1. LIQUOR LICENSE TRANSFER PRIMER
By: Christopher P. Baker
Varnum LLP
39500 High Pointe Blvd., Ste. 350
Novi, MI
(248)

2. The four “ts”
TYPES
TIMING
TROUBLE
TIPS

3. TYPES ON PREMISES vs. OFF PREMISES

4. ON PREMISES
CLASS C – MOST COMMON
Class B Hotel License
Definition: A location, licensed to sell, at retail, beer, wine, mixed spirits, and spirits for consumption on the premises. Examples: Bars, restaurants, bowling alleys, golf courses (some), entertainment centers. Note – Freely transferable within county.
Definition: A hotel licensed to sell at retail, beer, wine, spirits or mixed drinks for consumption on the premises (including hotel rooms). Eligibility: Designed for a hotel with capacity for minimum of 25 rooms in the local governmental unit of fewer than 175,000 in population; or capacity for minimum of 50 rooms in a local governmental unit of 175,000 or more in population. Note – May convert a Class C to a B- Hotel License. May transfer ownership or interest.

5. On PREMISES continued
CLASS a hotel
Tavern
Definition: License to sell, at retail, beer and wine for consumption on the premises only. Note – Freely transferable within county. Brew Pub Definition: License issued in connection with a Class C, Tavern, A-Hotel or B- Hotel to manufacture up to 18,000 barrels per calendar year, for sale on the premises or off premises (with a SDM)
Definition: A hotel that is licensed to sell, at retail, beer and wine for consumption on the premises (Note: no spirits).

6. CLASS c, tavern, a hotel or b hotel resort licenses
On PREMISES continued
CLASS c, tavern, a hotel or
b hotel resort licenses
Resort Licenses
Definition: Type of Class C, Tavern, A-Hotel, B-Hotel or SDD, issued without quota limitations.
Note: Only a limited number may be issued generally at the discretion of the MLCC.
“Original 550 Resort” – This type of resort license was first authorized by statute in 1964 and created an additional 550 resort licenses, transferable freely within the state.
Eligibility:
Full-time restaurant, open to the public five hours a day, five days a week, with seating of 100 persons and food sales must be 50% or more gross sales; or
Maintain sleeping facilities with a minimum of 25 bedrooms, meeting, and conference rooms capable of accommodating 200 persons, or convention facilities accommodating 200 persons; or
Sports or entertainment venue with a capacity of 4,500 or more; or
Golf-course which is open to the public and has at least 18 holes, and measures at least 5,000 yards.

7. CLASS c, tavern, a hotel or b hotel resort licenses
On PREMISES continued
CLASS c, tavern, a hotel or
b hotel resort licenses
Section 531(3) Resort Licenses – The commission may issue no more than 5 new Resort Licenses each year, which are non-transferrable from its original location.
Eligibility:
Business designed to attract and accommodate tourists and visitors;
Primary business of the establishment is not the sale of alcohol;
Economic development factors must be considered;
Capital investment of no less than $75,000.
REQUIREMENTS:
Full-service restaurant open to the public five hours a day, five days a week, with seating of not less than 100 persons. Food sales must be 50% or more gross receipts (except for establishments in counties with less than 50,000 population, which are only required to have 50 persons capacity); or
Maintain sleeping facilities with a minimum of 25 bedrooms, meeting and conference rooms capable of accommodating 200 persons, or convention facilities capable of accommodating 200 persons; or
Sports or entertainment venue which has capacity for 4,500 or more; or
Golf-course open to the public and has at least 18 holes, and measuring at least 5,000 yards.

8. Off PREMISES
SPECIALLY DESIGNATED MERCHANT LICENSE (SDM)
Specially designated distributor license (SDD)
Definition: A business licensed to sell, at retail, beer and wine in the original package for consumption off the premises. Examples: Grocery stores, convenience stores, food specialty stores, pharmacies, gas stations, and other establishments selling beer and wine for consumption off the premises. Note – Presently subject to limited quota. Freely transferable within county.
Definition: A business licensed to sell, at retail, spirits and mixed spirit drink in the original package for consumption off the premises. Examples: Convenience stores, retail stores. Note – A half mile restriction removed. Transferable within county.

