The Rise of Crafty Liquor License Transfers in Pennsylvania
It’s undeniable that we are living in the golden age of craft beers. From large cities to small towns, restaurants and breweries are popping up in our neighborhoods and delighting beer drinkers with their crafty concoctions. However, the path to getting that liquor license approved, so we can enjoy these brewed pleasures, is littered with potential pitfalls. This can be particularly problematic if there are no available liquor licenses in the municipality in question. For those lawyers who have never dealt with liquor license transfers, it can come as a shock that there are quotas in Pennsylvania regarding the amount of liquor licenses available by county and municipality.
Pennsylvania’s Liquor Code (47 Pa.C.S.A. § 4-461(a)) places a restriction on the number of available county liquor licenses, specifically restaurant licenses (“R”) and Eat Place Licenses (“E”), at one per three thousand residents. Therefore, each county has a certain specified number of liquor licenses which are available.
Due to earlier, more generous quotas, most counties actually have more licenses than would be permitted under the current more restrictive quota system. This usually means that the only means of acquiring one of these licenses is by purchasing the relevant license from another person or entity who holds the type of license your client is attempting to use. There are of course a few other means by which a person or entity could acquire a relevant liquor license in Pennsylvania, including for a brewery and brew pub, but that’s an entirely separate article.
However, before advising a client to purchase that license, it’s very important to determine exactly where that client is intending to operate their business with the liquor license. If the liquor license is staying within the same municipality, and simply moving locations within, then your client can make their application to the Pennsylvania Liquor Control Board and allow the transfer to proceed as usual under the PLCB+ system.
Unfortunately, if the liquor license your client is trying to acquire is outside of the municipality where they intend to operate, another issue becomes pertinent to the transfer. Pursuant to Pennsylvania’s Liquor Code (47 Pa.C.S.A. § 4-461(b)(3)) any license being transferred into a municipality, “must first be approved by the governing body of the receiving municipality when the total number of existing restaurant liquor licenses and eating place retail dispenser licenses in the receiving municipality equal or exceed one license per three thousand inhabitants.” This means that in order to obtain approval of the liquor license from the Pennsylvania Liquor Control Board, the relevant municipal governing body (whether it is a Board of Supervisors, Borough Council, City Council or Board of Commissioners) must approve the transfer in those scenarios when the municipality already has more than one license per three thousand inhabitants.
When you are representing the proposed license holder who wishes to make such a transfer, you must notify the municipality in question in order to initiate the process enunciated in 47 Pa.C.S.A. § 4-461(b)(3). Under that same provision of the Liquor Code, the municipality must schedule one public hearing before the municipal governing body for the purpose of, “receiving comments and recommendations of interested individuals residing within the municipality concerning the applicant’s intent to transfer a license into the municipality.”
Further pursuant to 47 Pa.C.S.A. § 4-461(b)(3), the governing body of the municipality must issue an opinion regarding their approval or denial of the transfer of the liquor license within forty-five days of the initial request for approval. This can be done by either ordinance or resolution. If the transfer application is approved, then the potential license holder can submit their transfer application to the Pennsylvania Liquor Control Board (along with a copy of the resolution showing their approval).
While there is no requirement under the Liquor Code, these hearings are typically transcribed and, for the convenience of the municipality, can be scheduled during one of their regular meetings. If you are representing the potential license holder, try to coordinate the timing with the municipality and be mindful of the additional expenses that could be incurred by the municipality in hearing the request. As the governing body of the municipality is ultimately making the determination as to whether the license can be transferred, it is always best to avoid conflict and imposing additional costs that the governing body will have to explain to their taxpayers. Never forget that the governing body you are appearing in front of is an elected body who have constituents to whom they are accountable when presenting your case to them.
Things are significantly more complicated if the governing body of the municipal entity denies the request for approval of transfer. The language contained in 47 Pa.C.S.A. § 4-461(b)(3) clearly states the following: “A decision by the governing body of the municipality to deny the request may not be appealed.” However, the case law has been mixed on whether the denial by the governing body of the municipality can be appealed.
The most recent case to speak on this matter, Giant Food Stores, LLC v. Penn Township, 167 A.3d 252 (Pa.Cmwlth. 2017) indicated that the denial of a liquor license transfer was appealable to the Court of Common Pleas. The Commonwealth Court reasoned that the denial was an adjudication under the Local Agency Law (2 Pa.C.S.A. § 751), and therefore was appealable.
Another potential issue regarding these inter-municipal transfers to be aware of concerns “dry” areas. These are areas which, by means of local ordinance, do not permit alcohol sales in that municipality. The Pennsylvania Liquor Control Board will not allow for an inter-municipal transfer of a liquor license into a “dry” area where such transfer would directly defy the local ordinance. Thankfully, this issue can be sidestepped by checking with the local municipalities’ ordinances to determine if the municipality has enacted any of these “dry” laws. The Pennsylvania Liquor Control Board also has a list on its website compiling all “dry” municipalities which can be helpful in determining if you may have this issue to address.
So the next time you are enjoying one of those hoppy or malty beverages we all love, remember to raise a toast to the lawyers, municipal officials and business owners who made it possible.
Reprinted with permission from the February 25, 2020 edition of The Legal Intelligencer © 2020 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. ALMReprints.com – 877-257-3382 – firstname.lastname@example.org.