How to Get a Liquor License in Michigan

Getting a liquor license in any state can take considerable time and money. Michigan's Liquor Control Commission (MLCC) is the state's licensing division that issues licenses for all types of liquor sales. How an individual or company plans to sell alcohol defines the type of license it will get. This article focuses on retail sales of alcohol.

The state of Michigan has four main tiers of liquor licenses and different requirements for each: the retailer tier, the manufacturer's tier, the wholesaler tier and the supplier tier. The retailer tier consists of licensed premises such as bars, clubs, hotels, restaurants and stores with licenses to allow the sale of alcohol to consumers.

The retailer tier consists of two groups, on-premises licensees selling alcohol to patrons drinking at the establishment and off-premises licensees selling to customers for consumption elsewhere.

Liquor licenses are "quota" licenses in Michigan. There are specific license types in given limited numbers pursuant to a local governmental unit's population. Once that governmental unit meets the quota for that license type, there will be no more licenses of that kind issued, but most transfers can occur from one governmental unit's location to another.

Off-premises licenses are exempted from quotas if there is no other similar license type within two miles of a proposed location.

A person seeking an on-premises license would need a Class C license, which allows businesses to sell beer, wine, mixed spirits and spirits. This entity must complete certain tasks to apply:

• Fill out an On-Premises Retailer License & Permit Application Form (LCC-100a) for a new license or a License Interest Transfer Application (LCC101) to transfer ownership.

• Pay a nonrefundable inspection fee of $70.00 for each license requested in an application.

• Pay an initial and annual fee of $600. The MLCC bases extra charges on its request for licenses and permits in conjunction with the license.

• Submit Livescan fingerprints. Applicants new to licensing through the MLCC must submit fingerprints and complete a Livescan Fingerprint Background Request Form. (This step applies to all liquor licenses in the retailer tier).

Those transferring a liquor license of any kind must submit a purchase agreement signed by the current licensee and applicant detailing the sale of the existing license and other assets of the business. It must show the terms of sale and purchase price.

On-premises license purchasers must have at least 10 percent of the business price, excluding real property. Agreements that are not cash-only and include personal property must list the licenses and real estate with terms and prices for both. If separate entities purchase real estate and personal property, the agreement must name them and list who bought what items.

Applicants who do not pay the purchase price at closing may pay the balance later if it is covered by a promissory note or a security agreement, excluding alcoholic beverage inventory.

Property document requirements for a Class C License apply to all liquor licenses in the retailer tier. Applicants must show documentation that demonstrates they have authority over the property where the licensed business will be, including lease agreements, deeds or land contracts.

They may include provisions to reassign the liquor license in the event of a lease agreement termination or land contract default, but only with MLCC approval.

If a company applies for the license and its stockholders or members own the property under another company or as individuals, they'll need to show a lease agreement to the MLCC. If they are an individual who owns real estate with a spouse or another individual not named on the license, there must be a lease between the applicant and the real estate owner.

Limited partnerships applying for liquor licenses in the retailer tier must submit a partnership agreement and a stockholders/members/partners report. Corporations must submit:

• Articles of Incorporation (current and filed).
• Current Certificate of Good Standing from the state where incorporation took place.
• Current Certificate of Authority to Do Business in Michigan if incorporated out of state.
• Certified copy of meeting minutes of the company's board of directors or a statement signed by a corporation officer naming the persons signing the application and other documents the MLCC requires.
• Stockholders/members/partners report.

Limited Liability Companies (LLCs) must submit:

• Articles of Organization and any amendments.
• Current Certificate of Authority to Do Business in Michigan if an out-of-state LLC.
• Operating agreement entered into by LLCs members.
• Recent Corporations Division annual statement.
• Statement signed by an LLC manager or at least one member, if management is limited to the members naming the authorized application signer, and signer of other documents required.
• Stockholders/members/partners report.

Michigan law defines a tavern license as a license for an establishment such as a bar or restaurant that sells beer, wine and mixed spirits for on-premises consumption at retail prices.

Those applying for a new tavern license and those transferring interest in a license must submit:

• On-Premises Retailer License & Permit Application (Form LCC-100a) for a new license.
• License Interest Transfer Application (LCC101) to transfer ownership.
• Nonrefundable $70 inspection fee per license.
• Initial and annual renewal fee of $250.

The MLCC bases extra charges on the request for other licenses and permits in conjunction with a tavern license.

