What the Liquor Authority Looks for When Reviewing Liquor Store Applications

A license to sell liquor and wine at retail for off-premises consumption is commonly referred to as a “package store license”. Section 63 of the Alcoholic Beverage Control Law governs the issuance of package store (liquor store and wine store) licenses. The law provides that determinations on whether to grant permission to operate a package store be made in accordance with public convenience and advantage.

In evaluating whether public convenience and advantage will be served by issuing the license, the Authority considers whether the area is adequately served by the existing package stores. As part of that review, the Authority looks at, among other things, the proximity of the existing licensed stores to the applicant’s location, the gross sales of the four nearest liquor stores, recent population or demographic changes, and whether the applicant will offer products or services not currently provided by the existing licensees.

When an application for a brand new package store is filed, the Authority will obtain the annual gross sales figures from the four closest stores for the last several years. These stores have up to 30 dys to reply to the Authority once they receive a request. If any of these existing liquor stores report declining revenues, a liquor store application is unlikely to be approved where there was nothing submitted with the application to demonstrate that there has been a change in the area’s population or demographics that would support the issuance of another package store license in the community. The decreasing sales at the existing package store suggest a limited demand for their goods. The Authority’s experience has been that oversaturation of package stores in a community often leads to the licensees “cutting corners” as they compete for the same customers. This includes licensees violating the law to obtain an advantage over the other business. This could be overcome. However, if the applicant includes documentation and supporting statements with the application to sh0w that the store would offer products or services that are not already available to the community at the existing package stores.

Other factors that support issuance of a liquor store license include:

• applicant’s previous experience operating a successful package store or other business involving retail alcohol sales;
• the nearby liquor stores do not meet the needs of consumers;
• the municipality and nearby business community supports the application; and
• based on population increases, there is sufficient amount of business for all of the stores in the area

The Authority as stated that the fact that this location may have been a package store in the past has little, if any relevance in deciding whether this application should be approved. Thus such information will not be weighed heavily in review of the new application. (In our experience, it may have a small impact and is worth mentioning.)

In the case where the applicant has a history of disciplinary violations, the Authority is likely to find that issuing the applicant a license would only increase the likelihood of future violations. Creating such an environment does not serve public convenience and advantage. This can be overcome with a strong management plan that proves the Authority that the applicant will operate a responsible and legally compliant business and can demonstrate a firm plan for doing so. Hiring experienced management is helpful to making this case.

The request for data often provokes a protest letter from competitors who would like to prevent a new store from entering the local market. These will be considered but will not automatically lead to denial of an application. Having experienced representation can be particularly advantageous when swimming in these shark infested waters.

Applications for package store licenses often take longer than on-premise retail licenses because of the 30 day period for competitors to respond and because all package store licenses must be approved by the Full Board at a public meeting. These two requirements can ad 1-2 months to the process time and should be factored into a launch business plan.

             About Tracy Jong

Tracy Jong has been an attorney for more than 20 years,      representing restaurants, bars, and craft beverage manufacturers in a wide array of legal matters. She is also a licensed patent attorney.

Her book Everything You Need To Know About Obtaining and Maintaining a New York Retail Liquor License: The Definitive Guide to Navigating the State Liquor Authority will be available next month on Amazon.com as a softcover and Kindle e-book.

Her legal column is available in The Equipped Brewer, a publication giving business advice, trends, and vendor reviews to help craft breweries, cideries, distilleries and wineries build brands and succeed financially.

She also maintains a website and blog with practical information on legal and business issues affecting the industry. Follow her, sign up for her free firm app or monthly newsletter.

www.TracyJongLawFirm.com

TJong@TracyJongLawFirm.com

Facebook: Tracy Jong Law Firm

Twitter:      @TJLawFirm

LinkedIn:   Tracy Jong

Tracy Jong Law Firm