERSUS THE GREEN. SO THE REVENUE TOWARD APPROPRIATION FURTHER EXPLAIN WHAT THAT IS. OKAY. SO WHEN WE'RE APPROPRIATED OUR APPROPRIATIONS FOR THIS AGENCY, WE HAVE A RIDER IN OUR BILL PATTERN THAT SAYS THIS AGENCY MUST COLLECT REVENUES TO SUPPORT THAT APPROPRIATION. RIGHT. OKAY, AND WE KNOW THAT WHERE THOSE REVENUES, THEY HAVE A SPECIFIC CODE. SO WE KNOW EXACTLY WHERE THOSE REVENUES ARE GOING TO BE DERIVED FROM AND MY REVENUE ANALYST, THEY PROJECTED, I THINK WE USED A 3% GROWTH RATE ON EXISTING REVENUES ACTUALS IN THE BIENNIUM OF 2022 AND 2023, AND WE PROJECTED ABOUT A 3% GROWTH IN ALL OF THOSE LITTLE REVENUE BUCKETS, AND WHEN WE PROJECT THOSE THINGS IN THE RIDER, THE RIDER SPECIFICALLY REFERENCES THE TYPES OF FUNDS THAT COUNT TOWARD IT. WHEN WE AGGREGATE ALL OF THOSE UP WITH THE 3%, OUR BELIEF IS IT'S A SAFE BET THAT WE'LL HAVE 222.9 COLLECTED, AND WE KNOW THAT OUR APPROPRIATION OF 111 FITS WITHIN THAT. SO IF WE DIDN'T, IF WE HAD MORE APPROPRIATED TO US THAN WE COULD COLLECT. THAT RIDER DIRECTS THE COMPTROLLER TO REDUCE OUR APPROPRIATION, AND SO OKAY, SO THE DELTA, WHICH IS APPROXIMATELY 111 MILLION, RIGHT BETWEEN THE REVENUE TOWARD APPROPRIATION AND THE BASE REQUEST. WHERE DOES WHERE DOES THAT MONEY GO? OKAY. SO WHEN THE COMPTROLLER IS CERTIFYING THE BILL, THIS REVENUE THAT'S COLLECTED ABOVE WHAT WE'VE SOUGHT AFTER OR WHAT HAS BEEN APPROPRIATED TO US GOES INTO CERTIFYING THE BILL, AND SO AS WE COLLECT IT, WE'RE ACTUALLY SENDING THIS TO THE COMPTROLLER, AND SO THE CONTROLLER IS THAT ARE THOSE PROCEEDS DIRECTED TOWARD ANYTHING IN PARTICULAR, OR IS THAT JUST GOES IN THE GENERAL BUDGET FOR THE STATE? WE DON'T KNOW THE SPECIFIC THINGS. IT'S IN THE GENERAL BUDGET OF THE STATE. OKAY. SO IF WE WERE A PRIVATE COMPANY, YOU COULD ALMOST VIEW THAT AS PROFIT. I KNOW WE DON'T WANT TO TOUCH THAT ONE. ALL RIGHT. SORRY, I DIDN'T MEAN TO SAY THAT. PARDON ME. EXCESS FUNDS. EXCESS FUNDS. RIGHT. YEAH. OKAY. I'LL GET A PHONE CALL ON THAT ONE. I THINK YOU MIGHT. YES. YEAH. CHAIRMAN, LET'S JUST SAY WE'RE EFFICIENT. YEAH. RIGHT. EXACTLY. OKAY. ALL RIGHT. NO, I MEAN, THANK YOU. ONE OF THE THINGS WE TALKED ABOUT IN THE PAST IS I SAID IF WE WERE A PRIVATE COMPANY. OKAY, I LIKE IT. I LIKE THE QUALIFYING STATEMENT. YEAH, A BIG IF. ONE OF THE THINGS WE TALKED ABOUT IN THE PAST ABOUT, YOU KNOW, THAT DELTA BETWEEN WHAT WE NEED FOR OUR SPENDING AND WHAT WE'RE COLLECTING IS THE UNKNOWNS. WE DON'T KNOW WHEN WE'RE GOING TO HAVE A $13 MILLION EXCEPTIONAL SERIES OF ITEMS. I GET IT. NO, WE NEED TO HAVE A CUSHION BECAUSE AND WE ALSO DON'T KNOW IF WE'RE GOING TO GO INTO ANOTHER COVID SITUATION OR WE'RE GOING TO GO THROUGH A MAJOR RECESSION. RIGHT. WHICH IS WHY I THINK KEEPING BECAUSE WE NEVER WANT TO BE IN A POSITION WHERE THE CONTROLLER HAS TO CUT US BECAUSE WE'RE NOT ADEQUATELY SUPPORTING THE AGENCY INTERNALLY. NOW I'M QUITE HOW MANY MAYBE YOU ALL KNOW THIS. HOW MANY STATE AGENCIES ARE SELF-FUNDING? I'M NOT SURE. ARE WE THE ONLY ONE? WE'RE NOT THE ONLY ONE. WE'RE NOT THE ONLY ONE. PUBLIC FINANCE DIVISION. THE AG'S OFFICE DOES. OKAY. ALL RIGHT. GOT IT. WE CAN GET THAT FOR YOU. THANK YOU. THEY CALL THAT I THINK THEY CALL THEM ALRCS OR SOMETHING LIKE THAT. APPROPRIATIONS LIMITED TO REVENUE COLLECTED. SO THERE ARE OTHER AGENCIES THAT HAVE ALRCS. I'M NOT SURE TO THE EXTENT WHERE IT'S YOUR ENTIRE APPROPRIATION, BUT IT'S VERY COMMON TO HAVE AN ALRC IN AN APPROPRIATION. COMMON, NOT TO BE ABLE TO USE THOSE EXCESS FUNDS FOR WHATEVER PURPOSES THE AGENCY DEEMS APPROPRIATE. YEAH. WELL, SURE. RIGHT. YEAH, I MEAN, THAT MAKES SENSE, BUT OKAY, WE'LL SEE WHAT WE CAN DO TO FIND OUT. I'M JUST CURIOUS, AND THAT'S THE END OF MY PRESENTATION. SO IF THERE ARE ANY OTHER QUESTIONS, I'M HAPPY TO TAKE THEM NOW. COMMISSIONERS, ANY QUESTIONS OR COMMENTS? I HAVE A COUPLE OF COMMENTS OR JUST QUESTIONS ACTUALLY FOR CONRAD. THANK YOU, CONRAD, ONCE AGAIN FOR CLARIFYING SO MUCH, AND I KNOW WE TALKED ABOUT DRAFT AND ALL OF THAT. SO IT'S GOOD TO SEE WHERE WE ARE. TWO QUESTIONS I HAD FOR CLARIFICATION. ONE ON THE ON THE ENFORCEMENT LINE ITEM THAT WE HAVE. [00:35:06] I WAS WONDERING JUST FROM A DETAILED PERSPECTIVE, I KNOW THIS AGENCY HAS TAKEN ON THE RESPONSIBILITY OF REALLY LEANING INTO THE HUMAN TRAFFICKING SPACE, AND SO IS IS THAT BUDGET OR IS THAT NUMBER FOR HUMAN TRAFFICKING THAT WE ALSO NEED FOR OUR EXPANDED, EXPANDED ENFORCEMENT? IS THAT IN THAT ENFORCEMENT OR IS THAT IN ANOTHER LINE ITEM ENTIRELY IN THAT ENFORCEMENT LINE ITEM? YES AND ONE OF THE THINGS YOU'LL HEAR ON OCCASION IS WE TALK ABOUT BUDGETS BY PROGRAM, AND SO YOU BROUGHT UP SOME PROGRAMS LIKE HUMAN TRAFFICKING