Tracy Jong

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 such determinations 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 nearest liquor stores, 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 new package store is filed, the Authority will obtain the annual gross sales figures from the four closest stores for the last four years.  These stores have up to 30 days 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 stores 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 businesses.  This could be overcome, however, if the applicant includes documentation and supporting statements with the application to show 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;
  • 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 has 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.

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.