Achieving Alcoholic Beverage Licensing Success
Understanding California’s Alcoholic Beverage Licensing Framework
Doing business in the alcoholic beverage industry is a licensed privilege, not a right. That means if you aren’t licensed to do something, then you can’t do it. Put another way, an alcohol license is a privilege to do something that would otherwise be illegal. California residents and businesses should assume they need a license for anything and everything they want to do with alcoholic beverages in the state.
The California Department of Alcoholic Beverage Control (ABC) regulates the production, importation, distribution, sale, storage, transportation, and marketing of alcoholic beverages in California. Businesses who produce, import, distribute, sell, or store alcohol in California need a license from the ABC. There are over 80 different types of alcohol licenses.
Businesses who make, blend, bottle, import, distribute, or store wine, beer, or liquor also need a federal permit or bond from the Alcohol and Tobacco Tax and Trade Bureau (TTB), the federal agency that regulates alcoholic beverages. Retail businesses do not need federal permits or bonds.
Businesses can’t share licenses. California law forbids anyone other than the persons named on the license from using the designated license privileges, which includes participation in the net profit from the sale of wine, beer or liquor.
Depending on the circumstances, unlicensed operators may face criminal prosecution, fines, and potential jail time. Although most offenses are considered misdemeanors, operating a still in California without a license is a felony. The ABC may also decide unlicensed operators cannot qualify for future alcoholic beverage licenses or manage licensed businesses.
Navigating the ABC License Application Process
The ABC’s application process involves the following steps:
(1) Initial filing – application forms;
(2) Notifications;
(3) Investigation;
(4) Final review; and
(5) Issuance or denial of the license.
If your license application is denied, you can request a hearing. You should consult an alcohol attorney about your options if ABC denies your license application.
Applicants for multiple licenses can request that a particular license be designated as its use or “P-12” license. A P-12 license designation allows the ABC to perform only one moral character investigation and streamlines the record keeping and reporting requirements.
Obtaining Necessary Local Approvals
Before applying for a license or engaging in business, applicants should contact appropriate county and city officials to determine if a local business permit is required. Even if you have previously obtained a license in the same city or county, check local laws before applying for new licenses because regulations change frequently.
If you are trying to license a location that has not previously been licensed, a Conditional Use Permit (CUP) may be required.
Some local officials or others may impose additional requirements on your application based on concerns about “undue concentrations” of alcohol licenses or crime in the neighborhood around your business. For example, San Jose currently requires a “determination of public convenience or necessity” for license application sin areas it designates as having undue concentrations of crime or pre-existing alcohol licenses. Notably, those areas cover more than half the city. For similar reasons, San Francisco requires applicants to submit applications and a security plan to their local police station before submitting the application to the ABC. To learn more about undue concentration os crime or other alcohol licenses near a proposed location, applicants can review census tract information on the ABC’s website.
Understanding Why the ABC Denies Some License Applications
The ABC may deny license applications based on objections or concerns about either the applicant or the premises.
The ABC may deny license applications if the applicant:
(1) Falsified their application:
(2) Has a disqualifying police record;
(3) Has a disqualifying license history (i.e., previous revocation of an ABC license due to disorderly operations or other misconduct);
(4) Has a record of chronic insobriety;
(5) Is disqualified by tied house laws;
(6) Is not the true owner;
(7) Is not at least 21 years of age;
(8) Is a peace officer;
(9) Is not the tenant at the proposed premises.
The ABC may deny license applications if the proposed premises is not suitable because it’s:
(1) Too close to a school, church, hospital, playground, nonprofit youth facility, or residence and would disturb the facility or resident;
(2) Located in a high crime area and does not serve “public convenience of necessity;”
(3) Likely to create a public nuisance; or
(4) Not consistent with zoning laws.
Understanding Why the ABC Denies Some License Applications
The ABC may deny license applications based on objections or concerns about either the applicant or the premises.