AND BORDER SECURITY. THOSE PROGRAMS ARE RIGHT THERE IN THE ENFORCEMENT, AND SO YOU'LL FREQUENTLY HEAR US TALKING ABOUT ARTICLE NINE AND HOW THERE IS 1.2 IN ARTICLE NINE FOR THIS AND 5.7 FOR THAT. WHEN YOU HEAR THOSE CONVERSATIONS, KNOW THAT THEY ARE CONVERSATIONS HAPPENING IN THAT ENFORCEMENT STRATEGY. YES. OKAY, PERFECT BECAUSE THAT WAS GOING TO BE MY SECOND CLARIFICATION WHEN WE TALKED TO THE LINE ITEM OF PORTS OF ENTRY, KNOWING THE RESOURCES THAT'S NEEDED FOR THAT, AND ECHOING THE COMMENTS THAT THE CHAIRMAN SAID EARLIER TODAY. SO THAT IS ALSO ROLLED UP INTO ENFORCEMENT. SO THANK YOU. LET ME CLARIFY THAT, COMMISSIONER. SO OUR PORTS OF ENTRY ACTUALLY, ALTHOUGH IT'S MANAGED BY CHIEF SWENSON OVER THE ENFORCEMENT DIVISIONS. RIGHT. IT'S ACTUALLY GOT ITS OWN STRATEGY AS THE PORT OF ENTRY STRATEGY. SO ON THE SLIDE THAT WE'RE NOW SHARING AGAIN, WHEN YOU LOOK AT CE1.2, THAT'S WHERE OUR PORTS OF ENTRY STAFF AND THEIR OPERATIONS ARE FUNDED FROM THERE. OKAY. ALL RIGHT. THANK YOU. ALL RIGHT. ALL RIGHT. OKAY. THANK YOU VERY MUCH. THANK YOU. THANK YOU. THE NEXT AGENDA ITEM WILL BE PREPARING FOR THE 89TH TEXAS LEGISLATURE. DIRECTOR, STAPLES AND DIRECTOR MORALES. GOOD MORNING, MR. CHAIRMAN AND COMMISSIONERS. MY NAME IS JARED STAPLES, AND I'M THE DIRECTOR OF PUBLIC AND GOVERNMENT AFFAIRS FOR TABC, AND WE'RE LESS THAN FOUR MONTHS AWAY FROM THE NEXT TEXAS LEGISLATIVE SESSION. SO TODAY WE HAVE AN UPDATE FOR YOU ON WHAT THE AGENCY'S ROLE IS IN THE PROCESS, WHAT WE'RE WORKING ON NOW AND WHAT TO EXPECT NEXT YEAR, BUT FIRST, I WANT TO FORMALLY INTRODUCE YOU TO TONY MIRELES, WHO IN MAY THIS YEAR JOINED MY TEAM AT TABC AS TABC NEW DIRECTOR OF GOVERNMENT RELATIONS. BEFORE COMING TO THE AGENCY, TONY WORKED FOR SEVEN YEARS IN THE TEXAS HOUSE OF REPRESENTATIVES, WHERE HE WAS THE CHIEF OF STAFF FOR HOUSE MEMBER FOR THE LAST FIVE YEARS, AND NOW IN HIS ROLE AS GOVERNMENT RELATIONS DIRECTOR AT TABC. TONY IS PRIMARILY RESPONSIBLE FOR MANAGING THE AGENCY'S RELATIONSHIPS AND COMMUNICATIONS WITH GOVERNMENT OFFICIALS AND THEIR STAFF, AND HE'S CHARGED WITH COORDINATING TABC PARTICIPATION IN LEGISLATIVE SESSIONS, WHICH HE'LL TELL YOU MORE ABOUT SHORTLY. SO WE'RE EXCITED TO HAVE TONY ON THE TEAM AND THINK HE'S GOING TO HAVE A GREAT IMPACT, AND BEFORE I TURN THE MIC TO TONY, I WANT TO GIVE YOU GUYS A BRIEF REFRESHER ON WHAT THE AGENCY'S ROLE IS IN THE LEGISLATIVE PROCESS, AND THAT IS PRIMARILY TO BE A RESOURCE FOR THE LEGISLATURE AND OUR REGULATED INDUSTRY. THAT MEANS WE EDUCATE THEM ABOUT TABC'S MISSION AND OPERATIONS. WE REQUEST FUNDS. THE AGENCY NEEDS TO PERFORM ITS DUTIES. WE PROVIDE FEEDBACK WHEN ASKED HOW TO MAKE OUR STAKEHOLDERS POLICY GOALS WORK WITHIN THE TEXAS ALCOHOLIC BEVERAGE CODE, AND WE OFFER FEEDBACK ABOUT TABC'S ABILITY TO IMPLEMENT POLICY PROPOSALS THAT ARE FLOATING AROUND THE CAPITOL. HOWEVER, AS A STATE AGENCY, WE MUST BE VERY CAREFUL NOT TO ADVOCATE FOR OR AGAINST ANY POLICY PROPOSAL OR DO ANYTHING THAT COULD BE CONSIDERED LOBBYING, BECAUSE NOT ONLY DOES STATE LAW PROHIBIT AGENCIES FROM ENGAGING IN THIS KIND OF ACTIVITY, BUT AT THE END OF THE DAY, AS A REGULATOR, TABC MUST HAVE THE PUBLIC'S TRUST TO FAITHFULLY AND FAIRLY ENFORCE THE LAWS ADOPTED BY THE LEGISLATURE, BUT WITH THAT IN MIND, THE TABC TEAM IS PERFECTLY PREPARED TO BE A HELPFUL RESOURCE TO OUR INDUSTRY STAKEHOLDERS AND TO LEGISLATORS THROUGHOUT THE SESSION. NEXT SLIDE, AND WITH THAT, I WILL TURN IT OVER TO TONY. THANK YOU. THANKS, JARED. FOR THE RECORD, I'M ANTONIO MORALES. I AM THE DIRECTOR OF GOVERNMENT RELATIONS FOR TABC. SO THIS SLIDE BRIEFLY PROVIDES A TIMELINE OF THE LEGISLATIVE ACTIVITY BETWEEN NOW AND THE END OF THE CALENDAR YEAR. GOING BACK TO LAST MONTH, AS OUR CFO, CONRAD SWAN HAD SAID, THE TABC OFFICIALLY SUBMITTED THE LAR TO THE LEGISLATURE ON AUGUST 23RD. [00:40:09] OUR LAR INCLUDES FIVE EXCEPTIONAL ITEMS, FOR A TOTAL OF 13.5 MILLION FOR 2026 AND 2027. TABC ALSO SUBMITTED ITS WINERY PERMIT STUDY TO THE LEGISLATURE, AS DIRECTED BY THE GENERAL APPROPRIATIONS ACT FOR THE 2024-2025 BIENNIUM. SINCE THEN, TABC'S GR TEAM HAS ORGANIZED MEETINGS AT THE CAPITOL TO DISCUSS THE AGENCY'S APPROPRIATIONS REQUESTS AND ANSWER QUESTIONS FROM KEY STAFF IN THE HOUSE AND IN THE SENATE. TABC REMAINS TRANSPARENT WITH THE LEGISLATURE TO MAINTAIN POSITIVE RELATIONSHIPS WITH ELECTED OFFICIALS AND THEIR STAFF. LAST WEEK, TABC CHIEF OF ENFORCEMENT RON SWENSON TESTIFIED BEFORE THE SENATE BORDER SECURITY COMMITTEE AT THE COMMITTEE'S REQUEST. HE PROVIDED TESTIMONY ON THE AGENCY'S INVOLVEMENT IN BORDER SECURITY AND SUPPORTING OTHER AGENCIES INVOLVED IN OPERATION LONE STAR. LATER