Navigating Liquor Laws: A Guide for Restaurant Owners

For many people, dining out isn’t merely about eating a meal. Instead, it’s an experience. Diners enjoy not only the convenience of dinner out but also the ambiance, socialization, new cultural experiences, and trying new flavors and combinations. Alcohol fits well with all these goals and desires, and if you don’t yet have alcoholic drinks on your menu, now is a great time to explore your options. After all, about half of all beer is enjoyed alongside meals. In other words, adding drinks to your menu could be a fast, easy way to boost your bottom line.

Serving alcohol in your restaurant isn’t just about profit, however. When you add alcoholic beverages to the menu, you can enhance your guests’ dining experiences. According to one review, alcohol interacts with the chemicals in the body that regulate pain and rewards, which can boost the enjoyment of food. This might be one reason those who imbibe often crave snacks or meals. They aren’t necessarily hungrier, but they get more pleasure from the food they choose.

Alcohol can also help you attract new diners for a more diverse clientele. With the right assortment of products, approachable flavors and combinations, and events aimed toward new and experienced drinkers, you can significantly increase revenues and attract new foodies to your venue. Before you create a new drinks menu, however, you need to consider the legal aspects of such an endeavor.

The laws pertaining to acquiring, serving, and even consuming alcohol can be complex and diverse. Even a seemingly minor misstep could mean anything from fines and penalties to a lost liquor license or the closure of your establishment, and your reputation will take a hit.

It’s time to grab a drink and get comfortable as we walk you through the various liquor laws and everything you need to do to get and keep your liquor license.

Understanding Liquor Laws: The Basics

On December 5, 1933, Congress ratified the 21st Amendment to the Constitution, effectively repealing the 18th Amendment and ending the prohibition of alcohol. Alcohol might have been legal once again, but it was not a free-for-all. Lawmakers passed a series of federal, state, and local laws designed as a framework for the responsible manufacture and consumption of alcoholic beverages, including beer, hard cider, wine, and spirits.

While the federal government regulates the alcohol industry, its legislation acts as a framework that can be built upon by each state based on the needs of their citizenry, including rules about legal drinking ages, where alcohol can be sold, and the hours or days in which it can be sold. This can make for a complicated patchwork of laws, which are intended to help regulate the alcohol industry and reduce certain harmful or criminal activities, such as underage drinking or driving while intoxicated. These regulations include requiring liquor licenses for certain businesses.

Liquor licenses are permits that allow a person or entity to sell alcohol or alcoholic beverages. Any business that distributes, manufactures, or sells alcohol must have a liquor license, including restaurants, bars, clubs, and other establishments.

While there are many subtypes of liquor licenses, most fall into one of two categories: on-premise and off-premise. This indicates whether alcohol can be consumed on the seller’s premises or if it must be taken and consumed elsewhere. Cafes, restaurants, gastro-pubs, taverns, and bars all typically need an on-premise license to serve alcoholic drinks.

Knowing your state’s laws can ensure compliance, but not knowing the law won’t protect you if you run afoul of it. In other words, ignorance of the law is simply not a valid defense, and failing to follow the laws that apply to you and your business could put you at risk of serious consequences, including losing your license and possibly your business.

Getting Your Liquor License: The Process

Getting the license you need for on-premise consumption of alcohol can be a time-consuming process, but it can help you expand your menu, attract new customers, and enjoy higher profit margins. Several steps are involved in obtaining the license.

Research

Each state has its own rules regarding liquor licenses, so your first step will be to research. Some states, such as Pennsylvania, control the sales of all hard alcohol. Others, like Alaska, California, New Jersey, and Washington, offer limited licenses based on population size. A Texas Liquor License for instance, has specific licenses for those who handle food, such as the Mixed Beverage Permit with Food and Beverage Certificate Required.

Do your homework to find out what your state requires and needs from you to approve your license. Your state’s Alcohol Beverage Control Board, or ABC, can be an invaluable resource as can local industry groups. If you don’t already have a liquor lawyer, now is a good time to consider one who can ensure you have everything you need before you move forward with your application process and help you avoid unnecessary delays or obstacles.

