Working in business brokerage, Transworld Colorado is used to performing a number of i dotting and t crossing activities. But recently there have been some changes to the regulations governing liquor license transfers that we sought professional help to better understand. Enter Peter Nemkov, a private practice attorney with Nemkov and Bonifazi, PLLC who boasts deal experience with approximately 2,000 transactions during his tenured career in Washington D.C. and Colorado. Mr. Nemkov explained the many intricacies of transferring a liquor license in Denver and the surrounding cities, which we will present to you in the following article.
Colorado liquor licensing law is regulated by a statute called the Colorado Liquor Code (CRS 12-47-101 et seq.) and it is governed at both the local and state levels through the Denver Department of Excise and License, and the Local Licensing Authority for the surrounding cities, as well as the Colorado Department of Revenue, Liquor Enforcement Division for the State. To begin at the retail level there are three main types of licensing, a Retail Liquor Store License being the most common, followed by the Hotel and Restaurant License and the Tavern License, a more junior version of the Hotel and Restaurant License. When transferring one of these license types, one must first work through the local authority, before getting the final license permissions from the State authority.
Receiving a liquor license transfer is a game played mostly in forms, but if played well by completing each step fully and honestly then it is fairly likely the Local Licensing Authority will issue a Temporary Permit and the State will grant the transfer and a permanent liquor license will be issued. First, there are both Local and State forms to be filled out including the transfer application, an individual history report, a financial questionnaire as well as the requirement to get fingerprinted. The applicant will also need to provide documents including entity documents (S Corp or LLC only), local and federal tax ID numbers, a lease, the asset purchase agreement (for their new business) as well as the filing fees.
The purpose of all of these forms and documents is of course to complete the license transfer, but they must also provide sufficient elements of proof for source of funds, no current conflicting licensing and that the applicant is of good moral character. What does all this mean specifically? The elements of proof and source of funds show that this person is, in fact, buying the business with the license in question and has sufficient funds to cover the purchase price. The local and state authority needs to ensure that the applicant does not have an interest in other conflicting licensing, noting that the transferred license can be mixed and matched between the Hotel and Restaurant Licenses and Tavern Licenses, but not the Retail Liquor Store License.
Finally, the applicant may not have any current, recent or repetitive criminal history to report. Mr. Nemkov made it decidedly clear that it is imperative to share any and all current and historical infractions you can think of because it is much easier to explain away old history than to come back from "trying to cover it up." Once all applications are submitted a Temporary Permit from your local authority should be issued within 10-15 days (5 days outside of Denver city limits). This Permit is good for 120 days and can be extended once, via an application for another 60 days. Before receiving a Permanent Liquor License all inspections must be completed with the City of Denver (only if the license is requested within City limits).
Mr. Nemkov explained that for Denver applications it would be imprudent to accept any Temporary Permits without having first completed and passed the inspections. Inspections are completed through four different regulatory authorities, Development Services (the Building Department), the Denver Fire Department, Environmental Health, and the Department of Excise and Licenses (always completed last). Once each of these inspections is completed and passed, then it is the appropriate time to seek and accept a Temporary Permit. It is important to note that in Denver a Zone Use Permit is also required to receive liquor licensing, temporary and permanent. Once the Temporary Permit is issued to the applicant, the application is forwarded to the State for approval and issuance of the Permanent Liquor License.
At this point it is fairly likely the State will rubber stamp your application and issue a Permanent Liquor License, but it is not uncommon that they require a minor clarification and the License will be issued after that. Less than 1% of applicants in possession of a Temporary Permit will not receive a Permanent Liquor License and again these issues are usually due to dishonesty. As a final piece of advice, Business Broker, Chris Cantwell, who recently went through this process with his client says, "It is of the utmost importance to have all your documents, applications, fees and forms of proof buttoned up prior to submitting your total package to the Local Licensing Authority. Having to go back and redo any part of the application will only delay your deal process."
Hopefully, the information we have provided here has helped to illuminate the process of transferring a liquor license in Denver. As always, our brokers will do their best to support and facilitate the process of procuring the proper licensing for a business purchase, but we highly recommend retaining an experienced attorney to support this aspect of your transaction. To discuss the topic of licensing more in depth, please schedule a complimentary consultation with one of our brokers today.*
*Disclaimer: This article was compiled by Transworld Denver with information provided by Peter Nemkov of Nemkov and Bonifazi. Transworld Denver is not an attorney and none of the above constitutes legal advice. If you are pursuing a liquor license transfer we highly recommend contacting an attorney.
Matt Prescott is a Certified Business Intermediary with Transworld Business Advisors of Colorado. After having graduated from the University of Arizona, he initially worked in commercial real estate, later transitioning to sales for a Fortune 300 company based in Chicago. Matt has been working with Transworld since February of 2016 and is knowledgeable in a vast range of business industries. If you are interested in buying or selling a business contact Matt Prescott today!