THIS WEEK, TABC EXECUTIVE DIRECTOR THOMAS GRAHAM WILL PRESENT THE AGENCY'S LAR IN A JOINT HEARING OF REPRESENTATIVES FROM THE OFFICE OF THE GOVERNOR, THE LEGISLATIVE BUDGET BOARD AND OTHER LEGISLATIVE STAFF. TABC LEADERSHIP HAS BEEN PROACTIVE IN MEETING WITH HOUSE APPROPRIATIONS AND SENATE FINANCE COMMITTEE STAFF TO MAKE SURE THEY'RE PROPERLY INFORMED ABOUT TABC OPERATIONS AND BUDGET NEEDS. MOVING AHEAD THE NEXT MONTH. TABC WILL TESTIFY BEFORE THE HOUSE LICENSING AND ADMINISTRATIVE PROCEDURES COMMITTEE ON OCTOBER 16TH AND THE SENATE STATE AFFAIRS COMMITTEE ON OCTOBER 17TH TO PROVIDE AGENCY UPDATES AND DISCUSS THE AGENCY'S IMPLEMENTATION OF LAWS ADOPTED LAST SESSION, AND TO ANSWER QUESTIONS ABOUT THE COMMITTEE'S INTERIM CHARGES. ALSO IN OCTOBER, OUR AGENCY WILL BEGIN TO EDUCATE STAFF AND TRACK LEGISLATION, AND FINALLY, MOVING ON TO NOVEMBER. THE FIRST TUESDAY IS THE FIFTH, WHICH MEANS THERE IS A GENERAL ELECTION FOR FEDERAL, STATE AND COUNTY OFFICERS. LATER THAT MONTH, LEGISLATORS WILL BEGIN TO FILE BILLS FOR THE 89TH LEGISLATIVE SESSION. NEXT SLIDE PLEASE. THE FIRST DAY OF SESSION IS JANUARY 14TH. OTHER KEY ACTIONS IN THAT MONTH ARE THE BIENNIAL REVENUE ESTIMATE FROM THE STATE COMPTROLLER'S OFFICE, WHICH WILL TELL US HOW MUCH MONEY THE STATE CAN SPEND. THE HOUSE AND SENATE WILL EACH FILE THEIR BUDGET BILLS, AND THE LIEUTENANT GOVERNOR ASSIGNS SENATORS TO THEIR COMMITTEE THE FOLLOWING MONTH. HOUSE MEMBERS WILL BE ASSIGNED TO THE COMMITTEES AND BUDGET COMMITTEES WILL BEGIN THEIR HEARINGS. TABC WILL LIKELY BE INVITED TO PROVIDE TESTIMONY BEFORE BOTH CHAMBERS BUDGET COMMITTEES IN FEBRUARY, AS IT HAS IN PRIOR SESSIONS. MARCH 14TH IS A 60 DAY MARK OF SESSION, WHICH MEANS IT WILL BE THE BILL FILING DEADLINE IN APRIL. BUDGET BILLS WILL GO TO THE FULL HOUSE AND SENATE FOR DEBATE CHANGES AND APPROVAL IN MAY. WE WILL BEGIN TO SEE THE DEADLINES FOR THE HOUSE AND SENATE TO CONSIDER AND REPORT BILLS. THE 140TH DAY IS THE LAST DAY OF SESSION FOR THE 89TH REGULAR SESSION IN SEPTEMBER OF 2025. THE STATE BUDGET WILL GO INTO EFFECT IN THE FISCAL YEAR FOR 2026, AND WILL BEGIN THROUGHOUT THIS ENTIRE PROCESS. TABC WILL BE PROACTIVE AND WILL PROACTIVELY MEET WITH WITH OFFICIALS AT THE CAPITOL AND INFORM THEM ABOUT THE AGENCY'S OPERATIONS AND BUDGET NEEDS. WE WILL TRACK ALL BILLS FILED THAT COULD IMPACT TABC PROVIDE TESTIMONY TO COMMITTEES. WE'RE ASKING FOR OR WHEN WE'RE ASKED TO DO SO, AND OVERALL BE A RESOURCE TO LAWMAKERS. TEXAS ALCOHOLIC BEVERAGE INDUSTRY. TABC IS ACTIVELY MONITORING POTENTIAL LEGISLATION BASED ON RECENT INTERIM CHARGES IN THE SENATE. THE SENATE STATE AFFAIRS WILL HEAR INVITED TESTIMONY ON DELTA EIGHT AND NINE PRODUCTS FOR THE SENATE. THERE IS LOOKING FOR CURRENT REGULATORY STRUCTURE OF THE DELTA EIGHT AND NINE INDUSTRIES. ALSO INCLUDED ARE BEVERAGES WITH THC. THE SENATE IS LOOKING AT CURRENT LAWS AND REGULATIONS OF NONALCOHOLIC THC BEVERAGES. CURRENTLY, THERE ARE NOT ANY ALCOHOLIC BEVERAGES ON THE MARKET. TONY, LET ME INTERRUPT YOU THERE. SO AS THE DELTA EIGHT, DELTA NINE SITUATION, THERE MAY BE ALCOHOLIC BEVERAGES MIXED WITH, YOU KNOW, THEY EXIST. RIGHT. SO AT WHAT POINT DO WE PROVIDE THE INPUT TO THE LEGISLATURE FROM A FROM AN EXPERTISE PERSPECTIVE, NOT FROM A LAWMAKER PERSPECTIVE, WHERE IN THE WHERE IN THE PROCESS WOULD WE GET INVOLVED? CHAIRMAN. WE'VE BEEN ASKED TO SPEAK. IS THAT CORRECT? WE HAVE INVITED TESTIMONY FOR THIS DELTA EIGHT DELTA NINE HEARING AND THEIR INTERIM CHARGE COMING UP. AT THIS POINT, THERE ARE NO PRODUCTS YET THAT WE'RE AWARE OF THAT HAVE PRODUCT APPROVAL FROM THE STATE OF TEXAS AND THE FEDERAL GOVERNMENT THAT HAVE THE THC AND ALCOHOL MIXED. OKAY. THERE ARE PLENTY OF BEVERAGES OUT THERE THAT DO HAVE THESE DELTA PRODUCTS IN THEM. THEY JUST DON'T HAVE ALCOHOL AT THIS POINT, AND DO ANY OF OUR INDUSTRY PARTNERS EITHER CURRENTLY OR INTEND TO SELL THEM. I DO BELIEVE THAT WE HAVE INDUSTRY PARTNERS OUT THERE THAT ARE SELLING THE DELTA EIGHT, DELTA NINE BEVERAGES, AND I'M NOT SURE WHICH OF THE TWO THAT THEY ARE CURRENTLY SELLING. OKAY. SO IF WE'RE NOT REGULATING THE PRODUCT ITSELF, BUT WE'RE REGULATING THE LICENSE HOLDER THAT IS SELLING THEM, ARE WE NOT DE FACTO INVOLVED? [00:45:08] OUR INVOLVEMENT AS IT STANDS NOW, UNLESS SOMEONE STARTS PUTTING ALCOHOL IN THOSE BEVERAGES, IS WE WORRY ABOUT THE PUBLIC SAFETY STANDPOINT FROM AN ON PREMISE LOCATION STANDPOINT. SO IF AN ON PREMISE LOCATION IS SELLING DELTA PRODUCTS AND THEY'RE SELLING ALCOHOLIC BEVERAGES, AND WE HAVE SOMEBODY THAT'S INTOXICATED ON THAT LICENSED PREMISE, THAT'S WHERE OUR REGULATION PIECE COMES INTO PLAY BECAUSE WE HAVE