When Is Transferring a Liquor License Problematic?

The transfer of a liquor license is often hotly contested, particularly when the previous licensee was hit with a proceeding to revoke or cancel their license due to any of several typical violations (sales to minors, unlicensed security, purchase from unauthorized wholesaler, etc.). The major concern being that the new applicant is a front for the previous ownership or that the previous ownership will maintain an interest in the new establishment. However, as a matter of law suspicion or speculation is not enough to deny an applicant a liquor license.

In one case, the applicant, a restaurant in Plattsburgh (Clinton Country) was denied an on-premise liquor license. The SLA provided four reasons: (1) the landlord committed a number of liquor license violations when it operated the premises under the same d/b/a name, resulting in the revocation of its liquor license; (2) the applicant lacked experience in operating an establishment licensed to sell liquor for on-premises consumption; (3) the applicant intended to continue its financial interest and active participation in a pizza business right next door; and (4) the applicant did not produce a sales agreement to show that the former licensee relinquished all interests in the business.

The court disagreed with the SLA, overturned their decision, and issued the liquor license noting that the record failed to disclose a rational basis for the disapproval. The SLA failed to provide adequate support for their speculation that the landlord may have a continued ownership interest in the business and that the applicant’s principals were not the sole and exclusive owners of the business.

Citation: Matter of RSSM, Inc. d/b/a Woodstock v. New York State Liq. Auth., 204 A.D.2d 906 (3rd Dep’t 1994).