Every bar that serves liquor must have a license to do so. Different agencies regulate the process in different states. Make sure you start the process of getting your license early in the timeline of starting up your bar. Depending on the system in your area, getting this license could take a year or more.
The cost of a liquor license varies greatly. The application fee and taxes involved may be only a few hundred dollars. But because many communities limit the number of liquor licenses, you may need to buy one from an existing bar (like the one you're taking over perhaps) or even a license broker, which can wind up costing thousands of dollars. When buying and transferring a liquor license, make sure you have a lawyer who has gone through the process, and ask questions until you understand everything.
Sometimes a town will issue a new license when the population increases. Go to the town government to find out whether you can acquire a license this way and, if so, find out the bidding process. These licenses are usually awarded on a blind bidding scale, sold to the highest bidder. Again, consult with an attorney to walk you through the process.
Most licenses are valid for a year and require an initial license fee. If you maintain good standing with your local agency, you can probably get an automatic renewal for a smaller annual renewal fee. If, however, someone has filed complaints against you for overserving patrons alcoholic beverages, serving minors, or violating other terms of the license, your license may be revoked.
Your local governing agency offers liquor licenses in different classes. What kind of establishment you have determines what kind of license you need and how much you pay for it. The class of license you need depends completely on what you serve, where you serve it, how you serve it, and whom you serve it to.
Here's a list of the broad, common classes of licenses used in many areas. They may be called something different in your area.
- Tavern: Some states require taverns to offer a food menu, but others don't. If you serve food but half of your sales are alcohol, your state government may require you to apply for a tavern license. In some states, no such separate license exists.
- Beer and wine: This license allows you to serve only beer and wine. Licensees cannot sell liquor or distilled spirits. In some areas, smaller restaurants (40 to 100 seats) can get only this type of license.
- Restaurant: This license usually requires that only a certain percentage of your sales come from alcohol. States have varying percentages, but most requirements fall somewhere around 40 percent. Some states have a minimum number of seats required for your establishment to qualify for this license. A restaurant license usually allows you to serve beer, wine, and liquor. Some people call it an all-liquor license for that reason.
Club: Private clubs, such as country clubs, golf clubs, and so on, are eligible for a separate license allowing them to serve alcohol to their members. Some states only allow beer and wine in clubs, but others allow for all liquor.
In certain counties, local governments mandate that alcohol may not be sold within its borders. These counties are known as dry counties. Most dry counties include an exemption for private clubs, so some creative owners get club licenses and then create a not-terribly-exclusive policy, selling membership cards to their patrons ($1 for a lifetime membership, for example), so they can then sell them cocktails.
Brewpub: Many places brew their own beer, and in some states, you need a separate license to serve it to the public. Check your local agency for details.
Some states issue an alternating premises, or AP, liquor license for places like wineries and breweries that allows these establishments to brew and ferment alcohol at certain times and serve patrons at other times.
- Eating place: This license is usually reserved for carryout places, such as delis, that may serve food but offer a small amount of carryout beer. Usually, you can only sell beer with this license, and you are restricted in the amount you can sell to each customer (one six-pack per customer, for example).
- Retail: A retail license applies to grocery stores, drugstores, liquor stores, or any other retail establishments that sell bottles of liquor.
Some states offer a few other classes, such as hotel and restaurant, bed and breakfast, arts (for places like theaters that sell alcohol during intermission), and wholesale (for companies that sell liquor to bars and restaurants).