Anyone who wishes to sell alcohol in the state of California is required to have a liquor license. There are around eighty different types of licenses to sell alcohol, designated for various means and needs, such as where the beverage will be consumed, the form and sale of the alcohol, and the specific type of facility making the sale. Any new or established business that wants to sell alcohol must select and purchase the appropriate license for their business before sales commence.
What Is the Process for Obtaining a Liquor License Like?
In most cases, obtaining a liquor license isn’t simple. It can take quite a while and be very expensive. One reason for this is that California law requires each county to limit the number of liquor licenses they issue at any given time. This limitation creates fierce competition in many counties and makes the process of acquiring the license difficult.
Competition for liquor licenses is tied to the specific type of permit involved, so the first step for a business is to decide what type they wish to procure. To make this decision a little easier, consider that the many variations of liquor licenses in California fall into five basic divisions, including:
- Off-sale licenses
- Non-retail licenses
- On-sale licenses
- Temporary licenses
- Non-profit temporary licenses
To further break down these divisions, liquor license law in California consists of three primary tiers:
- Distributors who sell alcohol to importers and wholesalers
- Manufacturers such as wineries and breweries
- Retailers who sell directly to customers, including two categories:
- “Off-sale,” such as liquor stores, grocery stores, and other retail outlets
- “On-sale,” which includes establishments like pubs and bars
On-site retailers such as bars, hotels, and restaurants are some of the most common types of businesses seeking liquor licenses. These licenses are often referred to as “hospitality licenses.”
How Do On-Sale Licenses Differ from Off-Sale Licenses?
Any business that wishes to sell alcohol to be consumed on-site will need an “on-sale” license, whereas those who sell packaged and closed containers of alcohol to be consumed elsewhere can do so with an “off-sale” license. The cost of liquor licenses varies, depending on whether an establishment wants to permit drinking on-premises and what type they wish to purchase. For instance, those for the specific sale of wine and beer tend to be less expensive than licenses for a business that intends to have a full bar.
What Liquor Licenses Are Most Popular for the Hospitality Industry?
A few liquor licenses stand out as the most popular for this industry. Those specifically for wine and beer sales are especially sought-after, as well as a specific license that allows off-sale purchases of wine, beer, and spirits.
On the other hand, Restaurant owners typically want one of two main licenses. One that allows them to serve wine and beer on-premises along with food, and another that allows them to offer on-sale purchases of beer, wine, and spirits. The latter, called Type 47, is the license that a full-service restaurant would typically want. This license also requires the establishment to earn a minimum of 50% of its profits from the food they sell.
Nightclubs and bars typically need an alcohol permit called a Type 48, which requires anyone who enters the establishment to be 21 years of age.
The Four Most Sought-After Liquor Licenses
Here is some information on the most commonly sought-after liquor licenses in California.
- Type 48 license. This license is one of the most difficult to obtain and one of the most expensive. The cost of a Type 48 license varies depending on a few issues, including current market trends and the location of the establishment. It is not uncommon for businesses to pay hundreds of thousands of dollars for these licenses.A business that operates with a Type 48 liquor license is not required to sell food and may sell liquor, beer, and wine. These businesses must not allow anyone under the age of 21 into their establishment. Typically, a Type 48 license is the type that dance bars and nightclubs want, as they often serve alcohol but no food.
- Type 47 license. The Type 47 license is another one of the most popular options, as it is the type that a restaurant would buy if they want to serve wine, beer, and spirits with their food. This is also one of the most expensive types of liquor license, although various factors play a role in the cost. For instance, a Type 47 for a mom-and-pop eatery in a small town will likely be far less expensive than one for a high-volume restaurant in a major metropolitan area.This license is an “On Sale General Full Liquor License.” For a business to acquire one of these licenses, they must prove that the food items they offer will account for at least 50% of their total sales. The business owner can prove this by gathering evidence such as gross receipts of the restaurant’s food sales. Like the Type 48, this license can be very difficult to procure.
- Type 20 license. With a Type 20 license, the establishment may only sell wine and beer, and it may not be consumed on-premises. Businesses that operate on a Type 20 license are prohibited from selling spirits. Convenience stores and grocery stores are the most likely businesses to have a Type 20 license. Compared to the other most popular licenses, Type 20 is usually inexpensive, as they can typically be purchased for a few hundred dollars. The owner of the establishment must make sure no alcohol is opened or consumed on their premises, however; this may result in suspension of their license or more severe sanctions.
- Type 21 license. This type of license is typically reserved for liquor stores. It is just like a Type 20 license, except the proprietor is allowed to sell liquor in addition to beer and wine. A Type 21 license is often a more expensive option since it allows for the sale of spirits.
Be Sure to Have the Correct License
Business owners often pay a lot of money for a license to offer beer, wine, and sometimes liquor, so it is essential to follow the rules associated with that specific license. Unfortunately, mistakes happen, and a proprietor may end up facing the loss of their license. If you are a business owner who needs legal counsel regarding your liquor license, contact Blake & Ayaz to see how we can help.