Alcoholic retail licenses in California

After last week’s lectures I became curious about alcohol licenses. As detaining a license can be so fundamental in running a business related to alcohol, I started doing some research on the subject.

It turns out that probably I would need a whole quarter of research to fully understand the license system, so I am going to briefly present what I have discovered. I am also sure that I will have done mistakes in the interpretation of the policies, so please correct me in the comments if I am wrong.

I counted approximately 80 different types of alcoholic beverage licenses. I will focus on retail licenses in California as there seems to be more information available on those. Listing all of them would be excessive, but I found that most of them touch on the same privileges. These are:

• Beer / Wine / Spirit: defines which beverages can be sold / held at the premise under the license. Some licenses do not enable the sale of spirits, but admit the presence of spirits on premise to be used for cooking purposes. Licenses that enable the sale of liquors have a much higher value compared to only wine and beer licenses.
• On sale / off sale: defines if the purchased alcoholic beverages must be consumed on site or off site
• Food required: defines whether the license holder must provide food. Some licenses require only snacks whereas others define that the majority of sales of the license holder must be generated by food
• Minors: defines whether minors (of 21) can or cannot be allowed on premise
• Yearly or seasonal: defines whether the license is valid year-round or only during specific months

There are two ways to obtain a retail license, either by applying for a new license or buy acquiring a license from a current license holder. Either way, the licenses have to be renewed every 12 months.

The number of liquor licenses is capped per county. Each year the state decides the number of new licenses to concede to each county. To obtain one of those licenses an application has to be filed. If the county receives more applications than available licenses, then a public drawing is held to determine who obtains the license. For 2016 the cost to apply for a new license was $ 13’800.

Buying a license is more complicated but usually a necessary route. The price varies mainly based on location and license type. Lowest prices range in the $ 3000 – 5000 range (for wine and beer licenses) all the way up to hundreds of thousands of dollars for popular areas. There exist a number of “license brokers” specialized in the purchase and sale of alcohol licenses.

Questions:

• What is a “bona fide” eating area? Bona fide means good faith in latin. It appears often in the ABC guidelines, but I haven’t been able to find an exhaustive definition, especially when related to eating areas
• I struggled to find information on distributor and wholesaler liquor licenses. May this be the result of lobbying from current distributors?

Sources:
- Most common liquor licenses and brief description http://www.abc.ca.gov/forms/abc616.pdf
- Liquor licensing brokerage and consulting firm with information about the process http://liquorlicensenetwork.com/
- Liquor license cost estimate http://grbill.com/what-is-the-cost-of-a-liquor-license-in-california/
- Application process flowchart http://www.abc.ca.gov/Legal/Application_Process/Application_Process_Chart.pdf
- List of all Californian license types http://www.abc.ca.gov/permits/licensetypes.html