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Category: Liquor Control Law

Overview: Ohio Liquor Permitting


November 1, 2023

Obtaining authorization to sell alcohol in Ohio is no easy task. While the legal landscape has changed considerably from the blanket Prohibition of the 1920s, trade in alcoholic beverages remains heavily controlled by the state government. Any business seeking to sell alcohol to the public for beverage use must first obtain a liquor permit from the Ohio Division of Liquor Control (“DOLC”), a division of the Ohio Department of Commerce. This document will provide you with a basic understanding of the types of permits and their associated privileges, options available for businesses seeking to sell alcohol, and the permit application process.

Types of Liquor Permits

The first step in a business’s liquor permitting journey is to identify what type of permit is needed. This depends on the nature of your business, what types of alcohol you wish to sell, what days and hours you wish to operate, and where your business is located.

Ohio offers various types of liquor permits, which are divided into classes based on the types of activities the permit authorizes. For example, establishments wishing only to sell alcohol at carryout should obtain a C-class permit, while full-service restaurants and the like desiring on-premises consumption will need a D-class permit. There are also A-class permits available to manufacturers and certain brewpubs, and B-class permits for distributors and wholesalers. Many operators may also be familiar with F-class temporary event permits, which can be obtained by qualifying not-for-profit organizations for limited time events.

Within each permit class are several subtypes, each with differing privileges. The most common restaurant and bar permits are:
• D-1 (beer)
• D-2 (wine and mixed drinks)
• D-3 (spirits)
• D-3A (extended hours to 2:30am)
• D-5 (all beverage types)
• D-6 (Sunday sales)

An establishment seeking maximum privileges (sometimes called a “full-service” permit) will generally obtain either a D-1, D-2, D-3, D-3A, & D-6, or a D-5 & D-6. Either set of permits will allow sales of all types of alcoholic beverages for on-premises consumption, seven days per week, from 5:30am to 2:30am. A full service permit also allows for sale of carryout beer, wine, and mixed drinks. Spirits (defined as anything over 21% ABV) may only be sold at carryout by special state-licensed Agency stores, although a recent update to Ohio law allows D-3 and D-5 permit holders to make limited sales of spirits “to-go” with a meal, under certain conditions.

Permitting Options

There are two types of liquor permit applications available: an application for a new permit, or an application to transfer ownership of an existing permit. Which application you need to use will depend on several factors.

One of the basic concepts in Ohio liquor permitting is the quota system. A limited number of D- and C-class liquor permits are allocated to each city and township based on the area’s population data from the latest U.S. Census. For each one thousand population, a city or township is allocated one C-1, C-2, D-1, and D-2 permit; for each two thousand population, one D-3, D-4, and D-5 permit.

Once you have identified the type of liquor permit needed for your business, the next step is always to check the quota for the city or township where your business is located. This can be done through Ohio DOLC’s website, although the information in the quota database is not always 100% up-to-date. If a quota opening is available, great – you may submit a new permit application directly with Ohio DOLC. This option is always preferred, as it will secure a liquor permit for the state-minimum pricing ($2,844 for a D-5 & D-6, or $3,128 for a D-1/2/3/3A/6).

Often a quota permit is not available, particularly in very large or very small cities/townships. In that case, any application submitted to DOLC will be placed onto the “waitlist,” where it will remain indefinitely until a permit becomes available. This process can sometimes take several years depending on how many other applicants are ahead of you on the waitlist.

Another option that should be considered are possible “quota-exempt” permits. These are special D-class permits that may be issued to certain qualifying businesses, and the number available is not limited by the city or township quota. For example, large restaurants with 4,000 square feet of floor space, 140 indoor seats, and full-course meals may qualify for a D-5I permit. Another type of exempt permit is a D-5J, which requires that the business be located within a Community Entertainment District formed by the city council or township trustees. If your business qualifies, quota-exempt permits are often a great option to fairly quickly and cheaply obtain a liquor permit in instances where the quota is full.

What if the quota is full, your business does not qualify for an exempt permit, and you need a liquor permit ASAP? The only remaining option is to purchase an existing permit from someone else and transfer it to your business. This can be done in two ways: (1) identify a business within your city or township who is willing to sell their permit, or (2) use the Economic Development Transfer (“TREX”) process to transfer a permit issued to a business outside your city or township. A key requirement of the TREX process is that it requires approval from your local city council or township trustees prior to you being able to file a transfer application with Ohio DOLC.

Unlike new permit applications, transfers can be extremely complex, and it is very strongly recommended that applicants retain qualified liquor counsel to represent them in permit transfers. Transfers introduce numerous risks that are not present with new permit applications, such as seller tax issues that can impede transfer of a permit or even shift pre-existing tax liabilities from the prior permit holder to the new owner. State processing times are also a big concern for transfers. While experienced liquor counsel can often complete a transfer in 60-90 days, unrepresented applicants typically see their transfer applications languish for months on end without any progress being made by the state.