TO WORRY ABOUT ARE THEY INTOXICATED AT A LICENSED LOCATION? OKAY. THANKS, TONY. PLEASE CONTINUE. ABSOLUTELY. ALSO THAT WEEK IN THE SENATE, WE'VE BEEN INVITED TO TESTIFY ON THE IMPACT OF A LAW THAT PASSED LAST SESSION TO ALLOW FOR THE INCREASED SALE OF DISTILLED SPIRITS. THE SENATE IS EVALUATING THE ECONOMIC AND PUBLIC SAFETY IMPACT OF INCREASING THE AMOUNT OF BOTTLES A DISTILLERY CAN SELL TO EACH CONSUMER. THESE HAVE ALL BEEN TOPICS OF DISCUSSION AT THE CAPITOL AND AMONG THE INDUSTRY. TABC HAS NOT BEEN GIVEN A SPECIFIC PROPOSAL TO WEIGH IN ON, AND TABC IS NOT AWARE OF ANY CURRENT PROPOSALS TO OFFICIALLY GET INVOLVED IN THIS PROCESS DISPLAYED ON THIS SLIDE. OUR LEGISLATIVE OFFICES WITH KEY CONTACTS THAT WE ARE MOST OFTEN INTERACTING WITH. HOWEVER, WE RESPOND TO ALL MEETING REQUESTS THAT WE RECEIVE. TABC IS COMMITTED TO BEING TRANSPARENT WITH THE LEGISLATOR TO MAINTAIN POSITIVE RELATIONSHIPS WITH THEIR ELECTED OFFICIALS AND THEIR STAFF. THIS CONCLUDES OUR PRESENTATION AND WE ARE HAPPY TO ANSWER ANY QUESTIONS. I DO HAVE A QUESTION IN RESPONSE TO THOMAS'S COMMENT THAT WE'RE SURE NO ENTITY IS SELLING HEMP, CBD, DELTA OR WHATEVER. I GUESS THERE'S SO MANY DIFFERENT KIND OF STRAINS OR VARIANTS WITH A MIX OF ALCOHOL. IS THERE ANY WAY THAT WE CAN CONFIRM THAT? I MEAN, I KNOW WE'RE THEY'RE NOT TELLING US HOW DO WE GO OUT AND ASK AND FIGURE OUT WHAT DO THEY EXIST? ARE THEY I THINK THEY DO EXIST, BUT I DON'T KNOW. I MEAN, I DON'T KNOW EITHER, BUT IS THERE A WAY, AS THE AGENCY WHERE WE CAN KIND OF CAST A BROAD NET AND DO AN INFORMATION REQUEST TO FIGURE OUT IF PEOPLE ARE SEEING THESE STOCKED ON THE SHELVES? BECAUSE I'M BEING TOLD, NOT PERSONALLY, BUT THROUGH SOME PARTIES THAT I'VE BEEN TO WITH SOME FRIENDS THAT THESE THESE DRINKS DO EXIST, AND I'M FIELDING THESE QUESTIONS AND I'M LIKE, NO, I DON'T THINK THAT'S DOABLE HERE IN TEXAS, BUT APPARENTLY IT IS. SO TO BE ABLE TO SELL AN ALCOHOLIC BEVERAGE IN THE STATE, THEY NEED TO THE PRODUCERS HAVE TO GO TO THE FEDERAL GOVERNMENT FIRST AND TELL THEM WHAT THEIR FORMULA IS, AND THEN RECEIVE WHAT'S CALLED A COLA CERTIFICATE OF LABEL APPROVAL FROM THE FEDS. IS THAT ATF? THAT IS TTB. OKAY, AND SO THE TTB TAKES THOSE IN. THEY ASK WHAT THEIR FORMULAS ARE. WHAT IS TTB? TAX AND TRADE BUREAU. OKAY, AND SO THEY'RE THE ONES WHO REGULATE THAT PIECE OF IT AT THAT LEVEL. SO WHEN IT COMES TO FORMULAS AND HANDING OUT PRODUCT REGISTRATION COLAS AND THINGS LIKE THAT, SO THEY YOU HAVE TO GO TO THEM FIRST, GIVE THEM A COPY OF YOUR FORMULA AND GET REGISTRATION FOR YOUR PRODUCT AND SO THEY MAY ASK YOU FOR A SAMPLE OF YOUR PRODUCT TO TEST. OR THEY MAY NOT BASED ON WHAT YOUR FORMULA SAYS IS IN THERE, AND THAT'S JUST MATCHING UP WHAT'S IN THE BOTTLE WITH WHAT'S WRITTEN ON THE CAN ESSENTIALLY. RIGHT, THEY'RE GOING TO THEY WANT TO, WELL, THEY WANT TO KNOW YOUR RECIPE ESSENTIALLY, BUT DO I GUESS THE OTHER COULD DO PRODUCTS EXIST IN THE UNITED STATES THAT HAVE BOTH ALCOHOL AND THC, NOT THAT ARE REGISTERED AT THE FEDERAL LEVEL. OKAY. WHICH AND ALSO NOT THAT HAVE BEEN REGISTERED WITH THE STATE OF TEXAS. SO IF THEY'RE ON SHELVES, IT'S NOT WITH ANY REGULATORY OVERSIGHT. RIGHT. THE ONES THAT ARE ON THE SHELVES THAT WE KNOW OF, THAT ARE OUT THERE AND AGAIN, THAT WE KNOW OF JUST HAVE IN TEXAS DELTA PRODUCTS OR CBD IN THEM. SO LET'S ASSUME THAT THE LEGISLATURE SAYS, OKAY, DELTA CAN STAY. WE HAVE THESE PRODUCTS THAT CARRY THAT IN THEM. SO WHO'S GOING TO REGULATE THOSE. THAT'S GOING TO BE UP TO THE LEGISLATURE. RIGHT NOW WE HAVE NO PIECE IN THAT REGULATION UNTIL THEY INTRODUCE ALCOHOL INTO THOSE BEVERAGES. SO I THINK WE'LL WATCH THE SESSION AND SEE WHICH DIRECTION. YOU SEE THAT THERE'S A GAP THERE. RIGHT. THERE'S A REGULATORY GAP THAT EXISTS, AND I BELIEVE RIGHT NOW THEY'RE THEY'RE REGULATED BY HHC. IS THAT CORRECT? DSHS. DSHS DELTA EIGHT AND NINE PRODUCTS. YES. THEY HAVE TO GET A RETAIL PERMIT FROM THE STATE FOR THE CBD PRODUCTS. I SEE NOW; I UNDERSTAND YOUR COMMENT EARLIER BETTER. OUR OVERSIGHT IS REALLY TO THE LOCATION ITSELF WHERE THE LICENSE IS WITHOUT ANY ADDITIONAL REGULATORY LANGUAGE. RIGHT. THAT'S NOT TO SAY THAT THERE COULDN'T BE A RETAILER OUT THERE THAT STARTS MIXING THEM TOGETHER ON THE PREMISES LIKE THEY WOULD MIX, YOU KNOW, A COCKTAIL, [00:50:08] BUT IT'S NOT SOMETHING WE ARE AWARE OF AT THE MOMENT. RIGHT. WE'VE SEEN ANYTHING ON THE AGENDA THAT YOU KNOW OF AT THIS POINT REGARDING UNLICENSED BARS, BYOB. THERE HAVE BEEN BILLS FILED IN PRIOR LEGISLATIVE SESSIONS, AS WE'VE HAD DISCUSSIONS ABOUT, AND I ASSUME THOSE WILL SOME OF THOSE WILL BE FILED AGAIN, MAYBE IN DIFFERENT FORMS, BUT WE HAVEN'T SEEN