The ABC may deny license applications if the applicant:
(1) Falsified their application:
(2) Has a disqualifying police record;
(3) Has a disqualifying license history (i.e., previous revocation of an ABC license due to disorderly operations or other misconduct);
(4) Has a record of chronic insobriety;
(5) Is disqualified by tied house laws;
(6) Is not the true owner;
(7) Is not at least 21 years of age;
(8) Is a peace officer;
(9) Is not the tenant at the proposed premises.
The ABC may deny license applications if the proposed premises is not suitable because it’s:
(1) Too close to a school, church, hospital, playground, nonprofit youth facility, or residence and would disturb the facility or resident;
(2) Located in a high crime area and does not serve “public convenience of necessity;”
(3) Likely to create a public nuisance; or
(4) Not consistent with zoning laws.
Complying with Operational Requirements
A complicated framework of federal, state, and local laws strictly regulate alcoholic beverage businesses. Make sure you understand the applicable rules for labeling, shipping, distributing, marketing, selling, transporting, storing, and returning alcohol. You also need to know about employee training (Responsible Beverage Service) and minimum age requirements, and special rules for retail premises, including rules about signs.
Why Hire an Experienced ABC Attorney
Working with an experienced alcohol attorney simplifies the licensing process. It’s important to consult an alcoholic beverage attorney about your business plan, including your plans for growth, as early as possible. Licensing choices affect how you can market and ship alcohol, as well as your future options for acquiring other categories of licensed businesses (i.e, how you operate within tied house rules and applicable tied house exceptions for combining producer and retail businesses).
Experienced alcoholic beverage counsel can set businesses up for full compliance with federal, state, and local laws, reduce enforcement risks, and protect business operations for the long term.
Frequently Asked Questions:
ABC posts the information about license applications, including the required forms, fees, contact information for ABC district offices, and a step-by-step guide to the application process here. You can submit applications online or in person at the district offices.
it depends on how quickly you respond to follow-up questions and requests from ABC, whether you already have any ABC licenses, and whether anyone protests your license application (usually neighbors or local law enforcement). License applications usually take at least three months to process, even if there are no protests to address.
It depends on the type of license. ABC posts the schedule of license fees here.
These are the primary qualifications:
(a) Licensees must be 21 or over;
(b) Licensees cannot be law enforcement;
(c) Licensees cannot have been convicted of a crime of “moral turpitude,” unless the ABC has formally determined they are rehabilitated; and
(d) Licensees cannot violate tied house rules mandating separate ownership of businesses in the producer, wholesale, and retail tiers of the industry.
Yes, if the ABC approves your transfer application. ABC posts information about transfers here.
On-sale licenses authorize the sale and service of wine, beer, and/or spirits for consumption ON the licensed premises (such as restaurants and bars).
Off-sale licenses authorize the sale of wine, beer, and/or spirits for consumption OFF the licensed premises (such as stores).
The ABC may try to impose special conditions on licenses, particularly retail licenses, during applications, transfers, or enforcement proceedings. It’s important to consult an alcohol lawyer before agreeing to any conditions.
Yes, they can. If the ABC tells you there is a valid protest against your application, it’s a good idea to consult an alcohol lawyer. Protests can cause the ABC to deny your application or impose restrictions on your business operations.
The most common reasons for denials of license applications include:
(a) Failure to comply with local zoning rules;
(b) Failure to obtain a declaration of “Public Convenience and Necessity” from local agencies (where required);
(c) A valid protest against your license application;
(d) A finding that the applicant was convicted of a crime of moral turpitude; and
(e) Violation of tied house rules (separation of producer and retail alcohol businesses).
It’s important to maintain ongoing compliance. Start by reviewing the ABC’s website. Consult an alcohol lawyer with questions. Consider creating alcohol law handbooks for yourself and your employees.
Consult an alcohol lawyer as soon as the ABC tells you they intend to suspend or revoke your license. Licensees only have a few days to respond and notify the ABC if they intend to either defend themselves or try to negotiate a lower penalty in suspension or revocation proceedings.