What You Need to Know About Obtaining a Liquor License

By: Lori T. Williams, Owner/Managing Attorney of Your Legal Resource, PLLC

Attorney John Hindo shares what’s involved in obtaining a liquor license, if you are a business owner in Michigan.   Hindo is a partner in the law firm of  Mekani, Shallal & Hindo, PC, located in Birmingham, MI, and has been in practice for 9 years. Hindo chose to focus on liquor licensing as a practice area, since many of his clients are retail establishments, and alcohol sales are a central focus of their business.  He helps his clients with the purchase or sale of a business, obtaining liquor licenses, and representation of clients who have been denied licensure by the Michigan Liquor Control Act. Hindo’s clientele includes convenience stores, gas stations, shopping centers, restaurants, hotels, and other retail establishments.

“Many people don’t recognize that alcohol sales have expanded from the supermarket and convenience stores, to other retail establishments. For example, pizza stores are starting to sell alcohol.  Also, many restaurant are now selling alcohol that can be purchased and taken home with a carry-out order,” says Hindo.

Two issues of concern that arise frequently with Hindo’s clients are:

1.  Whether or not the Michigan Liquor Control Commission is going to ease restrictions as to where a liquor license can be operated;

Currently, in order to operate a liquor license in Michigan, absent certain exceptions, each establishment must be no closer than ½ mile of another location.  However, there is ongoing discussion regarding eliminating this rule, so that the holders of a liquor license are not restricted as to where they can operate their businesses.

2.  Whether the Michigan Liquor Control Commission is going to ease restrictions on gas stations selling alcohol.

Currently, in order for a gas station to sell alcohol, the general rule is that the business must maintain $250,000 in inventory and the fuel pumps must be 50 feet away from the point of sale (ie. cash register).  There is a discussion pending to lower these requirements, so that it would be easier for a gas station to obtain a beer & wine license.  Hindo notes that the main opposition to this discussion is that gas stations are now competing with convenience stores, and may one day make the traditional convenience store obsolete.

Hindo provides the following 3 tips for Michigan business owners who are considering applying for a liquor license, or are trying to get one renewed:

1.         Hire an experienced attorney that knows the process.  One of the biggest mistakes that clients make is to not hire an attorney who specializes in this area.

2.         Make sure to know what the rules and regulations are for each city that you wish to do business in, so that there are no delays in obtaining your license.

3.         Make sure to always train your staff so that your establishment is always in compliance with the rules and regulations of the Michigan Liquor Control Commission.

While it is not a requirement to hire an attorney to obtain a liquor license, having one can make the process much simpler and less costly in terms of lost revenue while you wait for the license.  Hiring a lawyer can actually save you some money. Hindo notes that, “the application process is a very rigorous and document intensive.  If an applicant does not have their documents submitted properly, then their application will get rejected.  Additionally, through the application process, clients will have to appear at investigations with theMichigan Liquor Control Commission and various municipalities to determine eligibility to become a licensee in addition to verification of finances.  During that process, voluminous amounts of documents are requested.  If a person is not intimately acquainted with the process, then chances are the documents provided will be incomplete or incorrect, and result in a delay in the investigation process or an outright denial of licensure.”

The process involves much more than simply filling out forms. It’s an intricate process, and not obvious to the lay person.  Additionally, Hindo points out that “many applicants do not realize that it could take up to several months to obtain a license.  As a result, they make significant investments in their business,without realizing that it may be several months before they receive an approval.  When making their financial investments, they do not contemplate that they may be risking their investment in the event that the application is denied.”

There are several types of liquor licenses available, but the most common are:

• Specially Designated Merchant (SDM): for the sale of beer and wine in general, and for convenience stores and supermarkets;
  
   
• Specially Designated Distributor (SDD): for the sale of liquor generally, and convenience stores and supermarkets;
  
   
• Class C licenses: for the sale of beer, wine, and liquor for consumption on the premises at places like restaurants and bars.
  
   

The filing fees are several hundreds of dollars and vary for each type of license. They also vary in how easily they are obtained.  For example:

• SDM licenses are generally granted to every applicant, provided that the applicant complies with the application process and qualifies under the law.
  
   
• Class C licenses are generally available because those licenses are not restricted city wide, but rather county wide.  For example, if you wanted to open a restaurant in Farmington Hills, you could purchase another businesses Class C license that is in Troy.
  
   
• SDD licenses are generally difficult to obtain because there is a quota system.  This means that each city can only have a designated amount of SDD licenses, and once those licenses have been taken, the only way to get one is to purchase it from someone who owns one.

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John Hindo, one of the founding partners in the law firm of of Mekani, Shallal & Hindo, PC, concentrates his practice in the areas of commercial transactions, commercial litigation, and commercial loan workouts/debt negotiations.  John has assisted many applicants in obtaining licenses from the Michigan Liquor Control Commission, and he has also successfully defended and litigated many matters involving the Michigan Liquor Control Commission.  For more information, visit the firm’s website.
 
Lori T. Williams is a 23 year attorney based in Birmingham, MI. She owns a legal referral and legal consulting business called Your Legal Resource, PLLC. She assists individuals and small businesses in need of legal advice or representation by connecting them with the right legal specialist for their situation. She also provides consulting services for attorneys and other professional service providers on how to generate more business through effective branding, marketing, networking, and by creating strategic partnerships. For more information, visit www.bestlegalresource.com.