ANY. OR AT LEAST I HAVEN'T SEEN ANY PROPOSALS FOR WHAT THAT MAY LOOK LIKE IN THE COMING SESSION. COULD YOU CHECK JUST TO KIND OF LET US KNOW IF YOU HEAR OF ANYTHING, YOU KNOW, IT'S EARLY, BUT I'D BE CURIOUS. WE CAN CHECK IN WITH SOME OF THE OFFICES THAT FILED THOSE. IT IS A SUBJECT THAT COMES UP ALL THE TIME, RIGHT, AS IT RELATES TO US AS AN AGENCY. SO, THANK YOU. WHEN IS THE HEARING ON THE DELTA EIGHT, DELTA NINE IN THE CAPITOL? SO I BELIEVE THAT HEARING ALREADY OCCURRED, AND TABC WASN'T INVITED ON THAT ITEM, BUT ON OCTOBER EITHER 16TH OR 17TH WE WILL BE PROVIDING TESTIMONY AT THE SENATE STATE AFFAIRS COMMITTEE'S REQUEST ABOUT THC PRODUCTS. SO THERE'S THE THC BEVERAGES. SO IT'S TRUE THC OR HEMP DERIVED PRODUCTS? I DON'T KNOW. I MEAN, I THINK THEY'RE ALL THC, BUT IF THERE'S A FORMULA THAT THE GOVERNMENT JUST A CHEMICAL CHAIN, RIGHT. IT'S A NUANCE OF, IT'S SOMEHOW TIED BACK TO THE HEMP GROWING, ANYWAY. WE DON'T THAT'S BEEN PART OF THE DIFFICULTY IN IDENTIFYING. OKAY. WELL THAT'S NOT FOR US TO DECIDE, BUT ANYWAY IT'S IS POTENTIALLY AN ISSUE THAT WE'RE GOING TO HAVE TO FACE. ON OCTOBER 16TH OR 17TH, THEY JUST CHANGED THE DATE. OKAY, BUT WE CAN FOLLOW UP WITH YOU GUYS AND MAKE SURE YOU HAVE THAT, THAT DATE AND LISTEN IN TO THAT ONE CAN EITHER WATCH IT LIVE. WE HAD A HARD--I HAD A HARD ENOUGH TIME UNDERSTANDING THE DIFFERENCE BETWEEN A MALTED BEVERAGE AND A BEER. WE ALL CALL IT BEER, RIGHT? RIGHT, IT'S ALL BEER NOW. THANK YOU. OKAY. COMMISSIONERS, DO YOU HAVE ANY OTHER QUESTIONS SO FAR? NO. THANK YOU. WE ALL FEEL SO ENLIGHTENED NOW, DON'T WE? ALL RIGHT. THANK YOU. THANK YOU. GENTLEMEN. OKAY, GUYS. THANKS. THANK YOU. OKAY, NEXT AGENDA ITEM IS PUBLIC COMMENT. GENERAL COUNSEL PERSON, DO WE HAVE ANYONE? NO, SIR. WE DO NOT. HOW DISAPPOINTING. ALL RIGHT, SO LET'S GO TO THE NEXT AGENDA ITEM, WHICH IS CONSIDERATION OF POTENTIAL ACTION OF PUBLICATION OF RULE REVIEW OF RULE 16 [4. Rules] TAC31.1 RELATING TO THE SEPARATION OF DUTIES BETWEEN COMMISSION AND EXECUTIVE DIRECTOR, SPECIAL COUNSEL, DIAMOND. GOOD MORNING, MR. CHAIR. WELCOME, SIR. THANK YOU SIR. GOOD MORNING COMMISSIONERS. FOR THE RECORD, MY NAME IS MATT DIAMOND, TABC, SPECIAL COUNSEL. MR. CHAIRMAN, AS YOU MENTIONED AGENDA ITEM 4.1 IS A PROPOSED RULE REVIEW CONDUCTED PURSUANT TO TEXAS GOVERNMENT CODE 2001.039. AS YOU'RE AWARE, THIS SECTION REQUIRES AGENCIES TO REVIEW ADOPTED RULES WITHIN FOUR YEARS OF THEIR EFFECTIVE DATE, AND EVERY FOUR YEARS THEREAFTER TO DETERMINE IF THE REASONS FOR INITIALLY ADOPTING THE RULES CONTINUE TO EXIST DURING THIS REVIEW. STAFF WILL CONSIDER AND MAKE RECOMMENDATIONS WHETHER THESE RULES OR THIS RULE SHOULD BE REPEALED, READOPTED OR READOPTED WITH AMENDMENTS. SHOULD THE COMMISSION APPROVE? STAFF WILL POST THE REVIEW FOR PUBLIC COMMENT AND CONSIDER ANY WRITTEN COMMENTS RECEIVED BY 5:00 PM ON NOVEMBER 10TH, 2024 AS A PART OF THIS REVIEW PROCESS, AND THAT CONCLUDES MY PRESENTATION ON THIS AGENDA ITEM. I'M HAPPY TO ANSWER YOUR QUESTIONS. OTHERWISE, THE MATTER IS RIGHT FOR YOUR DECISION. QUESTIONS OR COMMENTS? ALL RIGHT. I MOVE TO APPROVE PUBLICATION OF RULE REVIEW RULE 16 TAC 31.1 RELATING TO THE SEPARATION OF DUTIES BETWEEN COMMISSION AND EXECUTIVE DIRECTOR. IS THERE A SECOND? SECOND. MR. MACK, THANK YOU SIR. WE HAVE A SECOND. WE'LL NOW VOTE. ALL HAVE VOTED. MOTION IS APPROVED. SPECIAL COUNSEL DIAMOND, THE NEXT AGENDA ITEM IS CONSIDERATION OF POTENTIAL ACTION ON THE REVIEW OF READOPTION OF CHAPTER 45 SUBCHAPTERS A THROUGH E [00:55:03] 16 TAC 45.1 TO 45.51 RELATING TO THE MARKETING PRACTICES, GENERAL PROVISIONS, ENFORCEMENT, AND SPECIFIC REQUIREMENTS FOR DISTILLED SPIRITS, MALT BEVERAGES, WINE. THANK YOU, MR. CHAIRMAN. IT'S A MOUTHFUL. I APPRECIATE THAT. STAFF HAS CONCLUDED THE REVIEW OF CHAPTER 45 SUBCHAPTERS A THROUGH E, WHICH WAS PROPOSED AT THE JULY 23RD, 2024 COMMISSION MEETING. THE REVIEW WAS CONDUCTED PURSUANT TO TEXAS GOVERNMENT CODE 2,001.039. AS WE PREVIOUSLY MENTIONED REQUIRES AGENCIES TO REVIEW ADOPTED RULES WITHIN FOUR YEARS OF THEIR ADOPTION. EVERY FOUR YEARS THEREAFTER TO DETERMINE IF THEY ARE STILL NECESSARY. THIS PROPOSED REVIEW WAS PUBLISHED IN THE AUGUST 2ND, 2024 ISSUE OF THE TEXAS REGISTER. TABC DID NOT RECEIVE ANY COMMENTS REGARDING THIS REVIEW. AT THE CONCLUSION OF THIS REVIEW, TABC STAFF FOUND THAT THE REASONS FOR ADOPTING CHAPTER 45 SUBCHAPTERS A THROUGH E CONTINUE TO EXIST, AND STAFF RECOMMENDS RE ADOPTION OF THESE RULES. STAFF DID IDENTIFY PROVISIONS IN THE RULE REVIEW THAT MAY WARRANT FURTHER AMENDMENT, BUT ANY AMENDMENTS TO THESE RULES WOULD BE PROPOSED PURSUANT TO TEXAS ADMINISTRATIVE PROCEDURE ACT IN