When considering purchasing an establishment with a Colorado liquor license, such as a restaurant or retail liquor store, it is important to understand – before you buy – what you must do to transfer the liquor license.
In Colorado, liquor licenses are not traditionally “bought or sold” in the way they are in other states. A Colorado liquor license is transferable to new owners when certain conditions are met. With recent changes in the law however, retail liquor store licenses (“RLS”) may have some value in and of themselves, but that is a discussion for another day. Colorado’s liquor licensing system puts no real cap on the amount of licenses that may be issued, other than the fact that the issuance of any new license must meet the “needs and desires” of the neighborhood. Essentially, if the neighborhood doesn’t want the license, you don’t get the license.
In a purchase of an existing liquor licensed business, (hotel and restaurant license, tavern license, beer and wine license, for example) you can transfer the liquor license of the existing business, thus avoiding the need to conduct a new needs-and-desires survey of the neighborhood, and simply show to the local beverage licensing authority that you possess the “moral character” required to hold the license. In fact, in some jurisdictions in Colorado, a Transfer of Ownership of a liquor licenses does not even require a public hearing. The liquor license transfer can be processed by administrative review.
One disadvantage to a Transfer of Ownership is you are assuming all of the prior history of that liquor license – which may include violations of the liquor code, such as serving alcohol to a minor or over-serving an intoxicated customer. Multiple violations of the liquor code within a short period of time result in more extreme penalties. Penalties can include a fine, a temporary suspension of the license during which you cannot sell alcohol, or a permanent revocation of a license. However, we believe that except in the most unique circumstances, the benefits of transfer outweigh the negatives. In our experience, once the liquor license is transferred, the licensing authorities recognize that there are new owners when looking at past violations.
If you do wish to Transfer Ownership of a liquor license, you can apply for and operate your new business under a Temporary Liquor License while the permanent transfer is being processed. This allows for uninterrupted business operations while you apply for and are approved to hold the license permanently.
Colorado Beverage Lawyers of LaszloLaw
Our Colorado beverage lawyers assist Colorado businesses by addressing their needs throughout the liquor licensing process and continuing to provide guidance as needed. Contact the Colorado beverage lawyers at LaszloLaw today to discuss your business’ needs.