Opening a Restaurant in New Jersey – A Liquor License Q & A

If you have plans to open a restaurant in New Jersey and would like to serve alcohol, you should be aware of the longstanding rules related to liquor licenses.  Most New Jersey municipalities are not able to issue new liquor licenses meaning that a business owner seeking a license will likely have to purchase an existing license.

What’s the first step in acquiring a liquor license? 

First, you should understand that there are several different types of liquor licenses but for your use as a restauranteur, you will want to acquire what is known as a Plenary Retail Consumption Liquor License.  You can determine if there is such a license available for acquisition by calling the municipal clerk or secretary of the Alcoholic Beverage Control Board of the municipality in which you plan to locate your restaurant.

I’ve located an available license in a different municipality.  Can it be transferred to the municipality in which I plan to operate?

No.  Liquor licenses are not transferable from one municipality to another.  The municipal clerk can provide you with a list of the names and addresses of the holders of all liquor licenses and can advise you which licenses are currently not in use (i.e., “pocketed”).  You can then contact the license holder to determine if he or she wants to sell the license.

Once I identify an available license, what are the next steps?

If you reach an agreement with a license holder, you will then need to:

  • Enter into a written purchase and sale agreement,
  • Obtain written consent from the seller to transfer the license,
  • File a 12-page application, accompanied by required fees, with the municipality for a “person-to-person” (from the seller to buyer) and “place-to-place” (from seller’s establishment to your new establishment) transfer of the liquor license,
  • Publish legal notices of the proposed transfer, and
  • File for the issuance of a tax clearance with the New Jersey Division of Taxation. The municipality cannot approve the license transfer until a tax clearance certificate is issued.

The municipality through the police department will then conduct a background investigation of you, the buyer and your principals, including fingerprinting, to ensure that you are not legally disqualified to hold a license, are reputable, and will operate the licensed premises in a reputable manner.  The background investigation also ensures that the proposed transfer and restaurant liquor license operation will not violate any state or local laws, regulations, and ordinances (including distance requirements between licensed establishments, as well as distance between schools and religious facilities), and that you have disclosed the source of all funds to purchase the license and you do not have any undisclosed, or hidden or non-qualified investors.  If you are determined to be qualified, and no objections to the license transfer are received by the municipality, then the municipality must authorize the transfer of the license to you and the new premises by resolution at a public meeting.  You are not entitled to utilize the license until such official action is taken.

How long can I expect the process to take?

The entire license transfer process should take between 90-120 days so the purchase and sale agreement should adequately provide time to complete this process.

What options do I have if my application for a liquor license is denied?

In the event that you cannot acquire a license, then, unless prohibited by the municipality, your customers may bring their own alcoholic beverages (beer and wine only) into your establishment.  You can supply glasses, ice, etc. but you cannot charge a corkage fee.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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