THE TEXAS GOVERNMENT CODE, AND THIS CONCLUDES MY PRESENTATION ON THIS AGENDA ITEM. I CAN ADDRESS ANY QUESTIONS. OTHERWISE, THE MATTER IS RIPE FOR YOUR DECISION. QUESTIONS, LADIES AND GENTLEMEN. NONE. ALL RIGHT. I MOVE TO APPROVE REVIEW AND READOPTION OF CHAPTER 45 SUBCHAPTERS A THROUGH E RELATING TO MARKETING PRACTICES, GENERAL PROVISIONS, ENFORCEMENT, AND SPECIFIC REQUIREMENTS FOR DISTILLED DISTILLED SPIRITS, MALT BEVERAGES, AND WINE AS RECOMMENDED BY STAFF. IS THERE A SECOND? SECOND. THANK YOU, COMMISSIONER ATKINS. WE HAVE A SECOND. WE'LL NOW VOTE. ALL HAVE VOTED. ALL RIGHT. THE MOTION IS APPROVED. THANK YOU, MR. CHAIRMAN. GOOD MORNING, COMMISSIONERS, AND I DID NOT CALL YOU MATT DAMON THIS TIME. [CHUCKLING] I'M SURE THAT'S ABOUT THE HUNDREDTH TIME YOU'VE PROBABLY HEARD THAT THIS WEEK, BUT THAT'S FINE. ALL RIGHT, SENIOR COUNSEL CHERRY, PLEASE COME FORWARD IF YOU ARE WITH US. THE NEXT AGENDA ITEM IS CONSIDERATION OF POTENTIAL ACTION ON PUBLICATION OF PROPOSED AMENDMENTS TO RULE S16. TAC 41.12, RELATING TO COMPLIANCE REPORTING BY LICENSE AND PERMIT HOLDERS. IF YOU PLEASE, SIR. ALL RIGHT. GOOD MORNING. CHAIRMAN. COMMISSIONERS. FOR THE RECORD, I'M MATTHEW CHERRY, TABC SENIOR COUNSEL. SO THE NEXT AGENDA ITEM IS A PROPOSED AMENDMENT TO RULE 41.12, WHICH RELATES TO COMPLIANCE REPORTING. THE PROPOSED AMENDMENTS THAT WE HAVE IN THIS DRAFT, THEY INCREASE THE AMOUNT OF TIME LICENSEES AND PERMITS ARE ALLOTTED TO COMPLETE AND SUBMIT THEIR COMPLIANCE REPORTS, AS WELL, AS IT DOES PROVIDE SOME ADDITIONAL RELIEF TO PERMIT HOLDERS WHO FAIL TO REPORT A FAIL TO SUBMIT A REPORT ON TIME. STAFF DID PRESENT THE PROPOSED AMENDMENTS AT A STAKEHOLDER MEETING ON AUGUST 8TH, 2024, AND WE RECEIVED NO COMMENTS. THIS TIME, I'LL TAKE ANY QUESTIONS. OKAY. QUESTIONS? ALL RIGHT. I MOVED TO APPROVE PUBLICATION OF PROPOSED AMENDMENTS TO RULE 16, TAC 41.12 RELATING TO COMPLIANCE REPORTING BY LICENSE AND PERMIT HOLDERS. IS THERE A SECOND? SECOND. COMMISSIONER MARINO, THANK YOU. WE WILL NOW VOTE. ALL HAVE VOTED. THE MOTION IS APPROVED. THE NEXT AGENDA ITEM IS CONSIDERATION AND POTENTIAL ACTION ON PUBLICATION AND PROPOSED AMENDMENT TO RULE 16 TAC 45.2 RELATING TO DEFINITIONS AND PROPOSED NEW RULES 45.28 AND 45.29 RELATING TO STANDARDS OF FILL FOR DISTILLED SPIRITS AND WINES. SO THIS AGENDA ITEM, IT COVERS PROPOSED CHANGES TO CHAPTER 45, AND LIKE YOU JUST SAID, 45.2 RELATES TO DEFINITIONS, AND THEN WE PROPOSED A NEW 45.28 AND NEW 45.29, WHICH COVERS THE CONTAINER SIZES AND THE STANDARDS OF FILL FOR WINE AND DISTILLED SPIRITS. THE PROPOSED AMENDMENT TO 45.2. IT JUST UPDATES THE DEFINITION OF A DISTILLED SPIRIT. [01:00:01] THAT WAY, THE DEFINITION IN THE RULE ALIGNS DIRECTLY WITH THE DEFINITION IN THE CODE, AND THEN THE PROPOSED NEW 45.28 AND 45.29 FOR THE CONTAINER SIZES AND STANDARDS OF FILL. WHAT WE'VE DONE HERE IS MAKE IT CLEAR THAT WHAT'S AUTHORIZED FOR ALL THE CONTAINER SIZES ARE THOSE CONTAINER SIZES THAT ARE SPECIFICALLY AUTHORIZED IN THE ALCOHOLIC BEVERAGE CODE, AS WELL AS THE CONTAINER SIZES THAT ARE AUTHORIZED BY THE FEDERAL AGENCY AT TTB. THESE CHANGES ENSURE THAT OUR DEFINITION OF DISTILLED SPIRITS AGAIN, THAT IT ALIGNS WITH THE CODE, AND THAT ALL CONTAINER SIZES THAT ARE ELIGIBLE FOR A CERTIFICATE OF LABEL APPROVAL FROM TTB ARE CLEARLY AUTHORIZED IN THE STATE OF TEXAS. WE DID PRESENT THESE PROPOSED AMENDMENTS AT A STAKEHOLDER MEETING ON AUGUST 8TH, AND STAFF RECEIVED NO COMMENTS AT THIS TIME. I'LL TAKE ANY QUESTIONS. HAVE WE EVER HAD A SITUATION WHERE TTB RECOMMENDED A LABEL THAT WE DID NOT APPROVE, OR IS IT FAIRLY MUCH IN LOCKSTEP? WE'VE HAD SITUATIONS IN THE PAST MANY YEARS BACK WHERE TTB HAD APPROVED SOMETHING THAT WE COULDN'T NECESSARILY APPROVE BECAUSE OF OUR STATUTE, BUT IT'S GENERALLY WHEN THAT HAPPENS, IT'S MAINLY BECAUSE WE HAVE SOME REQUIREMENTS IN TERMS OF WE NEED TO HAVE IT EXPLICITLY SAY WHERE IT WAS PRODUCED, OR MAYBE IT SHOULD NOT SAY THIS PRODUCT WAS MADE FOR THIS SPECIFIC RETAILER. SO THAT'S REALLY WHEN WE KIND OF GET INTO KIND OF SOME OF THOSE VIOLATIONS. THAT MIGHT BE A SCENARIO WHERE WE WOULD DENY SOMETHING THAT THE FEDERAL GOVERNMENT HAS APPROVED, BUT THAT'S JUST BECAUSE WE CAN GO A STEP FURTHER AS WE NEED TO, TO DISPROVE SOMETHING IF IT RUNS AFOUL OF OUR LAWS, BUT GENERALLY WHAT THEY APPROVE, WE GENERALLY AGREE. OKAY. ALL RIGHT. ANY QUESTIONS, LADIES AND GENTLEMEN. I MOVE TO APPROVE PUBLICATION OF PROPOSED AMENDMENTS TO RULE 16, TAC 45.2 RELATING TO DEFINITIONS PROPOSED NEW RULES 45.28 AND TWO NINE RELATING TO THE STANDARDS FOR FILL FOR DISTILLED SPIRITS AND WINE. IS THERE A SECOND? SECOND. COMMISSIONER