Do you want to start a wine store and want to know what licenses to apply for? If YES, here are 7 types of business licenses you need to sell wine & liquor.
The sale of alcohol can boost restaurant profits substantially, thanks to the great profit margins that are used to sell most wines, hard liquors, and beer. But selling alcohol comes with responsibilities as states don’t want to leave the liquor business open to everybody. Therefore they require restaurants and businesses to apply for a liquor license before they can sell wine or any other liquor.
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What is a Liquor License?
A liquor license is a permit from the government that allows businesses to sell alcoholic beverages. Without this license, your wine and liquor trade would be termed illegal and sanctioned. While it may be called a liquor license, but these licenses come in various types depending on the type of drink you sell, your location and mode of operation.
You also should know that alcohol laws vary from state to state, so what obtains in one state will not obtain in another. Some states will limit the number of locations that can sell alcohol at any given time, which can make it difficult for new bars and restaurants to get a license immediately.
The Alcohol Beverage Control (ABC) board is the agency in charge of regulating the sale of alcohol in the united states. This is who you’ll contact to understand your state’s laws, find out how much a liquor license will cost, and determine the process of getting a liquor license in your state.
But if you want to open a business that sells wine and liquor, the following are the licenses you need to take note of.
Types of Licenses You Need to Sell Wine & Liquor
There are two main types of liquor licenses that are issued out to businesses. They include; on-license and off-license. The type you’ll need depends on how you want to sell your liquor.
Types of Liquor License
- You will need an on-license liquor license if the liquor you sell is intended to be consumed on the premises of your business – for example, a bar or restaurant.
- You will need an off-license if the liquor you sell is intended to be consumed off the premises – for example, a liquor store or Grocery Store.
However, in most states, there are additional classes of liquor licenses that you have to take note of. These are;
Classes of Liquor License
i. Restaurant license: This license limits what percentage of a restaurant’s earnings that can come from alcohol. This goes to say that if you have this license, you are not allowed to sell only alcohol. There is no limit to what type of alcohol you sell though, but you do need to keep the financial limit in mind. This percentage is usually in the region of 40%, so make sure you have that magic number top of mind as you run your business.
ii. Beer and wine license: If you don’t intend to serve hard liquor, this is the type of license you’ll need. This license would also limit you to selling only beer and wine.
iii. Tavern license: If your business is more of a bar than a restaurant (making more profit off of liquor than food) then you will need to obtain a tavern license.
iv. Commercial hotel license: The commercial hotel license allows you to sell alcohol for consumption either on the premises or on and off. You will need this type of license to run a hotel.
Subsidiary on-premises License
You will need a subsidiary on-premises license when selling liquor for on-premises consumption is a secondary function of your business. Types of businesses that may require this license include:
- Indoor sporting centres
- Amusement parks
- Function centres
- Training institutions.
Restaurant licensees must provide meals or prepared food (at their licensed premises) as the principal activity of their business. The provision of meals must be demonstrated on a daily basis. This means that:
- Most patrons who attend the venue during a day will consume a meal
- Most of the premises will be set up for dining
- The kitchen will be open up to 1 hour before closing the premises and
- There will be enough staff at the premises to prepare and serve meals.
Subsidiary off-premises License
You will need a subsidiary off-premises license when selling liquor for off-premises consumption is a secondary function of your business. Types of businesses that may require this license include florists or businesses that sell gift baskets (although, under some conditions, they may be exempt).
a. Bar license: You will need a bar license if your main business activity is selling liquor for consumption on licensed premises with a maximum seating capacity of 60 patrons.
b. Industrial canteen license: You will need an industrial canteen license when the main function of your business is selling liquor in remote industrial locations to employees and their guests.
c. Producer/wholesaler license: You will need a producer/wholesaler license when the main function of your business is either, or both:
- production and wholesale sale of liquor on the licensed premises
- wholesale sale of liquor (to other licensees) on the licensed premises.
d. Commercial special facility license: The commercial special facility license applies to casinos, airports, convention centres and other tourism businesses, excluding sporting facilities.
e. Community club license: The community club license applies to non-proprietary clubs (e.g. sporting clubs, RSL clubs and ethnic clubs).
f. Community other license: The community other license allows for limited trading periods and applies to non-proprietary clubs that are also incorporated associations (such as charities) or unincorporated associations with an individual to hold the license on the association’s behalf.
g. Nightclub license: You will need a nightclub license when the main function of your business is to provide entertainment. The person presenting the entertainment must be physically present while entertainment is being provided.
Types of Wine License
There are 2 types of wine licenses available under the Wine Industry Act 1994.
Note: Under the Wine Industry Act, an approved wine nominee is required if an individual holds more than 1 license or if the licensee is an organisation or partnership.
- Wine producer license: A wine producer license allows the licensee to operate a vineyard or winery.
- Wine merchant license: A wine merchant license allows the licensee to conduct business that contributes to the wine industry in a substantial way, such as using the fruit to make wine on another premise, or blending different wines to create a unique wine in the state.
License Needed to Sell Alcohol Online
In a lot of states, there is no specific license for directly selling packaged liquor over the internet to the general public. However, the sale of alcohol online is permitted under certain circumstances. The Liquor Act and Wine Industry Act allow for specific licensees to sell alcohol online:
- Commercial hotel licensees or limited commercial special facility licensees can sell retail packaged liquor for consumption off the licensed premises (takeaway liquor) to the general public. This includes online sale.
- Wine producer licensees and wine merchant licensees are permitted to sell wine to the general public for off-premises consumption (takeaway liquor). These sales may be conducted online.
How to Apply for a Liquor License
It is an established fact that before you open a new restaurant you need to apply for a liquor license. This process if this application can take up to a year, so if you want it on time, make sure that you apply early. Depending on where you live, a restaurant liquor license can cost a little as $500 or as much as $70,000. Many towns have a liquor license quota, so you may not be able to get a new license at all if the quota has been filled.
The application process to apply for a liquor license can be extensive. If you have any previous criminal record you may be required to submit a letter explaining the situation. Towns or states can refuse a liquor license because of past conduct. A license application usually goes to the town council to get the first approval.
The public is allowed to attend meetings to discuss the application, and their opinions are recorded and considered in decisions to approve restaurant liquor licenses. Upon approval, the application now moves on to the state for approval. If you can pay the exorbitant fee, and you manage to scale through, you will get your license.