9. Off PREMISES continued
Resort SDD’s
State may issue no more than 15 resort licenses each year.
Eligibility:
Must be an SDD licensee;
Must be located in a local governmental unit with a population of 50,000 or fewer;
Must be a business designed to attract and accommodate tourists and visitors;
Additional economic development factors either may or must be considered;
May be located within 2,640 of an existing SDD location.

10. TIMING NEW ISSUE LICENSE vs. TRANSFERS

11. timing
Transfers of
Existing Licenses
New issue
Quota – Available
License
Requires local government approvals for on-premises licenses. General enforcement and license investigation by the Michigan Liquor Control Commission. Average approval time = 6 – 7 months. Resorts – Warning!!! New issues discretionary and may require 1 year + for approval.
No local approval requirement.
Subject to enforcement and license investigation.
May involve either transfer ownership, transfer of location, or both
Note: Certain Resort licenses may not be transferred to separate location.
Average approval time = 6 months

12. Conditional liquor licenses
timing
Conditional liquor licenses
TIMING:
Definition: Allows an applicant for transfer of ownership of a retail license (Class C, Tavern, A-Hotel, B-Hotel, SDM, or SDD) to operate the business before final approval of the permanent license transfer. May be issued to an applicant requesting transfer of ownership and location of a qualifying on-premises retailer license and SDM license. May also be issued to an applicant requesting a stand-alone SDM license.
20 Business Days from receipt of full package:
Complete Application
Livescan prints
Purchase Agreement
Proof of Property documentation
Complete Charter documents
NOTE: May not be located within 500 feet of a church or school for consideration.

13. TROUBLE QUOTAS AND LOCATION RESTRICTIONS

14. Site-Specific RESTRICTIONS
TROUBLE
QUOTA
Location and/or
Site-Specific RESTRICTIONS
SDD – 500 feet from a church or school.
Class C – 500 feet from a church or school.
Tax Liens
Non-Renewal
Eligibility of Applicant
Prior criminal arrest/convictions
Interest in other liquor licensees
Police Powers
Other Issues
Transferor’s tax or other problems
Prior violations
SMD - One for every 1,000 in population.
SDD - One for every 3,000 in population.
On-Premises - One for every 1,500 in population.

15. TIPS CHECKLISTS RENEWAL/NON-RENEWAL STATUS Pending Violations
Local influence (positive v negative)

16. SAMPLE CHECKLIST
Buy / Sell Agreement
Retailer License & Permit Application LCC-100 or applicable application
LiveScan Fingerprints of Members / Stockholders
Report of Members / Stockholders LCC-301 or applicable application
Filed Articles of Organization / Incorporation
Operating Agreement of Members / Bylaws
Certified Resolution of the Managers or Officers Approving Loans and Capital
2 - 3 years US Federal Tax Returns
Property Lease with Property Owner / Deed
Member Affidavit- no police powers, criminal arrests, lack of interest in retail or wholesaler licenses

17. SAMPLE CHECKLIST cont. Budget
Cost of any land acquisition and estimate of costs of construction of improvements
Cost of initial equipment, supplies and materials
Misc. costs/ expenses to open and commence operations
Sources of all funds for item identified in the Budget
Capital contributed by Members, if any
Third Party Loans- need copies of loan commitment, promissory note(s), security agreements
Six Months of consecutive bank or institutional statements for any accounts that constitute sources for any of the funds
Site diagram, construction drawings

18. Presentation available at:
QUESTIONS?
Christopher P. Baker
Varnum LLP
39500 High Pointe Blvd., Ste. 350
Novi, MI
(248)
Presentation available at: