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How to Get a Liquor License in the USA

Published Feb 01, 2021 Retail
How to Get a Liquor License in the USA
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“Quick Summary” Be it a bar, restaurant, or nightclub, your establishment requires a liquor license. Even other businesses like breweries, grocery stores, convenience stores, taverns, hotels, clubs need liquor licenses.

Liquor laws in America differ from state to state, plus local agencies play a prominent role in issuing liquor licenses. However, the primary steps remain the same for every state, and following them will make obtaining a liquor license smooth and hassle-free.

Awareness of state-specific liquor laws

Every state in the United States of America has its laws; hence you need to be aware of them. The Alcoholic Beverage Control, also known as ABC, formulates liquor laws for each state in America. This body, i.e., ABC, controls the sales and distribution of liquor. 

They decide when and where you can sell liquor and to whom. Depending on the state and federal licensing requirements, liquor licenses can cost anywhere from $300 to $14,000. Even the processing time varies; it can take 5-6 months on average. Don’t forget to check if a particular city or town has license quotas. These license quotas determine the places where you can sell liquor in the state at a given point in time.

On-license of Off-license

The two main types of licenses given to establishments that sell alcohol are on-license and off-license.

  • An on-license is for those establishments that serve alcoholic beverages to people to be consumed on the premises. Examples of such establishments are bars, restaurants, taverns, etc.
  • An off-license is for those businesses that sell liquor to customers to be consumed outside the premises. These establishments include drug stores, liquor stores, and grocery stores.

Understand your license requirements

Depending on the type of business and the varieties of alcohol you want to sell, you need to apply for a liquor license accordingly. There are various types of liquor licenses.

  • Tavern license - This license is for those businesses that earn the bulk of their revenue from alcohol sales.
  • Beer and wine license - A beer and wine license is ideal for establishments that choose to serve alcoholic beverages (excluding hard liquor) as an accompaniment to food. Only soft liquor may be sold by owners holding such licenses.
  • Restaurant - This type of license allows restaurants to sell alcoholic beverages, but only a certain amount of revenue should come via alcohol sales, 40% in most cases.
  • Brewpub license - Establishments that want to make their alcoholic beverages need to get a brewpub license. Some states issue an alternating license wherein you can brew alcohol at a particular time and sell it some other time.
  • Club license - A club license allows establishments to serve alcoholic beverages to private members. Depending on the state, establishments are required to serve only beer and wine or all alcoholic beverages.
  • Delivery license - This license is for establishments to allow delivery of alcoholic beverages to customers in sealed containers.
  • Eating plate licenses - For take-out/takeaway businesses that sell minimal amounts of beer, the eating plate license is ideal. Still, it limits the amount of alcohol that can be sold to each customer.
  • Hotel licenses - These licenses are ideal for hotels with bars and restaurants that serve alcoholic beverages.
  • Retail licenses - Grocery stores, convenience stores, liquor stores, and other businesses that sell alcohol usually get a retail license.

Filing a liquor license application

After researching all the aspects of obtaining a liquor license, it is time to apply for one. Contact the local liquor licensing body and inquire about the paperwork required. Make a list of all the questions you want to be answered.

  • What kind of license do I require?
  • What is the cost of getting a liquor license?
  • In a quota state, does the town/city have any liquor licenses?
  • Any businesses willing to sell their existing liquor licenses? (in a quota state)

Make preparations for the entire procedure in advance. There is no point in running around at the last minute.

What are the documents required to apply for a liquor license?

The rules and regulations to apply for a liquor license differ from state to state. Each of the 50 states in America has its requirements. However, a few documents remain the same; some of them are as below.

  • Employee Identification Number (EIN)
  • Certificate of Incorporation
  • Company Constitution
  • Proposed Menu
  • Partnership Agreement
  • Restaurant Mockups

Have these documents ready at the time of filling up the application.

Other documents you may be asked to furnish:

  • Business License
  • Foodservice License
  • Music License
  • Food Handler’s Permit
  • Sign Permit
  • Dumpster Place Permit
  • Certificate of Occupancy
  • Sales Tax Permit
  • Building Health Permit
  • Employee Health Permit
  • Valet Parking Permit

Cost of a Liquor License

It is difficult to provide an accurate cost for a liquor license in each state. For total clarity, you need to consult the Alcohol Beverage Control body in your state/town. You might have to get federal, state, county, and local licenses in some towns or localities. The more the number of licenses, the higher the cost.

State-controlled stores or private ownership?

In the United States of America, there are liquor stores controlled by the state while others are not. The state operates such controlled stores and doesn’t allow private businesses to sell liquor. The state governments do this to ensure they get the entire revenue.

With liquor privatization, the absolute control of sales and distribution lies with privately owned businesses and enterprises.

States in which private businesses cannot sell liquor:

  • Alabama
  • Idaho
  • New Hampshire
  • North Carolina
  • Pennsylvania
  • Utah
  • Virginia

There are states which allow the private ownership of liquor stores but make significant decisions related to prices, product selection, etc. Distributors and wholesalers have to abide by these decisions.

  • Iowa
  • Maine
  • Michigan
  • Mississippi
  • Montgomery County (Maryland)
  • Montana
  • Ohio
  • Oregon
  • Vermont
  • Wyoming
  • West Virginia

How long does it take to complete the entire process of obtaining a liquor license?

When applying for a liquor license, don’t leave it to guesswork. Talk to the ABC in your area and plan in advance. With proper planning, you can get your license before your establishment commences business. When you know that your business complies with all the legal rules and regulations, you can remain stress-free and conduct business properly.

Liquor license renewal procedure

A liquor license renewal is pretty quick and straightforward. Most liquor licenses offer a validity period of 1-3 years, after which it requires renewal. Your license renewal request will be granted provided you don’t break the law or get into any legal hassles. Depending on your state’s laws, you can renew your liquor license 90-120 days before expiration. Moreover, the liquor license renewal cost drops significantly compared to when you first received your liquor license.