Most Pennsylvania liquor licenses are distributed on a county-by-county basis based upon a ratio of one license per 3,000 inhabitants in the county. Once the limit is reached, liquor license acquisition depends on supply and demand. However, in 2002 the Pennsylvania General Assembly passed legislation to enable the issuance of liquor licenses for economic development even after a county’s quota has been reached. Under this program if certain criteria are met the Pennsylvania Liquor Control Board (“LCB”) can issue a restaurant or eating-place retail dispenser license for the purpose of economic development, even if the existing number of restaurant and eating-place retail dispenser licenses in a county exceeds one license per 3,000 inhabitants.
An Economic Development License (“EDL”) application may be filed with the LCB only for premises situated within a Keystone Opportunity Zone (“KOZ”), an Enterprise Zone (“EZ”), or a municipality that has approved the issuance of a license for the purpose of local economic development. The applicant must submit with its application a written certification from the KOZ local coordinator, the EZ administrator, or the municipality certifying that the proposed licensed premises is situated in a zone or an area designated for economic development. There must also be municipal approval in the form of an ordinance or resolution that includes the applicant’s name and exact address. Whether the application is for a location in a KOZ or EZ, there is still a hearing requirement in the receiving municipality for purposes of receiving comments from residents within the municipality.
Once the applicant has satisfied the municipal and economic development requirements, an application is made to the LCB. The application for an EDL has a fee of either $50,000 or $25,000 (depending on population classification). The number of EDLs issued in a year is limited to two per county. Once the application and fees have been submitted, there is another hearing before the LCB hearing examiner to determine if the applicant has demonstrated that all other reasonable means of acquiring a license on the open market have been exhausted. Of course, that raises the question of what is “reasonable.” If a regular liquor license (available within the quota system) is for sale, but at a price deemed too high by the applicant, does refusing to buy it at that price demonstrate that the license could not be obtained by “reasonable means?”
The important caveat associated with the use of an EDL is the ratio of food-to-alcohol sales. An EDL will only be validated and renewed if the applicant demonstrates that food and non-alcoholic beverage sales are 50 percent or greater of total sales. When a licensee falls below that ratio, they may be forced to halt liquor sales, close, or apply for a standard (i.e. non-economic development) liquor license, should one be available.
One other notable difference between EDLs and standard licenses is that an EDL licensee may not sell or transfer a license. It may not be moved to a new location or transferred to a new owner. There are some instances whereby the stock of an entity holding an EDL may be sold, but that requires LCB approval.
For many there is appeal to obtaining a liquor licenses for $25,000 or $50,000. However, an applicant should be aware that EDLs are difficult to obtain and that it may take more than a year to go through the entire process. The procedures are complex and should be handled by an experienced attorney. Contact our office if you have questions about obtaining an EDL or any liquor licenses to see what would be the best course of action.
– J. Ken Butera