MACK. THANK YOU SIR. WE WILL NOW VOTE. ALL HAVE VOTED. THE MOTION CARRIES. NEXT AGENDA ITEM IS CONSIDERATION OF POTENTIAL ACTION ON PUBLICATION OF PROPOSED NEW SUBCHAPTER G, AS IN GOLF, RELATING TO THE OPERATION OF OPERATING AGREEMENT BETWEEN PERMIT AND LICENSE HOLDERS AND THE NEW RULE 16 TO 41.65 RELATING TO CONTRACT DISTILLING ARRANGEMENTS AND DISTILLERY ALTERNATING PROPRIETORSHIPS. ALL RIGHT. YES. SO THIS NEXT AGENDA ITEM, LIKE YOU JUST SAID, COVERS A PROPOSED AMENDMENT TO ADD A NEW SUBCHAPTER TO CHAPTER 45 WOULD BE SUBCHAPTER G, WHICH RELATES TO OPERATING AGREEMENTS BETWEEN PERMIT LICENSE HOLDERS, AND THEN WITHIN THAT NEW SUBCHAPTER, WE'RE PROPOSING A NEW RULE, 41.65, WHICH RELATES TO CONTRACT DISTILLING ARRANGEMENTS AND DISTILLERY ALTERNATING PROPRIETORSHIPS. YOU'LL GENERALLY JUST HEAR THIS REFERRED TO AS CONTRACT DISTILLING. THAT'S KIND OF THE COLLOQUIAL TERM THAT YOU'LL HEAR WITHIN THE INDUSTRY. THE PROPOSED RULE'S NECESSARY TO IMPLEMENT LEGISLATION AUTHORIZING HOLDERS OF A DISTILLERS AND RECTIFIERS PERMIT, AND A HOLDER OF A NONRESIDENT SELLER'S PERMIT TO ENTER INTO OPERATING AGREEMENTS FOR THE UNDERLYING ACTIVITIES RELATED TO THE PRODUCTION OF DISTILLED SPIRITS. THE PROPOSED RULE PROVIDES A FRAMEWORK FOR PERMITTEES WHO ENGAGE IN CONTRACT DISTILLING ARRANGEMENTS AND DISTILLERY ALTERNATING PROPRIETORSHIPS, AS CURRENTLY AUTHORIZED IN SECTIONS 14.10 AND SECTION 37.011 OF THE ALCOHOLIC BEVERAGE CODE. THE PROPOSED RULE ALSO DEFINES THE TWO TYPES OF OPERATING AGREEMENTS FOR THE PRODUCTION OF DISTILLED SPIRITS, AND IT PROVIDES A DEFINITION OF THE TERM AFFILIATE AS IT'S USED SPECIFICALLY IN SECTION 14.10, SUBSECTION A6 AND 37.011, SUBSECTION A OF THE ALCOHOLIC BEVERAGE CODE. ADDITIONALLY, THE RULE CLARIFIES WHO MUST BE A PARTY TO THESE ARRANGEMENTS, AND IT SETS FORTH REQUIREMENTS FOR PERMIT HOLDERS TO SUBMIT THOSE ARRANGEMENTS TO TABC FOR APPROVAL. IT ALSO CLARIFIES THE TYPES OF ACTIVITIES THAT AUTHORIZE THE SALE OF DISTILLED SPIRITS TO CONSUMERS DIRECTLY ON THE PREMISES OF A DISTILLERS PERMIT HOLDER, AND LASTLY, THE PROPOSED RULE PROVIDES AN EXCEPTION TO THE CURRENT REGISTRATION REQUIREMENT, WHICH WILL ALLOW THESE PRODUCTS THAT ARE PRODUCED UNDER THE ARRANGEMENTS TO BE REMOVED FROM THE PREMISES SO THEY CAN BE SUBMITTED TO THE FEDERAL GOVERNMENT IN CASE THEY NEED A SUBMISSION TO GET FORMULA APPROVAL, AND THEN FURTHER ON TO GET A CERTIFICATE OF LABEL APPROVAL, WHICH IS A PREREQUISITE FOR TABC PRODUCT REGISTRATION. STAFF DID PRESENT THE PROPOSED RULE AT A STAKEHOLDER MEETING ON AUGUST 8TH, AND WE CONSIDERED THE COMMENTS RECEIVED FROM STAKEHOLDERS IN DRAFTING THIS PROPOSAL, AND RIGHT NOW I'LL TAKE ANY QUESTIONS. DEFINE ALTERNATING PROPRIETORSHIP. SO GENERALLY THE WAY YOU WANT TO THINK ABOUT IT IS CONTRACT DISTILLING WOULD BE I'M A DISTILLER. YOU'RE A DISTILLER FOR SOME REASON. MAYBE ONE OF MY PRODUCTS IS DOING GREAT. I DON'T HAVE ENOUGH CAPACITY AT MY CURRENT FACILITY TO PRODUCE EVERYTHING THAT I NEED TO FULFILL ALL MY ORDERS. SO I ESSENTIALLY HIRE YOU AS A SECOND DISTILLER TO PRODUCE THAT PRODUCT ON MY BEHALF. [01:05:04] OKAY, AND THE OTHER ARRANGEMENT, WHICH IS CALLED AN ALTERNATING PROPRIETORSHIP, YOU ESSENTIALLY YOU HAVE TWO PROPRIETORS OF A BUSINESS THAT ARE ALTERNATING OR SHARING SPACE. SO INSTEAD OF ME AS DISTILLER ONE YOU DISTILLER TWO ME HIRING YOU TO PRODUCE THE PRODUCT ON MY BEHALF, I WOULD ACTUALLY ENTER INTO AN ARRANGEMENT TO GO ONTO YOUR PREMISES AND USE YOUR FACILITY TO PRODUCE MY PRODUCT. SO AGAIN, ALTERNATING PROPRIETORSHIPS, TWO PEOPLE THAT ARE SHARING THAT SPACE IS THAT COMMON? YES. NOW, OUTSIDE OF TEXAS, IT'S COMMON, BUT CURRENTLY IN TEXAS IT'S NOT AS COMMON BECAUSE THIS IS SOMETHING THAT THE LEGISLATURE JUST RECENTLY AUTHORIZED THE LAST SESSION. IT'S MORE COMMON CURRENTLY UNDER THE CONTEXT OF MALT BEVERAGES THAT'S BEEN ALLOWED UNDER TEXAS LAW FOR I WANT TO SAY IT WAS AUTHORIZED PROBABLY LIKE 3 OR 4 SESSIONS AGO. SO I GUESS THE IDEA HERE IS THAT THIS ALLOWS SMALLER BUSINESSES TO BECOME EFFICIENT SO THAT THEY CAN HAVE SOME ABILITY TO SCALE AND NOT BE CRUSHED BY. ABSOLUTELY. CHAIRMAN, WE WERE REALLY GLAD TO SEE THIS PASS LAST SESSION. SO AGAIN, WE WERE REALLY GLAD TO SEE THIS PASSED LAST SESSION AFTER YOU CAME ON BOARD, WE PUT THIS IN OUR LAR IN TERMS OF IMPEDIMENTS AND SAID, WE KNOW THAT THE WINE INDUSTRY CAN DO THIS. WE KNOW THE MALT BEVERAGE INDUSTRY CAN DO THIS. WE KNOW DISTILLERIES OUTSIDE THE STATE CAN DO THIS. PLEASE CHANGE THE LAW SO THAT THESE GUYS, THE DISTILLERIES CAN DO IT, AND WHILE THAT DIDN'T BECOME A PART OF SUNSET, THE INDUSTRY DID PUSH FOR IT OVER THE LAST TWO SESSIONS. GOT