The department may not issue a wholesale distributor license to an applicant under this subchapter unless the department:
(1) conducts a physical inspection of the place of business at the address provided by the applicant under Section 431.404 or determines that an inspection is unnecessary after thoroughly evaluating the information in the application, the compliance history of the applicant and the applicant's principals, and the risk of counterfeiting in the applicant's product; and
(2) determines that the designated representative of the place of business meets the qualifications required by Section 431.405.