Pricing for liquor permits on the open market varies. As of late 2023, typical pricing for a TREX transfer is around $15,000 – $20,000 for a full-service permit. Pricing for a non-TREX varies by city. In some jurisdictions, such as small college towns that will not approve TREX transfers, permits can be valued at over $40,000. Average pricing in other common markets is typically more reasonable, such as ~$25,000 in Cleveland and $20,000 – $25,000 in Columbus. Either way, a liquor permit transfer does not come cheap.

The Application Process

So you have identified the type of permit your business needs, and chosen either a quota, quota-exempt, or transfer permit. Now it is time to file an application with Ohio DOLC. Many applicants mistakenly believe that this process is as simple as just filing a few forms with the state. While that may be true in other places, the situation Ohio is a fair bit more complicated.

As part of your application, the state will request disclosure forms identifying all 5% or greater owners of your business, as well as any company officers. These individuals will need to provide a considerable amount of personal information to the state, and must also be fingerprinted for and Ohio Bureau of Criminal Investigation & Identification (“BCI”) criminal history background check. You will also need to provide a Summary of Tenancy Rights Form signed by your landlord, documentation for “financial verification” showing you have capital available to fund your startup costs and the purchase of your liquor permit, and more.

In addition to the items you need to provide, various state and local government entities also play a role in processing of your application.
• City council or township trustees: Ohio law allows local governments and opportunity to object to any liquor permit application. When an application is filed, DOLC will send a notice to the local government where your business is located, notifying them of the application and asking whether they object to your business receiving a permit.
• Surrounding institutions: Similarly, any school, church, library, public playground, or public park within 500 feet of your premises will receive notice of your application and opportunity to object.
• Local police: Copies of the personal history forms for your business’s owners and officers will be sent to the police department in your city/township, where the police will perform a background check on each person.
• Ohio BCI: Once your owners and officers have been fingerprinted, their prints will be sent to Ohio BCI for processing, and results then forwarded onto DOLC.
• County Board of Elections: As touched on above, your county’s Board of Elections is involved in assessing the wet/dry status of your business’s address. Board of Elections will review precinct records for your address going back to 1934, and furnish the relevant records to DOLC. DOLC will then perform its own analysis and determine your exact wet/dry status.
• Ohio Department of Taxation: If a permit is being transferred, Ohio law requires a tax proceed determination from Department of Taxation. Taxation will review the seller’s tax accounts and identify any outstanding tax issues, all of which must be fully resolved in order for the liquor permit transfer to proceed.
• Liquor inspections: All liquor permitted businesses must complete a pre-license inspection. Generally this is divided into two separate inspections: an initial (conducted while construction is on-going) and a final (may only be completed after all constructions/renovations are complete).

Each of the above steps presents copious opportunities for error or delay. Most DIY applicants fail to submit all required documents with their liquor application, which can cause rejection of the application or delays as DOLC sends requests for additional documents through USPS. It is typical for city objection replies to take the full allowable 30 days to complete, even in cases when the city has no objection to your permit. Occasionally objection notices or local police forms get sent to the wrong address, lost in the mail, or sit in a stack at the police department waiting to be processed. BCI backlogs also present issues from time to time, and can delay results processing for weeks. Not to mention tax problems in a transfer, which can cause months-long delays while the seller attempts to resolve the issues.

Conclusion

Obtaining a liquor permit for your Ohio business can be quite difficult, and the process often takes several months from start to finish. Selecting the right type of permit for your business and obtaining it in the quickest and most cost-effective way possible is always a challenge. As a result, it is generally recommended that businesses first consult with an Ohio liquor attorney to guide them through the process of selecting and securing an appropriate permit type. Diligent counsel can also help expedite most, if not all, of the application processing items through careful business structuring and proactive communication with relevant stakeholders and governmental entities. As your trusted advisor, a liquor lawyer can help your business avoid problems before they arise and successfully obtain issuance of your liquor permit with a minimal amount of delay.

Alicia E. Zambelli is a partner at Walter Haverfield and has extensive experience working with businesses in the hospitality industry. She can be reached at azambelli@walterhav.com or at 614-246-2280.

John N. Neal is a partner and head of the Walter Haverfield Hospitality and Liquor Control team. He can be reached at jneal@walterhav.com or at 216-619-7866.

Alexander R. Bibisi is an associate at Walter Haverfield who focuses his practice on hospitality and liquor control. He can be reached at abibisi@walterhav.com or at 216-658-6217. 

Bar and Restaurant Assistance Fund: Permit Holders Encouraged to Apply by Dec. 18, 2020


November 25, 2020

John Neal

November 25, 2020    

The state of Ohio has created a $38.7 million fund to help provide relief for bars and restaurants that have taken a significant hit during the COVID-19 pandemic. The program, funded by the CARES Act, will provide $2,500 grants to eligible liquor permit holders in the state. Permit holders are encouraged to apply by December 18 to ensure the funding request can be processed before the application closes on December 30, 2020.