Gather Documents

Once you know your state’s rules regarding alcohol, you’ll need to start gathering the required documents, which depending on the state could include:

• Building and zoning permits
• Health permits
• Signage permits
• Leases or proof of ownership
• Occupancy permits
• Surveys or floor plans
• Financial disclosures
• Employer identification numbers
• Copies of identification documents for those with a certain amount of direct or indirect interest in the business
• Proof of dram shop or liquor liability insurance

You might also need to provide your food service menu or other details about your restaurant’s offerings, verification of your financial records, tax documents, and copies of your food handler’s permit. Some states also require a background check for applicants and may require additional permits for liquor license holders, including sales tax permits, health department permits, and building and zoning permits.

Hire an Attorney

While you can go through this process alone, an attorney can smooth and simplify every aspect, taking the legal problems off your shoulders so that you can continue to do what you do best: run your restaurant. A liquor lawyer knows how to best navigate the licensing process and can spot potential issues before they arise, giving you ample time to address them before your application is in front of the board. They can even represent you and your business interests at the review.

Apply

Once you’ve completed your research and have your documents in order, it’s time to apply! 

You’ll simply fill out the necessary forms, upload or submit all the required supporting documentation, and pay the processing fee. Fees vary by state and locality, and in some places might not be due until approval. They can range from a few hundred to several thousand dollars.

Remember that licensing requirements can vary and each license allows specific types of sales. For example, a restaurant license might allow you to sell any drinks as long as they don’t exceed a certain percentage of your sales while a tavern license might specify how much alcohol you have to sell alongside food orders. Your local ABC board or liquor attorney can help you better understand the type of license you need.

Before you hit “submit,” check and double-check that your application is completed, thorough, and includes all supporting documents.

Approval

Now it’s time to sit back and wait. The approval process can take several months or a year or more, which is why you’ll want to apply sooner rather than later. As your application is being reviewed, additional processes, such as background checks, can lead to delays. Transparency in everything can help the process move more efficiently.

Your area’s liquor licensing board will perform the review, where you’ll have an opportunity to present your case. In some jurisdictions, communities have the right to protest license applications. If yours is one of them, you’ll need to be prepared to defend your proposal, too. Once your license is approved, you will be able to move forward with your plans.

Renewal

Depending on state and local laws, licenses need to be renewed periodically. You might need to renew yours annually, or you may have a few years in between each renewal. During the interim, you’ll need to ensure you are following all state and local laws pertaining to your business and how you handle alcohol.

Common missteps include:

• Failing to check IDs properly
• Letting underaged servers serve alcohol
• Serving patrons who are visibly intoxicated
• Failing to control guests appropriately
• Failing to maintain proper documentation
• Allowing underaged or unlicensed staff to serve alcohol
• Allowing staff to drink while working

Violations of your jurisdiction’s liquor laws can put your license in jeopardy and could lead to heavy fines and penalties, too.

Key Regulations Restaurant Owners Should Know

The intricacies of the regulations and laws surrounding alcohol can be complex, which means you could face unexpected roadblocks on your journey. Your liquor lawyer or ABC can be your best resource for navigating these issues.

Alcohol Beverage Authorities

For example, some states have “dry” counties, which means that alcohol sales are strictly prohibited. “Wet” counties, on the other hand, rarely restrict alcohol sales. Some restrict sales only during specific hours, such as early in the morning or late at night, while others restrict sales on specific days, like Sunday. Zoning laws can also affect your ability to sell or serve alcohol.

Regulations on Types of Alcohol and Serving Methods

Another common regulation involves the type of alcohol that may be served or how different types of alcohol are served. Laws can vary based on what you’re serving, whether that’s beer and wine or spirits. Your locale might also restrict the amount of alcohol by volume, or ABV, in the drinks you’re selling or require you to use specific serving sizes or containers for drinks.

Staff Training

Some states require staff to be trained in the legal aspects of serving alcohol. Even if your state does not require such training, it can benefit you and your team to complete programs to ensure responsible alcohol management.

Dram Shop Laws

Properly training your staff can help you avoid running afoul of Dram Shop laws, which hold both the owner of the business and the owner of the building in which the business is located legally liable for any damages associated with intoxicated customers, including the destruction of property, injury, or death related to alcohol-related car crashes.

Serving Minors

One of the most serious violations license-holders may face is serving alcohol to minors. Servers can be held liable both civilly and criminally in many states, and restaurants can lose their licenses entirely. For this reason, checking the identification of those you serve is critical.

