BUYING AN ARIZONA LIQUOR LICENSE

What you need to know –

 

1. Determine the type of license you need

 

Clearly your first line if action is to determine what kind of license that you need to have to operate the business you intend to operate – The Arizona Liquor Board offers the applicant a full menu of opportunities – Many of the alcohol licenses are direct issue but have certain operating conditions that the applicant must adhere to  stay within the framework of compliance otherwise they risk revocation and or disciplinary action taken by the Arizona Liquor Board.

With that said the state of Arizona does a reasonably good job on their web site to help direct the prospective licensee in determining what type license they may or may not need – Moreover the State Liquor Board does have many knowledgeable people on their staff that are more than willing to assist the new licensee- Knowing what you need is your first step.

 

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2. Secure a Location

 

– Once you have made the determination about what type of license you’ll require to operate the business you’ll need to identify a location that will be suitable for the operation . Consideration from an economic standpoint must be taken into consideration but there are additional requirements at  both the state and municipal levels that will be a snapshot related to proximity requirements to churches and schools existing within a certain radius of the proposed business – It’s critical for the new licensee to have assessed these requirements before committing to a location to ensure that once the public notice process has commenced the site will meet those requirements and in effect be exempt .

 

3. The License Process

 

Regardless of those issues that impact a site and indicate an inability to immediate obtain a license there will still be a process of application and submittal to the state Liquor Board and the ancillary municipal governmental authorities for the review , processing and ultimate approval of their new licenses. The state process due to statutory public noticing requirements will take a minimum of 105 days before both the municipal and state authorities will have blessed the pending application .

Simple acceptance of an application by a proposed licensee does not immediately confer approval – At any point through the process related to public notices and required hearings may result in opposition and denial of said filing – Because certain licenses particularly the more predominant licenses that are used to operate a bona fide eating place / restaurant ( A Series 12 ) have operating thresholds requiring that a licensee must not breach a certain threshold related to a ratio of food to sales of alcohol – It’s therefore critical to recognize that once a license is in place the regulatory agencies will reconcile the records of the newly operating restaurant / licensee to ensure compliance – If for any reason they are not compliant the state will commence disciplinary action and file an application

 

4. To Buy or Not to Buy

 

In the instances where your business do not bode favorably the alternative is to start the possible purchase and filing of another license that is more consistent with the business operation – However the state may suspend the license privilege until such time as the new license has been approved and issued – If in fact through the prospective licensees due diligence to determine exactly what type of license they might need to operate the newly contemplated business that said license though it exists is not readily available “ over the counter “ the prospective licensee will have to buy a license from another license holder .

In the state of Arizona there are three type licenses that are “ Quota” and must be purchased – They are a series 6 Bar ONLY License , a series 7 Beer & Wine Bar ONLY license and a series 9 Liquor Store license . The purchase of a license is not regulated by the state Liquor Board – There are no formal state statute in places to protect either the seller or the buyer when purchasing a license – A buyer of a license MUST be careful .

The state also requires that those applicants for quota licenses must own the license prior to make a formal submittal to the state for approval – And here lies the quandary – You must purchase a license that you’re not sure you’ll be able to use ! You could be a buyer one day and then down the road if not approved be a seller – or this reason it is critical to assess your needs . Identify a license that makes sense economically . Start and conclude your purchase with an escrow company , though it’s not required, so as to ensure recourse and more importantly ensure that the subject license your purchase is lien free , tax free and completely unencumbered before concluding the purchase and handing the seller your money.

 

5. Check the License Thoroughly

 

As previously stated the Liquor Board will require evidence of ownership – Ownership is evidenced through a certificate of title or a bill of sale from the seller – Beware! There have been instances where though a license appears to be “ available “ it in fact has already been sold and the bill of sale is NOT on record . It is therefore critically important that when you take possession through a purchase and receive a bill of sale from the seller that you immediately place the bill of sale on record at the state Liquor Board and confirm receipt of such – Licenses are purchased by the type needed and the county where you intend to operate the proposed business.

Outside of understanding that the subject license being purchased is “ lien free” it’s important to know it’s status – Most licenses that are purchased are in an inactive status – not being used – The state ONLY allows an inactive license to remain inactive for no more than 36 months / 3 years . Now you get to do the math – If you have to buy a license and the process after you’ve taken possession through a bill of sale takes 105 days buying a licenses that’s in the last stages of inactive status should you not be approved leaves the new prospective licensee at great risk

 

In summation :

 

Know what type license you need – Be sure that you can be compliant with any regulatory requirements to not only obtain the subject license but to continue to operate through the life of the business- Should a direct license not be available know that you’ll need to purchase a license that makes economic sense and with an understanding that if you don’t prevail you might need to resell – Know that your purchase should be handled through an escrow company to protect you from any liens or encumbrances and that the sale must conclude before the state will accept you application

 

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