Alcoholic Beverage Control Act
The sale of a business involving an alcoholic beverage license is subject to laws which are constantly being changed.
Pursuant to the Alcoholic Beverage Control Act (the ACT), the Department of Alcoholic Beverage Control (ABC) issues licenses authorizing the sale of alcoholic beverages. The ABC has the authority, for good cause, to deny, suspend, or revoke an alcoholic beverage license.
The ABC issues alcoholic beverage licenses to qualified adult persons, partnerships, and corporations for use at approved locations. The ABC investigates each applicant and may refuse to issue a license to any person who has violated the Act, has a disqualifying criminal record, or attempts to conceal an arrest record. The location may be disapproved if it is in the immediate vicinity of a school, church, or public playground or if there is an over-concentration of alcoholic beverage licenses in the area, or if licensure may create or aggravate a police problem. Most ABC application investigations take approximately 45 – 60 days
A license issued for a specific location must be placed in use within 30 days of the date of issuance. If the premises are still under construction, the ABC will hold the license in safekeeping for not more than 6 months unless cause for further delay can be established.
Transfer of License - Posting of Notice
Like an applicant for license issuance, an applicant for transfer of a license must post the premises with a notice of application to sell alcoholic beverages. Local officials and private parties may protest the proposed transfer and the license cannot be transferred while a valid protest is pending or on approval. Further, the ABC may decline to transfer a license if disciplinary action is pending against the transferor.
No one should make any investment upon the assumption that an alcoholic beverage license will be transferred. An applicant for license transfer may be able to obtain a temporary operating permit. However, it may not be prudent for the seller to give possession of the business for operation under a temporary permit.
Notice to County Recorder and Escrow Requirement
Before filing a license transfer application with the ABC, the applicant and current licensee must file a notice of intended transfer with the county recorder and establish an escrow. Escrow may not release any consideration before the ABC approves transfer of the license. Then, transfer of the business will occur simultaneously with transfer of the license.