The Role of a Liquor Lawyer in Maintaining Compliance

Maintaining compliance might just be your biggest responsibility as a restauranteur, and a liquor lawyer can be your best friend in this process. Liquor lawyers specialize in the laws pertaining to liquor and alcohol sales. They can help you not only obtain your license but provide you with the information you need along the way to remain compliant with the legal regulations and guidelines set forth by the Bureau of Alcohol, Tobacco, and Firearms, the Tax & Trade Bureau of the Treasury, and your state and local government.

Compliance: Staying on the Right Side of the Law

At a full-service restaurant, alcohol sales can contribute heavily to profitability, especially with a well-curated drinks menu that complements your food menu. The profit margin tends to be higher on alcohol sales, and your customers might even enjoy their meals a bit more, boosting your reputation.

However, your success might be short-lived if you fail to follow the applicable laws. You and your staff must comply with applicable federal, state, and local alcohol laws at all times.

You can protect yourself and the business you’ve worked so hard to build by having a clearly stated house policy on alcohol. This policy should be based on the law while outlining your facility’s specific rules about selling alcohol. These can include employee responsibilities, identification requirements, and customer safety issues. Your alcohol attorney or a compliance consultant can help you draft and refine a policy and provide you with valuable information about implementing it.

In addition to a house policy, you will also need to train your employees not only on your policies but also compliance with local, state, and federal laws. In some states, this could even be required, with mandatory licensing requirements for both sellers and servers. Training can be online or in-person and should be completed even if your state does not require it.

Because many states feature “dram shop” laws, failing to follow specific alcohol-related regulations could result in your restaurant being held liable for selling to minors, selling to already intoxicated customers, or selling to someone who drives while intoxicated and injures or kills someone in a crash.

Creating a “culture of compliance” in your restaurant will help protect you, your staff, and your guests and stop problems before they start. This includes clearly communicating policies, leading by example, and enforcing the rules and procedures consistently across the board.

Because violations can put your livelihood and restaurant at such grave risk, you also need a firm and clearly stated policy on violations that help your team move forward after a misstep and work to prevent further violations. This includes reporting violations immediately, cooperating with authorities, and implementing policies to address the violations and reduce the risk of future violations.

Navigating Changes in Liquor Laws

Laws and regulations are adjusted periodically in response to our ever-changing needs and concerns as a culture and society or as a result of one or more specific incidents. When it comes to laws about alcohol, you might face changes in how you obtain your licenses and permits, how you can advertise or serve your products, and in pricing and taxing your menu.

Because you don’t want a seemingly minor issue to affect your license, restaurant owners and staff will need to remain current on all the various laws and rules affecting the industry. Follow industry sources, subscribe to newsletters, join your local industry associations, and follow the appropriate government agencies on social media to stay abreast of any policy changes that could affect you directly or indirectly.

A liquor lawyer can also be one of your most effective “secret weapons” when it comes to remaining current on all applicable laws. Your attorney can update you on any changes as well as help you and your team stay compliant.

Failure to comply with alcohol laws can result in anything from fines or penalties to the suspension or revocation of your license. Rarely, it could even cost you your business.

For this reason, you must update your policies as needed and communicate any changes to your staff and customer base to reduce the risk of confusion.

Constantly training your staff and implementing compliance programs can help ensure your success.

Alcohol and Your Restaurant: The Bottom Line

Laws surrounding alcohol can be complex and confusing, but understanding them can go a long way toward your success. A liquor lawyer is a valuable ally who can keep you current on the license application process, key regulations you need to know, and changes that could affect you and your business. They can also help you build a compliance policy that supports you in your goals while avoiding running afoul of the law.

While liquor laws might seem burdensome initially, they can help you protect your brand. Ensuring compliance with every transaction can keep your reputation solid, prevent costly and potentially damaging legal problems, and create a positive atmosphere for your staff and guests. Going into the process alone might seem like a more budget-friendly option, but it can leave you vulnerable to legal issues. Working with an experienced alcohol attorney will ensure you have access to the up-to-date information you need and pertinent advice to help you comply no matter how the laws change.

Adding alcoholic beverages to your menu can strengthen your brand, improve customer satisfaction, and build your success but only if you are fully compliant with the applicable laws.

If you’re ready to take the next step, then it’s time to start researching your state’s laws regarding alcohol, kick off the application process, and get legal advice from a qualified attorney.