IT PASSED LAST SESSION, AND NOW WE'RE NOT IN A POSITION WHERE WE'RE TELLING PEOPLE THEY SHOULDN'T BE DOING SOMETHING THAT THEY CAN DO EVERYWHERE ELSE. SO IT WAS GREAT FOR THE TEXAS MARKETPLACE. SEE, THAT'S AN EXAMPLE OF WHERE THAT'S PUBLIC PRIVATE PARTNERSHIP WORKING. RIGHT. THAT IS AN EXAMPLE WHERE WE'RE NOT PUTTING THE STRONG ARM OF GOVERNMENT TO IMPEDE COMMERCE. WE'RE ACTUALLY ASSISTING COMMERCE AND WE'RE ASSISTING INDUSTRY. SO I JUST I WANT TO MAKE THAT KNOWN AND FOR PUBLIC RECORD. YOU SAID THAT THERE WERE COMMENTS ON THIS PARTICULAR RULE? YES. SO AFTER SOME DISCUSSION WITH STAKEHOLDERS, WE HAD A DEFINITION FOR THE CONTRACT DISTILLING ARRANGEMENT THAT HAD A KIND OF A REQUIREMENT TO HAVE AN ADDITIONAL PREMISES, WHICH IS SOMETHING THAT IS REQUIRED UNDER THE ALCOHOLIC BEVERAGE CODE FOR MALT BEVERAGES, AND WHEN WE WERE SETTING UP THE FRAMEWORK FOR THIS RULE, SINCE THE CODE ALREADY HAS A FRAMEWORK FOR THESE TYPES OF ARRANGEMENTS FOR MALT BEVERAGES, WE TRIED TO USE WHAT WE COULD. THAT'S ALREADY IN STATUTE FOR THAT TO SET THIS UP THOUGHT PROCESS BEHIND THAT REALLY IS JUST THE INDUSTRY IS ALREADY USED TO THAT. SO NOW WE'RE ADDING SOME OF THE SAME TYPES OR SIMILAR ARRANGEMENTS FOR ANOTHER CLASSIFICATION OF ALCOHOL. LET'S TRY TO USE WHAT'S ALREADY BUILT IN. PEOPLE ARE USED TO THE EXTENT THAT WE CAN. SO WE JUST TALKED WITH SOME STAKEHOLDERS AND WERE ABLE TO MODIFY THAT DEFINITION TO NOT REQUIRE THAT ADDITIONAL PREMISES. EVERYBODY'S ON BOARD WITH OUR-- YES. OKAY. YEAH, AND I WILL SAY, TOO, AS WELL, GOING BACK TO YOUR COMMENT A MOMENT AGO, BUT WE ARE WORKING WITH OUR INDUSTRY PARTNERS OUT THERE ON THIS RULE. I DO EXPECT SOME FORMAL COMMENTS TO COME IN, OF WHICH, YOU KNOW, SHOULD WE RECEIVE, WE WILL CHANGE THE RULE TO MAKE THINGS EVEN EASIER FOR THEM. SO WE'VE BEEN WORKING WITH THE DISTILLED SPIRITS ASSOCIATION OF TEXAS AND OUR OTHER STAKEHOLDERS THAT HAVE COME TO US. SO WE WILL HAVE SOME UPDATES FOR YOU AT THE NEXT MEETING, WHICH WILL MAKE THINGS EVEN EASIER SHOULD THOSE REQUESTS COME IN. EXCELLENT, HIS RECALL IS JUST, YOU'RE GOOD MAN. JOHNNY ON THE SPOT THERE. THANK YOU. MR. CHERRY. I SUPPOSE WE HAVE TO VOTE ON THIS NOW, RIGHT? THAT WOULD BE MY PREFERENCE. YES, PLEASE. ALL RIGHT. I MOVE TO APPROVE PUBLICATION AND PROPOSE NEW SUBCHAPTER G RELATING TO THE OPERATING AGREEMENTS BETWEEN THE PERMIT AND LICENSE HOLDERS AND NEW RULE 16, TAC 41.65 RELATED TO CONTRACT DISTILLING ARRANGEMENTS AND DISTILLERY ALTERNATING PROPRIETORSHIPS. IS THERE A SECOND? SECOND. THANK YOU, COMMISSIONER ATKINS. WE WILL NOW VOTE. ALL HAVE VOTED. THE MOTION CARRIES. BEFORE WE GO INTO EXECUTIVE SESSION, I WANT TO SORT OF MAKE IT A HABIT OF WELCOMING. TO THE EXTENT THAT I KNOW YOU'RE HERE. MEMBERS OF INDUSTRY, WE REALLY APPRECIATE WHEN OUR INDUSTRY PARTNERS COME AND VISIT, AND I'D LIKE TO RECOGNIZE BOB HUNT FROM MOLSON COORS BEVERAGE COMPANY. THANK YOU, SIR, FOR COMING, AND ANY OF OUR OTHER INDUSTRY PARTNERS THAT ARE HERE. I'LL DO A BETTER JOB NEXT COMMISSION MEETING, KNOWING WHO YOU ARE AND BEING HERE. ALL RIGHT, SO THE NEXT ITEM IS EXECUTIVE SESSION. [5. Executive Session] THE COMMISSION WILL NOW GO INTO EXECUTIVE SESSION UNDER GOVERNMENT CODE 551.074 AND 071 AND 089. [01:10:06] REGULAR OPEN SESSION. TEXAS ALCOHOLIC BEVERAGE COMMISSION WILL BE IN RECESS. TIME IS NOW 11:44. THANK YOU ALL FOR COMING BACK. GENERALLY WHEN WE COME OUT OF EXECUTIVE SESSION, NO ONE'S HERE. I THINK IT'S PROBABLY A REFLECTION OF MY LACK OF POPULARITY, BUT I REALLY APPRECIATE THAT YOU'RE HERE. THE TEXAS ALCOHOLIC BEVERAGE COMMISSION HAS CONCLUDED ITS EXECUTIVE SESSION. IT'S NOW IN REGULAR OPEN SESSION. THE DATE IS TUESDAY, SEPTEMBER 24TH, 2024, AND IT IS 11:58 A.M.. [6. Closing Items] NEXT, POTENTIAL ACTION ON ITEMS DISCUSSED IN EXECUTIVE SESSION, OF WHICH THERE WERE NONE. THERE ARE NO ACTIONS TO BE TAKEN AND THE FINAL IS THE ANNOUNCEMENT OF THE NEXT MEETING DATE. THE NEXT MEETING IS PLANNED FOR THURSDAY, NOVEMBER 14TH, 2024, AND . THAT'S RIGHT FOLKS, YOU HEARD IT RIGHT THURSDAY, WHICH I DON'T THINK WE'VE EVER HAD A THURSDAY MEETING, HAVE WE? IT'S BEEN A WHILE FOR MY TIME. YEAH. OKAY. THAT WOULD BE REALLY EMBARRASSING. YOU KNOW, WE'VE HAD SEVERAL SINCE YOUR TIME AS A MEMBER. THANKS FOR COVERING ME. ALL RIGHT. SO ARE THERE ANY ISSUES WITH THAT DATE, COMMISSIONERS? NOPE. ALL RIGHT. LET ME JUST MAKE SURE. ALL RIGHT. VERY WELL. ALL RIGHT. THE NEXT COMMISSION MEETING IS SCHEDULED ON THURSDAY, NOVEMBER 14TH, 2024. NEXT ADJOURNMENT TIME IS 12 NOON. WE ARE ADJOURNED. WE'LL SEE YOU ALL NEXT TIME, FOLKS. * This transcript was compiled from uncorrected Closed Captioning.