Whether you are operating in Indiana, South Carolina, Virginia or any other state, if you want to legally serve alcohol at your establishment, you must first obtain a liquor license. There are liquor licenses designed for every type of establishment from small cafes and nightclubs to large restaurants. Here is what you need to know about the different categories of liquor licenses and the steps involved in obtaining one.
Categorizing Liquor Licenses
Typically liquor licenses will vary depending on three main factors:
- The type of alcohol being served – beer, wine, and/or spirits.
- The type of venue where the alcohol will be sold – hotel, grocery store, restaurant, cafe, nightclub, etc.
- How the alcohol will be sold or served – packaged vs. poured.
On-Premise Vs Off-Premise Liquor License
First, you will have to determine whether you will need on-premise or off-premise permissions.
On-premise refers to establishments where liquor is served and consumed on-site and within a designated area. This means that staff is responsible for making sure that alcohol is only served to people who are of legal drinking age and that no one is over-served when they are intoxicated.
An on-premise license will be specific about what is considered a “designated drinking area.” Outdoor spaces, including patios, garden areas, and decks can be included. When patrons are in these designated areas, it is up to the security staff, servers, and bartenders to make sure that rules are being followed and everyone is safe.
With off-premise sales, consumers visit a store such as a liquor store, wine shop, pharmacy, gas station, or grocery store where they purchase alcohol to consume at a different location. In this case, the seller does not have the responsibility nor training to monitor consumption. However, if alcohol is purchased and consumed directly outside the retailer, the seller can face disciplinary action from their local liquor authority.
Types of Liquor Licenses
Then, you will need to analyze which of the following license types will be best suited to your business.
Full Liquor License
A full liquor license is typically for restaurants that want to be able to sell beer, spirits, wine, and liquor along with a full menu of food. These can come in both on-premise and off-premise forms. A full liquor license is the most difficult and expensive license to obtain, but it is also the most lucrative, allowing bars and restaurants to serve classic well drinks or craft cocktails. To qualify, applicants must be able to show that 50% or more of their total sales come from food and non-alcoholic beverages.
Beer and Wine Liquor License
As the name implies, a beer and liquor license allows businesses to sell just these two types of alcoholic beverages. This route is less expensive and difficult than applying for a full license. You may still be required to prove that at least 50% of total sales come from food and non-alcoholic drinks.
Liquor Store/Retail License
With this license, you can run a retail store that sells alcoholic beverages that are packaged and meant to be consumed off-premise. This license can be used for convenience stores, liquor stores, grocery stores, etc. Depending on local Alcoholic Beverage Control (ABC) regulations, you may only be able to sell certain types of alcohol.
Brewery licenses are unique because they allow for both on-premise and off-premise sales, including alcohol delivery. Customers can drink and sample the products and buy some to take home and consume later. Variations in this type of license arise when it comes to how much beer the producer can make and sell annually and what type and size of containers it can be sold in.
Nightclubs, pubs, lounges, and taverns will typically apply for a tavern license. For these types of establishments, alcohol sales are their main business and source of revenue. They often also have permits that allow entertainment, dancing, outdoor service, and extended hours. As part of the license, no one under the age of 21 is allowed on the premises and the business must have kitchen facilities that are capable of serving enough food to be considered a meal.
A hotel license allows hotels and motels to sell on-premise drinks to guests. These drinks can be consumed at on-site bars and restaurants, in common gathering spaces, and in rooms. The hotel is required to have a kitchen that can serve meals.
In this case club does not refer to a nightclub, but instead applies to places like service clubs, country clubs, veterans clubs, fraternal clubs and other non-profit clubs that want to sell alcoholic beverages. The license may limit the type of alcohol that can be sold and the club must have a kitchen that can serve food to patrons.
Eating Place License
Smaller establishments with a tight budget might want to apply for an eating place license that allows them to sell beer with the food menu. In some cases, they may also be permitted to sell other alcoholic beverages in small quantities.
How to Get a Liquor License
Once you’ve determined which type of license you’ll need, you can begin the process of obtaining it. Because permits and license quotas can vary not just by state, but by county and municipality, your best option is to visit your local Department of Alcoholic Beverage Control (ABC) and do your research.
Keep in mind that each state names and classifies the types of liquor licenses differently. For example, in Massachusetts, a full liquor license will be listed as a Section 12 On-Premise License, but if you are trying to get the same license in California, you will be looking for a Type 47. The best way to go about this process is to consult with a local attorney who specializes in liquor laws.
Once you are ready to fill out an application, you will once again need to reach out to your local ABC so that you can obtain and submit the proper forms. You may need to submit an application to the state, town and county, so be sure that all your ducks are in a row. Application review times can exceed 30 days, which will give you plenty of time to work on other aspects of your business plan while you wait. If you’re planning on opening a bar, check out our blog post for a detailed checklist and business plan guide.
Although applications can vary widely, you can expect to have to submit the following information:
- Employee Identification Number
- Blueprints or photos of the establishment
- Company constitution
- Partnership agreement
- Certificate of incorporation
- A possible food menu
- A copy of the certificate for the title of the establishment
How Much Does a Liquor License Cost?
Just as the application process and requirements can vary widely, so too can the cost of a liquor license. In fact, a full liquor license can start at around $12,000 and go all the way up to $400,000. If you only want to serve beer and wine, you may be able to get a license for as little as $3,000. To learn more about what to expect, you can contact similar establishments in your area and ask them about their application experience and expenses.
While obtaining a liquor license will require some research, paperwork, and financial investment, being able to serve alcohol at your establishment can significantly increase profits. Start by identifying the best type of license to fit your establishment and then contact your local ABC agency. Finally, as you put together your business plan, choose the right POS software, design delivery apps, and estimate costs, be sure to also consider the time and expense involved in applying for a liquor license.
What is an on-premise liquor license vs an off-premise liquor license?
An on-premise license allows establishments to sell alcoholic beverages that are meant to be consumed on premise in a designated area. With an off-premise license, retailers sell packaged alcoholic beverages that they can take home or to another location to consume.
What are the types of liquor licenses?
Full liquor license, beer and wine liquor license, retail license, brewery license, tavern license, hotel license, club license, and eating place license.
How much is a liquor license?
It can vary widely based on location and the type of license. In some places, a full license can cost up to $400,000. Establishments that only want to sell beer and wine may be able to get started for as little as $3,000.
How do you get a liquor license?
Since regulations can vary by state, county, and municipality, the best way to start the liquor license application process is to contact your local ABC agency. They will be able to provide you with all the forms and information you need to get started.