February 24th, 2021

Hitting the Gas on a Liquor License – But Which One?

I’m sure many of us while traveling this great nation, have noticed the convenience other states offer of allowing us to stop at a gas station convenience store for some beer on the way to whatever revelry we are destined towards.  In Pennsylvania, however, picking up a six-pack on the way has always been, well, a lot less convenient.  However, legislation known as Act 39 of 2016 made the option of picking up a six-pack of your favorite malt beverage at your local gas station a significantly easier proposition (some of you may remember the catchy phrase “free the six-pack”).  Under Act 39, the Pennsylvania Liquor Control Board, in their discretion, could approve the sale of alcohol for a dispenser of liquid fuels if the interior building was connected but contained a separate sales point for the sale of alcohol and the two (2) sections operated independently.  This usually means that the convenience store portion operates independently of the liquid fuel sale portion of the business.  Even if approved, the Pennsylvania Liquor Control Board has traditionally imposed additional restrictions on the license holder in order to ensure safe compliance with these restrictions.  Finally, the new license holder would still be subject to the restrictions under 47 P.S. §§ 4-404(a), 4-431(b), 4-432(d), and 4-468(a)(3).

Unfortunately, this hasn’t necessarily helped owners and operators of gas station convenience stores navigate the difficult terrain of acquiring, using, and eventually selling malt beverages.  Inevitably, when clients contact me about a liquor license for a gas station, they always ask if they can acquire a “Take Out” license.  While that would certainly be ideal, and this may be an option in other states, sadly, as of now, no such license exists under the Liquor Code here in the Commonwealth of Pennsylvania.  As such, it comes down to the attorney to explain the different applicable license types to the client.

Initially, it should be noted that only three (3) classes of a liquor license would have any applicability to a gas station convenience store.  An “R”, Restaurant License, an “E”, Eating Place License, or a “D”, Distributor License.   However, each of these licenses comes with additional restrictions that can make their usage for operation in a gas station convenience store difficult.  The “D” Distributor License is particularly perilous as it may not be permitted under the PLCB regulations.

Restaurant “R” Licenses are by far the most popular in Pennsylvania, and the most used by gas station convenience stores, but, they can have some restrictions which make operation in a small gas station convenience store difficult.  Specifically, under the Liquor Code, the premises operating a Restaurant “R” License within the establishment must be no less than four hundred (400) square feet for the operable area, it must be equipped with tables and seating to accommodate at least thirty (30) patrons at once, as well as sufficient food to provide for those patrons.  The obvious flaw in this requirement is that customers don’t stop at convenience stores to linger over a meal with friends; they frequent convenience stores to “grab and go.”  I don’t think the drafters of these laws and regulations have ever been to Wawa’s Hoagie Fest or have eaten a Sheetz dog before they finished paying for it. This makes the wasted square footage for tables and chairs that will rarely if ever, be used a drain on retail space for other revenue-generating products in the relatively tight footprint of a gas station convenience store.  The Pennsylvania Liquor Control Board has permitted counter seating to be included in this calculation, which is often less expansive and can fit in smaller locales.  Same problem, less wasted space.

It should be noted that there is a very specific class of “H” Hotel License which may also fall into this category as they operate functionally as “R” Restaurant Licenses in all but name.  However, to my knowledge, those specific “H” Hotel Licenses have not been used for this purpose.  Nonetheless, based on Act 39 of 2016, this would be a possibility.

An Eating Place “E” License could also conceivably qualify for usage by a gas station convenience store, but the area is still subject to restrictions for operation. Under the Liquor Code, the licensed area within the establishment must be no less than three hundred (300) square feet, equipped with tables and seating, and sufficient food, to accommodate at least thirty (30) patrons at once.  The establishment must also have a functioning kitchen or food preparation area.  While the restriction for an “E” Eating Place License has a smaller square footage footprint, it also requires the inclusion of a functioning kitchen and food preparation area which may add issues for a gas station convenience store that wants to sell six-packs to go, but does not want to become a dine-in restaurant in order to earn that privilege.

Finally, there remains a possibility that a “D” Distributor License could be used for this purpose. However, there are restrictions in the Liquor Code which make this unlikely.  Yet, under 47 P.S. § 4-492(12), Distributor licensees are generally prohibited from engaging in any other business but the sale of malt or brewed beverages excepting those items listed under the Pennsylvania Liquor Control Board Advisory Notice No. 9.  Additionally, guidance from the Pennsylvania Liquor Control Board in their Advisory Opinions would indicate that this usage is not permissible.

For those of you who may be representing gas station owners interested in purchasing a license, the following guidelines should be applied before entering into any sale agreement.  First, ensure that the Agreement of Sale for the purchase of the liquor license should be contingent upon not just the sale, but upon the approval for the purpose and usage in a gas station from the Pennsylvania Liquor Control Board.  This requirement was explicit in Act 39 of 2016, so you want to ensure that your client doesn’t end up owning a liquor license which it cannot practically use.

Second, if the license will require transfer into the municipality, you will want to start reaching out to the local municipality to determine if there will be potential problems. It is always wise (and beneficial to your client) to reach out to the solicitor and the legislative body of whatever municipality you will be transferring the license into and trying to take the respective temperature of the municipality in question.  It can go a long way in smoothing the road towards the approval of such a transfer.

There are many pitfalls out there when attempting to obtain a liquor license for the usage of a gas station convenience store for your client.  However, the rewards for your client can be very profitable.  As always, careful planning and thoughtful representation can help you and your client navigate these difficult decisions.

Reprinted with permission from the February 16, 2021 edition of The Legal Intelligencer © 2021 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. ALMReprints.com – 877-257-3382 – reprints@alm.com.

Jason A. Ulrich assists business owners in obtaining and transferring liquor licenses from the Pennsylvania Liquor Control Board. He provides legal counsel in the areas of land use, zoning, real estate, and construction matters, and has served in the capacity of Solicitor to several municipal entities throughout Pennsylvania.