What is a Liquor License and What Does It Do?

 

So, you think you might need a liquor license. Lucky for you, that’s our speciality. We can  break down everything you need to know about liquor licenses, who needs one, and the application and licensing processes.

Let’s start with the basics: A liquor license is a permit to sell alcohol and alcoholic beverages. If your business has a hand in the distribution, manufacturing, or sale of alcohol, you need a liquor license. That includes businesses from restaurants and bars to hotels, private clubs, or other establishments. And that’s good news: According to data by BevSpot, liquor sales can be responsible for some of the largest profit margins on a menu, depending on the type of liquor—between 76% and 82%!

 

What does a liquor license do? Liquor licenses regulate:

 

• Which businesses are allowed to sell alcohol

• When and where they can sell alcohol

• How much can be sold at one time

• How much businesses can charge for alcohol

• The type of alcoholic beverages that can be sold

• To whom alcohol can be sold

• Which businesses are permitted to manufacture and distribute alcohol

 

Liquor licensing laws also specify that wholesale vendors of wine, liquor, and beer can’t sell to establishments without a liquor license.

 

What Kind of License Do You Need?

 

An important  thing to keep in mind is that every state has its own rules about the sale, distribution, and consumption of alcohol and different requirements about liquor license applications and the licensing process. These rules are regulated by each state’s  Department of Alcoholic Beverage Control (ABC) or a division by a similar name. Individual counties and cities may also have their own related departments.

 

Futhermore,  there are different types of liquor licenses and they vary by state. The ABC in your state will be able to give you the lowdown on what is required for businesses to file a liquor license application and the application process.

 

 

Need to know which liquor license is right for you? Your type of license will depend on a couple things:

 

• What kind of establishment you have

• The kind of alcohol you sell and what time of day  you sell it

• Whether you’re planning to let customers roll BYOB-style or serving and selling alcohol

• Where drinking occurs

 

 

The two major types of licenses are an on-premise, where the liquor or alcoholic beverages you sell will be consumed on the premises, like a bar or restaurant. The other is an off-premise, which you need if you’re planning to have the liquor you sell be consumed off the premises, like a grocery store or drug store, or even a liquor store. There might be different qualifications for a catering company or special events.

 

In some states, you’ll be applying for a specific class of license. The most common classes of liquor licenses include a tavern license, which is for restaurants that serve both alcohol and food, but liquor only makes up about 50% of their sales; a beer and wine license, where you can only sell “soft” liquors but not hard liquor, like spirits; or a restaurant license, where the license could specify that only a certain percentage of earnings can come from the alcohol sales.

 

What Does a Liquor License Application Require?

 

Some states have a limited number of liquor licenses, so you should check availability for your state, county, or city level depending on where you’re located. But no worries—even if your county technically has no new liquor licenses available, businesses in your area could be interested in selling their licenses. Your state’s ABC  might track that information, too.

For a liquor license application, you’ll need business documents in place before you enter the application process, like employer identification numbers, zoning permits, building permits, health permits, signage permits, or leases. You’ll file your application with your state’s ABC, so in addition to the forms your local authority or state government requires, you might be required to pay a processing fee, complete a background check, and submit a financial verification sheet, a copy of a food handler’s permit or license, a lease, or a certificate of good standing from the Secretary of State.

Because states only want to provide responsible business owners with liquor licenses, offering up detailed information on your ownership and business finances is part of the deal—in some states, that even includes undergoing and passing different inspections from city departments. Since we know getting a liquor license is a lengthy process, we suggest getting as much together as you can ahead of time!

 

How Long Does a Liquor License Application Take?

 

Liquor license application processing can take a while—it varies based on state and license type, but typically it takes 90 days to five or six months.  Starting the process with plenty of buffer time between applying for a liquor license and your opening is crucial. The costs of a liquor license—once all aspects of the application process are added up—can range from several hundred dollars to millions of dollars depending on your state liquor laws, type of liquor, and type of license.

 

You’re also required to renew your liquor license annually, which might involve paying a renewal fee. What is important is knowing the cost and timeline upfront so you can feel confident and informed as you take this next step with your business. Research for the win!