Liquor license laws vary by state. Here’s what you need to know to get started with your application.
Opening a bar, restaurant or other establishment that sells alcohol requires a lot of planning. But before you start thinking about your menu items or drink specials, there are specific legal requirements you need to address first. One of the most important things you’ll need to legally serve alcohol is to obtain a valid liquor license.
Liquor license laws are governed by state and local agencies, so the process, wait time and costs for obtaining a liquor license can vary significantly depending on where you plan to operate your business. Know the requirements in your state and local area, and apply for your liquor license as early as possible. Here’s everything you need to know to get started with your liquor license application.
Why do you need a liquor license?
Businesses need a liquor license to legally sell and serve alcohol. Businesses can receive fines, be charged with misdemeanors and even get sentenced with jail time for selling alcohol without a liquor license.
Who can approve a liquor license?
Liquor licenses are approved and granted by the state government. Every state has its own Alcoholic Beverage Control (ABC) Department that regulates liquor licensing and alcohol laws for the state. This means that the process for getting a liquor license and the regulations for serving alcohol is different per state.
Be sure to review your state’s specific requirements for applying for a liquor license.
What do liquor license laws govern?
Liquor license laws can vary from state to state, but these laws typically regulate:
- how much a liquor license will cost
- the number of liquor licenses permitted in the area
- what kinds of alcohol can be sold
- when and where businesses are allowed sell alcohol
- to whom alcohol can be sold
- whether the business is permitted to sell or serve alcohol to go
- the amount of alcohol that can be sold at one time
- what containers can be used to sell and serve alcohol
- the cost of alcohol
- whether businesses are allowed to manufacture, distribute and sell alcohol
Towns and counties could also have their own alcohol service regulations in addition to the more general laws governed by the state.
What’s the difference between on-license and off-license?
Most states will require a business to determine whether they need an on-license or off-license.
- On-license: Needed for businesses that allow alcohol consumption on the premises, e.g. restaurants, bars, nightclubs
- Off-license: Needed for businesses that sell alcohol that will be consumed off the premises, e.g. liquor stores, bottle shops, alcohol distributors
Are there other types of liquor licenses?
In addition to on-license or off-license, some states also require more specific liquor license classifications. The type of license varies by state and also depends on the type of business you are operating. For example, a restaurant needs a different license than a beer manufacturer.
Common types of liquor licenses include:
- Restaurant licenses: This is the standard permit for restaurants and allows a business to serve any type of alcohol. These licenses can also be called “all-liquor licenses.”
- Retail licenses: Needed for retail businesses that sell alcohol such as liquor stores, grocery stores and convenience stores.
- Beer and wine licenses: For businesses that only serve beer and wine — not liquor or mixed drinks.
- Delivery licenses: This license permits businesses to deliver sealed containers of alcohol to customers.
- Tavern licenses: Needed for businesses that have alcohol sales making up at least half of their total sales.
What documentation do you need to apply for a liquor license?
The documentation you’ll need to apply for a liquor license varies by state and locale, so be sure to contact your state’s ABC Department to ensure you know what you need for your application. You should already have most of the documentation as they are typically permits you need to open a business, but remember to confirm with your state department. Common documents include:
- business license
- tax ID number from the IRS
- sales tax permit
- alcohol tax permit
- zoning permit
- building permit
- signage permit
- health permit
- food handler permit if your business also sells food
How much does it cost to get a liquor license?
Liquor license costs vary depending on your local license requirements and the type of license you need. Some areas also require a business to pay fees for federal, state, county and local licensing. This is why prices can range from as little as a few hundred dollars to a few thousand dollars depending on the requirements for your area.
How long does it take to get a liquor license?
Liquor license approval can take a few weeks to a few months, so submitting your application to your state’s ABC Department should be done as soon as possible. Some states also have a specific number of licenses allowed at one time, so if that quota has already been reached, getting a liquor license can take even longer and can incur additional costs.
Additional factors that could affect your liquor license application
Liquor License Quota States
In certain states, the number of liquor licenses allowed in a specific municipality is regulated by its population size. These liquor license quota laws were created after Prohibition laws were repealed, as politicians were concerned that alcohol consumption would go out of control if there were no liquor regulations.
Because the number of liquor licenses are regulated, it may be more difficult, more costly and could take even longer to obtain a liquor license in these states. If the area has already reached the maximum number of liquor licenses available, you may have to wait until one becomes available or pay more at a secondary resale market for a secondary market license.
The following states have a liquor license quota. Always check your state’s ABC Department to determine the quota figures and license availability.
- New Jersey
- New Mexico
- South Dakota
- Regions in Washington, D.C.
Dry and mixed counties
There are some counties in the country that are not permitted to sell alcohol. These are called “dry counties.” Some states that have dry counties are Texas, Arkansas, Kentucky, Oklahoma, Kansas, Mississippi and Tennessee. There are also counties in states including North Carolina, Michigan, Pennsylvania and Ohio that regulate alcohol sales but not its on-premise consumption. These are called “mixed counties.”
Before planning to open a licensed business, check whether the town or county where your business is located is permitted to sell alcohol.
What is the liquor license application process?
To start the application process for a liquor license, get in contact with your state’s ABC Department and ensure you have all the information about the type of liquor license you need, availability, cost and required documentation. Submit your application form, along with any supporting documents needed, and wait for approval. Submitting a liquor license application typically also comes with a processing fee that can range from $50-$100.
The wait time for approval will vary by area, but it generally takes up to 6 months for the ABC Department to review your application. For states with liquor license quotas, this process could take even longer.
Once you have your liquor license, remember that most states also require a business to renew their license every 1 to 3 years. Be sure to stay on top of your area’s renewal requirements, and follow all of the laws and regulations related to alcohol service in your area to avoid having your license revoked.