ALCOHOLIC BEVERAGE CONTROL ACT
The sale of a business involving an alcoholic beverage license is a specialty all to itself and is subject to laws
which are constantly being changed.
Regulation
Pursuant to the Alcoholic Beverage Control Act (the ACT - Division 9 of the Business and Professions Code),
the Department of Alcoholic Beverage Control (ABC) issues licenses authorizing the sale of alcoholic
beverages. The ABC has the authority, for good cause, to deny, suspend or revoke an alcoholic beverage
license.
The ABC issues alcoholic beverage licenses to qualified adult persons, partnerships, and corporations for use at
approved locations. The ABC investigates each applicant and may refuse to issue a license to any person who
has violated the Act, has a disqualifying criminal record, or attempts to conceal an arrest record. The location
may be disapproved if it is in the immediate vicinity of a school, church, or public playground or if there is an
over-concentration of alcoholic beverage licenses in the area or if licensure may create or aggravate a police
problem. Most ABC application investigations take approximately 45 - 60 days.
A license issued for a specific location must be placed in use within 30 days of the date of issuance. If the
premises are still under construction, the ABC will hold the license in safekeeping for not more than 6 months
unless cause for further delay can be established.
Transfer of License - Posting of Notice
Like an applicant for license issuance, an applicant for transfer of a license must post the premises with a notice
of application to sell alcoholic beverages. Local officials and private parties may protest the proposed transfer
and the license cannot be transferred while a valid protest is pending or on appeal. Further, the ABC may
decline to transfer a license if disciplinary action is pending against the transferor.
No one should make any investment upon the assumption that an alcoholic beverage license will be transferred.
An applicant for license transfer may be able to obtain a temporary operating permit. However, it may not be
prudent for the seller to give possession of the business for operation under a temporary permit.
Notice to County Recorder and Escrow Requirement
Before filing a license transfer application with the ABC, the applicant and current licensee must file a notice of
intended transfer with the county recorder and establish an escrow. Escrow may not release any consideration
before the ABC approves transfer of the license. Then, transfer of the business will occur simultaneously with
transfer of the license.