It’s no secret that a liquor license is a prize to be won. With many hurdles to jump and the high-profit margins of serving alcohol, getting a liquor permit for your business is like finding a pot of liquid gold. If you’re looking to learn how to get started, you’re in luck. This complete guide to liquor license laws by state will compare rules by state, help you determine how much it costs to get a liquor license and teach you all the ins and outs you need to know.
What Is a Liquor License?
In the simplest terms, a liquor license is a legal authorization to serve alcohol. Most states consider it a privilege and have the right to control how they are awarded. A licensing system allows the government to control how alcohol is served. Any restaurant or store that wishes to sell alcohol must first obtain a liquor license or permit. Each state has its own rules to govern how alcohol can be served, and liquor licenses allow them to enforce those rules by asking bars, restaurants and liquor stores to follow regulations.
Liquor licenses are usually hard to obtain. For bars and restaurants, you must gather a host of other permits and information as you apply for a liquor license. Many states even limit the quota of available liquor licenses to curb how alcohol can be bought and consumed. By making permits hard to get your hands on, states ask the food and beverage industry to police itself, making liquor laws much more enforceable.
How to get a liquor license
- Although the specifics on acquiring a license vary by state, the general process goes like this:
- Contact your state’s governing agency to determine what kind of liquor license you need and the availability of that license.
- Submit your application along with any other forms or permits required by your state or municipality. You will also have to pay a processing fee.
- Your state’s Alcohol Beverage Control (ABC) board can take up to six months to review and approve your application.
- If approved, you must pay for your license. Prices range from $300 to $14,000, based on your state.
- Liquor licenses must be renewed every one to three years.
Obstacles to getting a liquor license
Most of the obstacles associated with obtaining a license are bureaucratic. Working with your state’s governing agency, you must determine what kind of license you need and the availability of that license.
The type of license you need depends on a variety of factors that you will explain to your state’s ABC board. For example, you’ll need to explain what type of establishment you operate (restaurant, bar, hotel), if you’ll let customers bring their own alcohol (BYOB), the hours and days you will sell alcohol, and if you will be manufacturing alcohol on the premises.
Based on your answers to these questions, your state’s ABC board will tell you what kind of license you need, and if one is available. Many states have a limited number of liquor licenses, making new licenses hard to come by. If that is the case in your state, you may have to purchase your license from an existing business.
Once you find a liquor license, you will need to submit an application. Some of the items you must provide with your liquor license application are your employer identification number (EIN), business license, sales tax permit, health permit, building permit, and zoning permit. The building and zoning permits are used to determine if your business is in a location and facility where it is legal to sell alcohol. For example, some states won’t grant you a license if your business is too close to a school.
You might also find that your state has various laws specific to bars and restaurants. You should check with your state government to get a better idea of what rules you’ll have to follow. Some things to look for:
- Whether you can offer two-for-one specials or discounts during happy hour
- How many drinks you can serve a customer at once — many states limit this to one or two per customer at a time
- Whether customers can bring unfinished bottles of wine home with them
- When and how late you can sell alcohol throughout the week
- You will have to follow all the rules and definitions your state government recognizes to maintain a valid liquor license.
There are also some specialty permits you may need outside of the three basic permit types. These specialty licenses vary by state, and some states don’t require them. Here are some of the specialty permits you might qualify for:
Brewpub licenses are for any foodservice establishment that makes alcohol. Wineries and distilleries are classified separately. If you have one of these permits, you might have to observe a rule that you cannot brew and serve at the same time.
Club licenses are for members-only clubs, such as country clubs. Some private organizations may only serve beer and wine, while others can serve hard liquor as well.
Hotel licenses are specifically for hotels with bars and restaurants which serve alcohol.
How Do I Apply for a Liquor License?
To get a liquor license, you’ll usually follow five steps:
- Contact your state ABC board to confirm the availability of the licenses and which permit you need for your business.
- Prepare and submit your application alongside any forms, documents or other information required by your state. Pay the processing fee.
- Your state ABC board will process your application. Approval can take up to six months.
- When you get approved, you’ll pay the license fee. This cost can range from around $300 to $450,000, depending on your state.
- Once you have a liquor license, you will have to renew it every one to three years.
If you live in a state with limited liquor licenses, there is another avenue. Businesses who have a liquor license can sell them. To find out if any other companies are looking to sell their licenses, check with your state’s ABC board for an updated list of inactive licenses. If you find any available to buy, you can apply through your ABC board. You can also purchase another restaurant that has a liquor license and fill out a transfer application.