Off Sale in On Sale Businesses

Most restaurant people in California know that selling alcoholic beverages for consumption off of the licensed premises (“off-sale,” e.g., liquor stores and convenience stores) requires a different license than selling for on the premises consumption (“on premises,” e.g., restaurants and bars). However, few people are aware that there is nothing under state law that prohibits an on sale licensed business from engaging in off sales.  Rather, the Department of Alcoholic Beverage Control (“ABC”) typically places a condition on the license prohibiting a restaurant or bar from engaging in such sales.  Additionally, many local municipalities have ordinances or conditional use permits prohibiting such sales.  However, with the increasing popularity of wine tastings and restaurants specializing in high-end wines, the ABC and many local municipalities are softening their opposition to restaurants “exercising their off-sale privileges.”

To acquire such a right is not yet a routine process, and depends on the individual facts and local regulations.  Nevertheless, we are increasingly being called upon to assist in acquiring this type of entitlement.  When this option is available, it may save thousands of dollars in licensing and professional fees, as well as shaving many months from the application process.  On the other hand, if not properly vetted with all agencies involved, pursuing this strategy may result in some unpleasant surprises, such as infeasible conditions/restrictions or even outright denial.  Accordingly, we conduct meetings and conversations with all agency principals to ensure a clear understanding of our client’s needs.  Even then, we sometimes hedge our bets by pursuing a dual strategy, i.e., applying for the initial approvals for an off-sale license along with the on-sale license.  That way, if there are any unexpected impasses, our client does not lose months starting over applying for the off-sale license.

About William Adams

Attorney at Norton, Moore, & Adams, LLP.
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