An A-Hotel license is for hotels selling beer, wine and mixed spirits for on-premises consumption at retail prices. For an A-Hotel license, the hotel must rent and maintain at least 25 bedrooms in governmental units of less than 175,000 people or at least 50 bedrooms in governmental units of more than 175,000 people.

Those applying for a new A-hotel license and those transferring interest in a license must submit:

• On-Premises Retailer License & Permit Application (Form LCC-100a) for a new license.
• License Interest Transfer Application (LCC101) to transfer ownership.
• Nonrefundable $70 inspection fee per license.
• Initial and annual renewal fee of $250, plus $1 per room for more than 20 rooms.

The MLCC bases extra charges on the request for other licenses and permits in conjunction with an A-Hotel license.

A B-Hotel license is for hotels selling beer, wine and mixed spirits for on-premises consumption at retail prices. For a B-Hotel license, the hotel must rent and maintain at least 25 bedrooms in governmental units of less than 175,000 people or at least 50 bedrooms in governmental units of more than 175,000 people.

Those applying for a new B-hotel license and those transferring interest in a license must submit:

• On-Premises Retailer License & Permit Application (Form LCC-100a) for a new license.
• License Interest Transfer Application (LCC101) to transfer ownership.
• Nonrefundable $70 inspection fee per license.
• Initial and annual renewal fee of $600, plus $3 per room for more than 20 rooms.

The MLCC bases extra charges on the request for other licenses and permits in conjunction with a B-Hotel license.

The MLCC will issue a brewpub license with a Class C, Tavern, A-Hotel or B-Hotel license. It allows the licensee to brew a maximum of 18,000 barrels of beer annually for consumption or sale on or off the premises.

Those applying for a new brewpub license must submit:

• On-Premises Retailer License & Permit Application (Form LCC-100a) for a new license.
• Nonrefundable $70 inspection fee per license.
• Initial and annual renewal fee of $100, plus $3 per room for more than 20 rooms.

The MLCC bases extra charges on the request for other licenses and permits in conjunction with the brewpub license.

Brewpub licenses have additional MLCC requirements. A brewpub must:

• Hold a food service establishment license.
• In brewing up to 18,000 barrels of beer annually per calendar year for consumption or sale on or off the premises, the licensee must combine all the brewpubs brands and labels produced in Michigan to determine the brewpub's threshold.
• Have a manufacturing operation on the premises.
• Use agricultural products that comply with federal and state law.

A brewpub must make beer in accordance with federal and state requirements and submit a copy of the "Brewer's Notice" with federal malt beverage regulations to the MLCC. It must submit a tax report of all beer sold under the license during the preceding quarter, along with payment of a beer excise tax postmarked no later than January 15, April 15, July 15 and October 15 annually.

The MLCC requires evidence that no less than 25 percent of the restaurant's gross sales during a licensure period of a year come from the sale of nonalcoholic beverages and food prepared for on-premises consumption, and it will revoke the liquor license if the establishment violates this requirement.

A club license is for an incorporated or unincorporated nonprofit association. Its common purpose is to hire, lease or own a building or part of it for the use and accommodation of its members and their guests. A club license does not include organizations associated with commercial or business purposes.

The MLCC issues club licenses to fraternal, social and veteran organizations, but may issue them to any nonprofit that has been in existence for two straight years and meets its requirements. The organization must be able to support itself without the sale of alcoholic beverages. A board of directors, executive committee or member-chosen body must manage its affairs.

To apply for a club license, organizations must submit:

• A Club License Application (LCC-102).
• Approval from a local governmental unit that passes a resolution to recommend the license application or record its approval.
• Nonrefundable $70 inspection fee per license.
• Initial and annual renewal fee of $300, plus $1 per member after the first 150 members. Organizations with 600 plus members have a maximum license fee of $750.00.
• Club Resolution & Affidavit Relative to Racial Discrimination.
• Articles of Incorporation (current and filed).
• Certified copy of meeting minutes of the organization's board of directors or an approved resolution naming the persons signing the application and other documents the Commission requires.

The MLCC bases extra charges extra charges on the request for other licenses and permits in conjunction with the club license.

Club license applicants must also submit a resolution requesting a license adopted at a bonafide club meeting, certified and approved by most club members. The organization must also state that none of its documents contain racial disqualifications of membership or guest privileges.

The applicant must also publish public notice of the club's application to the MLCC in a local newspaper at least 10 days before license issuance.