The New York Times recently reported on the free-wheeling business culture in Detroit, where regulation is lax and real estate is cheap. In particular, it told the story of how one restaurateur purchased his liquor license online for $18,000 through a Craigslist advertisement.
Suspicious of this claim, the Bloomberg Businessweek explored further. As it turned out, the reporter found three postings in April alone where liquor licenses were up for sale, with prices in the neighborhood of $20,000 to $25,000. That was just in Wayne County, where Detroit is located. Other suburban areas had listings for the same, though their prices were a bit higher.
Apparently, according to officials, the process is legal. Mostly, these are called “resort licenses” and they can be moved anywhere within state lines. There are also sometimes reduced-cost licenses that can be transferred from one owner to the next, but they can’t be transferred from the original location.
It still takes about four months to complete all the proper government paperwork. If only it were so easy in New York City. Manhattan liquor license lawyers know that liquor license “transfers” involve a substantial amount of bureaucracy. Still, most of it can be handled without a great deal of hassle to the owner if an experienced lawyer is involved.
One important thing to understand is that liquor licenses in New York City can’t be “transferred” the way they might be in some other less-regulated municipalities. That is, the licenses can’t be sold or given from one person or company to another. The State Liquor Authority’s Licensing Bureau sometimes uses the term “transfer” to differentiate between a firm that is currently licensed and selling their business, as opposed to a new establishment that isn’t currently licensed. However, in both cases, the licensee has to go through the same process. That includes notifying the community board, and where applicable, holding a 500-foot hearing.
The 500-foot rule holds that if there are already three or more existing establishments with the same kind of license within 500 feet of the new proposed establishment, the presumption is that the application won’t be approved unless the SLA determines that so doing would be in the best interest of the public.
(There is also a 200-foot rule that holds that an establishment can’t be licensed to sell liquor at retail if it’s within 200 feet and also on the same street as a place of worship or school.)
In Detroit, one of the reasons there has been a glut of licenses up for sale has to do with the fact that the city has lost more than 1 million inhabitants since 1950. And while it may be cheap and easy to get a liquor license and start a company, the Times also noted that entrepreneurs have to cope with high crime, poor emergency response and dilapidated infrastructure.
While the process to obtain a liquor license is decidedly tougher in New York City, there are less of those kinds of downsides once you’re finally in business.
Call us today for more information on how we can help get you started.
The Wright Law Firm is a business law firm located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.