California ABC Releases Industry Advisory on Allocation of On and Off-Sale General Licenses including Napa County

This year the priority application process [1] takes an unprecedented level of importance particularly for Napa County. The number of Type 47 On-Sale General- Eating Place licenses[2] that are issued in any given county is tied to a population ratio set by statute which does not account for tourism levels. As a result, the number of licenses available in Napa County has remained artificially low. This has created a secondary market of existing licenses in which asking prices range anywhere from 150 to 200-thousand dollars. In contrast, an original license issued by the ABC costs twelve-thousand dollars.

In an effort to remedy the situation, at least in part, the state legislature enacted Assembly Bill 2266.[3] This statutory provision authorizes the California ABC to issue five additional new original Type 47 licenses per year, for a period of three years to businesses in Napa County. These licenses are allocated via the priority application process.

In an attempt to stimulate the economy, by encouraging new businesses, the ABC has elected to move up its 2009 priority license application period by two months, and is slated to announce the number of additional licenses available for each county[4] on July 8, 2009. Applications will be accepted between July 20, 2009 and July 31, 2009.[5] In cases where there are more applicants than available licenses in any given county, priority license drawings will occur during the week of August 24, 2009.

Any business considering commencing operations, particularly in Napa County, within the next few months should consider entering into this process. Please contact Tom Carey of our Alcohol Beverage Law Practice Group for more information.

[1] A priority license is a newly issued on sale general eating place license or off sale general license. These licenses are limited in number and are based on a population ratio to determine when new ones become available.
[2] Authorizes the sale of beer, wine and distilled spirits for consumption on the licenses premises. Authorizes the sale of beer and wine for consumption off the licensed premises.
[3] Codified into law as Business and Professions Code section 23826.10.
[4] Applies to counties other than Napa.
[5] License information will be posted on our site as it becomes available.