By Steve Rappaport
The liquor license conundrum; can’t get one, can’t live without one. Perhaps some information about this seemingly elusive essential ingredient to success in the food and beverage business might help.
The legal permission for selling alcoholic beverages is commonly known as a Liquor License. The New York State Liquor Authority (SLA)/Division of Alcohol Beverage Control (ABC) has established a classification system capable of coding and registering up to more than 70 different classes of Liquor License. In general, there are two distinctive methods of categorizing Liquor Licenses. There is the “Full License” allowing the sale of all forms of liquor (including hard liquor), and then there is a “Beer and Wine License”, which only permits the sale of beers and wines. The other categorizing method divides liquor licenses into “On Premise License” and “Off Premise License”. An “On Premise License” allows the sale and consumption of liquor inside an establishment, therefore is suitable for restaurants, bars and hotels. An “Off Premise License” does not permit on-site alcohol consumption, and is for wholesalers and retailers such as liquor stores or grocery stores.
According to SLA, On Premise Licenses include:
1. OP: On Premise is a full liquor license allowing for the sale and consumption of all types of alcoholic beverages. Additionally, a holder of an OP license may sell beer for off premise consumption.
2. CL: Club License allows the sale and consumption of all types of alcoholic beverages to members of clubs and their guests.
3. HL: Hotel License also permits the sale and consumption of all types of alcoholic beverages on site.
4. RW: Restaurant Wine License allows the sale and consumption of beer and wine.
5. EB: Eating Place Beer License allows the sale and consumption of beer on the premises.
Licenses for Off Premise consumption (means alcoholic beverages are sold “to go”) include:
1. L: Liquor Store License, which allows the sale of all forms of alcoholic beverages for off site consumption.
2. A/DS: Grocery Store Drug Store License allows the sale of beer for off site consumption.
3. AX/DX: Grocery Store Drug Store License allows the sale of beer and wine coolers for off site consumption.
The specific type of Liquor License required depends on the nature and scope of the business. The SLA requires that all applicants be a U.S. citizen or permanent resident alien, and at least 21 years of age. Applicants must not be a law enforcement officer with powers to arrest. Felons are not allowed to apply unless they have a Certificate of Release from Civil Disabilities. No On Premises Liquor License will be issued by the New York SLA if the premises are located within 200ft of a school or place of worship, unless the location was licensed prior to the existence of the school or place of worship, and has been continuously licensed ever since.
Under ABC law, Community Boards are extensively involved with reviewing applications for licenses that allow the on-premises consumption of liquor. Applicants for a liquor license must notify the Board of their intentions 30 days prior to submitting their application to the SLA. The Board takes this time to invite the applicants and their neighbors to a committee meeting, where the applicant’s business plans are discussed. Recommendations (approval, denial, or recommendation to change the business plan) will be made upon evaluating the positive and negative impact of the business on the local community, and then will be submitted to the SLA for consideration. Although the SLA is under no obligation to comply with the Board’s recommendations, it must consider it. Opposition from the Community Board usually means a stop sign, either temporary or permanent. The cases where applicants for Liquor License are able to bypass the Community Board’s recommendations are rare, if any. The notoriously difficult Community Boards in Manhattan Area include the Community Board 2 (SoHo, NoHo, Lower East Side, Chinatown, & Little Italy) and the Community Board 3 (East Village, & Two Bridges) which are both notably anti-nightlife.
If the new venue will be located within 500 feet of three or more existing liquor-licensed establishments, the SLA must hold a public hearing to determine if the new licensee will be in the public interest. This rule applies only to businesses that will serve hard liquor – those that will serve only beer and wine are not subject to it.
Professional legal assistance is not required for the application process but in practice is necessary. It is best to use a law firm specializing in liquor license law. The application process can be lengthy. The wait for approval after submitting all the required documents is expected to last about 6-weeks as formally stated by SLA. However, in reality, the process can sometimes take many months.
The timing and other unknowns involved in obtaining a Liquor License adversely affects the dynamic of commercial leasing. Restaurant owners often want their lease to contain a contingency clause allowing cancellation if the Liquor License doesn’t arrive within a set period. This is at distinct odds with a landlord’s interest. Keeping a property off the market for 6 or more months pending license approval is unrealistic. On the other hand, restaurant owners have understandable reservations about undertaking the cost of renovation until they are certain of getting a license. This push/pull is often resolved with a Community Board approval contingency. This precursor to formal SLA approval can be obtained quickly, often within a month, and often before a formal lease is executed. It is the preferred solution to a perplexing problem.
To speed the application process, the SLA recently launched a new self-certification program. This allows attorneys to certify that provided documents are true and accurate and that the application meets all statutory requirements. This program is only intended toward retail vendors. The application forms and instruction manual may be downloaded from the SLA’s website.
Scandal and the SLA are longtime cousins. Earlier this year newspaper accounts (The New York Times, April 8, 2009; CBS News, April 8, 2009, & NY Daily News, April 10, 2009) reported that some SLA employees were fast-tracking liquor licenses in exchange for gratuities from licensing lawyers. The SLA Harlem Office was raided and all 24 employees at the bureau were questioned about this alleged bribery scheme. This is not a first time the SLA history has been suspected of corruption. Last winter, two SLA commissioners were allegedly reported to have voted in favor of Cipriani’s license renewal due to pressure from an aide to Governor Paterson. In the 1960s, a scandal revealed that the then chairman of the SLA, Martin C. Epstein, together with a former state Republican chairman, had allegedly received more the $40,000 in bribes paid by the Playboy Club.
This article is a general summary of a number issues pertaining to obtaining a liquor license, and is intended only as an overview. However complicated, lengthy, and expensive the process might seem, prospective licensees take heart. Given the proper determination and adequate legal guidance, it an eminently doable task, and one with rich rewards.