How To Get a Liquor License

January 13, 2020

How To Get a Liquor License

If you’re working towards opening a bar or restaurant that serves alcohol, figuring out how to get a liquor license is an important step along the way.

Liquor license laws vary by state, and depending on your location they can be simple or difficult to obtain. If serving alcohol is an important factor for your new restaurant business, it’s best to start applying for a liquor license early.

Liquor Licenses

A liquor license is a permit given by the government that allows businesses to legally sell and serve alcoholic beverages. Without a liquor license, it is illegal to sell alcohol to patrons. Depending on your state, selling alcohol without a liquor license can result in various charges, ranging from fines to misdemeanors with jail time.

Alcohol laws differ from state to state, so the process and costs for getting a liquor license varies, as well as the specific regulations around serving alcohol. Each state in the US has its own Alcohol Beverage Control Board (ABC board) that regulates liquor licensing and alcohol sales.

While getting a liquor license for your bar or restaurant can be a somewhat difficult process, it’s typically worthwhile for your business. Small Business Chronicle reports that alcoholic beverages have some of the highest profit margins, falling between 60-80% depending on the type of beverage.

What Do Liquor License Laws Regulate?

So, what do liquor license laws actually govern? As we mentioned, it varies across state lines, but common regulations include:

Liquor license costs and quotas
Type of alcohol sold
To whom alcohol can be sold
Where and when alcohol can be sold
Whether alcohol can be served or sold to go
What amount of alcohol can be served and containers it can be sold in
Alcohol manufacturing and distribution laws
How much alcohol costs
Who wholesale vendors can sell to

Types of Liquor Licenses

There isn’t one blanket liquor license that any establishment selling alcohol can obtain. Within each state, there are different types of liquor licenses that apply to different types of businesses.

One broad category that most states differentiate is the difference between an on-license and an off-license. This essentially covers licenses to sell alcohol to be consumed on the business’ premises vs. off the businesses premises.

Restaurants and bars typically need an on-license, since patrons drink their beverages at the establishment. Off-licenses are for liquor stores or beer or wine distributors.

Aside from on and off licenses, there are other distinctions between different types of liquor licenses. Each state has different classes, but the most common types of licenses are the tavern license, a beer and wine license, or a restaurant license.

There are also different licenses for breweries and distilleries that make and serve alcohol, clubs, retail establishments, and more. Check your state’s liquor laws to figure out what license you need.

Tavern License

A tavern license is the standard permit for bars, pubs, or taverns. This license is for establishments where selling alcohol is the main source of business and earnings.

Beer and Wine License

A beer and wine license is for businesses that want to serve alcohol with food, but limited to beer and wine (no hard liquor or mixed drinks).

Restaurant License

A restaurant license is the standard permit for restaurants, and allows any type of alcohol to be sold. Most states set limits, however, on what percentage of earnings can come from alcohol sales. If you’re starting a restaurant, this is probably the license for you.

How Much is a Liquor License?

The cost of a liquor license varies by state, and by the specific class of license you apply for. Prices can range from $300 all the way into the $10,000 range. In some states, you’ll have to pay different fees for federal, state, and local licensing.

Typically, liquor licenses are more expensive in states with quotas on how many licenses they give out. In these states, the number of liquor licenses is determined by the population size in given municipalities. This makes it more difficult and more expensive to get a new license in these states.

In some of these quota states, there is a secondary market for resale of liquor licenses. Some reports say that restaurateurs have paid hundreds of thousands to millions of dollars for a secondary market license.

Which States Have Liquor License Quotas?

The following states have quotas on how many liquor licenses they’ll award based on population:

Alaska
Arizona
California
Florida
Idaho
Kentucky
Massachusetts
Michigan
Minnesota
Montana
New Jersey
New Mexico
Ohio
Pennsylvania
South Dakota
Utah
Washington
Some areas of Washington D.C.

How To Apply for a Liquor License in Your State

To apply for a liquor license, you’ll need to contact your state’s ABC board. We’ve listed the website for each state’s ABC licensing board below, so you can easily find your state’s resources.

The step by step process of getting a liquor license looks like this:

1. 1. Contact your state’s ABC or liquor licensing agency for information on what type of license you’ll need and its availability and cost.
  2. Submit your application for a liquor license, as well as any supporting documents needed.
  3. Wait for approval. ABC boards may take up to 6 months to review your application.
  4. Pay for your liquor license, if approved.
  5. Obey all regulations around your license to avoid losing it. Liquor licenses must be renewed every 1 to 3 years.

Liquor License Requirements

Each state has different requirements that must be met in order to get a liquor license. You’ll likely have to provide documentation to prove the legitimacy of your bar or restaurant in order to get a license. Every state is different, but common documents needed include:

Tax ID number from the IRS
Business license
Sales tax permit
Alcohol tax permit
Health permit
Zoning permit
Food handler’s permit (if your business sells food)
Building permit
Signage permit

There may be other legal documents needed to apply for your liquor license. Most of them are the necessary licenses and permits you need to open a restaurant, but you may need to supply some personal information as well. When you first contact your state’s ABC board, you can ask what documents you should prepare.

How Long Does It Take to Get a Liquor License?

The standard waiting time for a response from your state’s ABC board is up to 6 months. You may hear back sooner, but expect to wait awhile. We recommend applying in advance if possible so that your liquor license is in place by the time you open your restaurant or bar.

If you live in a state with quotas, it can take even longer. If there aren’t any liquor licenses available, you’ll have to wait for another establishment to forfeit theirs, or try to buy one on the secondary market.

FAQ

Can you renew a liquor license?

Yes, liquor licenses can be renewed. Liquor licenses are valid for 1-3 years, depending on state and local laws, before they need to be renewed. The renewal process is typically much easier than the initial application, but it varies by state. There is usually a renewal fee, but it is much less than the original cost.

Once you receive your liquor license, you can ask your state agency about the renewal process.

Do BYOBs need a liquor license?

Generally speaking, BYOB restaurants do not need a liquor license. There are some states, however, where the state requires some kind of license, especially for liquor. Check with your state ABC board to see if you need a license to allow customers to bring their own alcohol, or if there are limitations to the type of alcohol they can bring.

If you do choose the BYO route for your restaurant, it may be wise to invest in liquor liability insurance so that you are protected from any potential liabilities.

How old do you have to be to get a liquor license?

You must be 21 years old to apply for a liquor license for your business.

How old do you have to be to serve alcohol?

You must be 18 years old to serve alcohol in most states. In some states, you must be 21.

Can I apply for a liquor license online?

Some states offer online applications for liquor licenses, but there is often an added fee. Call or check your state’s ABC website to learn more about online applications in your area.

Can my business lose its liquor license? How?

Yes, a business can lose its liquor license. Typically, bars and restaurants lose their licenses because they fail to follow liquor license laws. The most common reasons for losing a liquor license include serving alcohol to minors or over-serving patrons, especially if it results in injury or lawsuit.