The application for the Bar and Restaurant Assistance Fund is available here. To apply, businesses are required to establish a registration ID with the state of Ohio, which provides users with secure access to assistance services and programs. Licensees must present their FEIN or SSN, liquor permit number and address for each unique location at time of application. To be considered eligible to receive relief, businesses must have had an active on-premise permit as of close-of-business on October 23, 2020. The business does not have to be currently open but must have an active liquor license. You can check the status of your liquor permit here. If it’s active, it will be listed as “issued.”

Multiple permit holders are eligible for the $2,500 grant for each liquor permit held.

Eligibility requires a permit in good standing, essentially meaning there are no tax delinquencies or violations pending. The Department of Taxation will confirm all entries. Once money is received, per CARES Act stipulation, businesses are to use the funds on COVID-related expenses due to business interruptions caused by the ongoing pandemic.

Permit holders may apply for the liquor assistance funding as well as the Small Business Relief Grant. Funding for the program is contingent on approval by the Ohio Controlling Board. The Ohio Department of Administrative Services will be sending checks to permit holders as soon as applications are processed.

If you have additional questions regarding the recommended practices of Ohio restaurants and bars, please reach out to us here. We are happy to help.

John N. Neal is head of the Walter | Haverfield Hospitality and Liquor Control team. He can be reached at jneal@walterhav.com or at 216-619-7866.

 

Last Call: Emergency Rule Forces Ohio Bars and Restaurants to End Alcohol Sales at 10 P.M.


August 3, 2020

John NealAugust 3, 2020 

All Ohio bars and restaurants are ordered to cease the sale of alcoholic beverages by 10 p.m. each night pursuant to an emergency adoption of the state’s Liquor Control Commission ruling signed into order by Ohio Governor Mike DeWine. The order is in response to the increasing number of COVID-19 cases in Ohio. The proposal was first announced by DeWine, promulgated by the Liquor Control Commission, and then signed as an executive order. Under the new order, establishments are mandated to stop serving alcohol by 10 p.m., and patrons must finish their drinks by 11 p.m. However, customers may continue to order food until the establishment’s closing time.

The new rule also expands the number of to-go alcoholic drinks from two to three, if purchased with a meal.

DeWine pushed for the 10 p.m. cutoff, citing reports from the Ohio Investigative Unit (OIU), which enforces liquor laws statewide, of multiple instances of overpopulated patios and overflowing dance floors in contravention of existing orders.

Many restaurateurs and bar owners alike have opposed the new rule. Some have referred to the mandate as a death sentence after experiencing a prolonged state of slow business and closures due to the ongoing pandemic. Some have called on DeWine to prove that bars are a substantial cause of spreading the illness by releasing data that proves so.

The new rule remains in effect for 120 days from the date that the order went into effect (July 31, 2020), or until rescinded by the Liquor Control Commission.

If you have additional questions regarding the recommended practices of Ohio restaurants and bars, please reach out to us here. We are happy to help.

John N. Neal is head of the Walter | Haverfield Hospitality and Liquor Control team. He can be reached at jneal@walterhav.com or at 216-619-7866.

Beware of the Face Mask ID Issue When Ohio Bars and Restaurants Open Up


May 8, 2020

John NealMay 8, 2020

Restaurants should expect to see heavy use of face masks by customers for the foreseeable future.

This comes after Ohio announced a rule on May 7, 2020 for the re-opening of its restaurants and bars that states that “[b]usinesses must allow all customers . . . to use facial coverings, except for specifically documented legal, life, health or safety considerations and limited documented security considerations.”

How does that affect Ohio’s strict requirement that liquor permit holders check identifications (ID) to ensure a customer ordering alcohol is 21 years of age or older? The Responsible RestartOhio guidelines do not address this (as of May 8, 2020).

Remember, selling or furnishing alcohol to a person under the age of 21 is a “strict liability” offense. If it happens, the law is broken. It ultimately does not matter if the server made an honest mistake or even if the customer used trickery; that is, with one expressed exception.

That one exception is validly checking ID. But Ohio statute provides that a valid effort to check ID requires a comparison of the picture on the ID with actual appearance of the person presenting it. How can that be done when the person is wearing a mask that covers half his/her face? I suggest that it cannot, at least in some cases.

Why does this matter given the state of affairs right now? The authorities are surely not going to run stings or cite servers for underage sales where a mask was used given the world we are living in, right?

  • First, underage sales are a serious issue and a criminal offense, and the state will continue to enforce that law, despite the extra burden on permit holders.
  • Second, making a sale to an underage person without validly checking ID removes the protections of Ohio’s Dram Shop Act from the permit holder business.

Dram Shop protection prevents a third party or customers from suing the restaurant for liability resulting from accidents that occur off-premises after alcohol consumption at the restaurant.  This is the scenario where a person is served alcohol and then causes a serious car accident.

Provided the restaurant validly checked the ID of the customer ordering the alcohol, which involves comparing the picture on the ID to the person presenting the ID, then the restaurant is protected from liability claims even in the event a “fake” ID was given and the person was actually underage.

Dram Shop protection likely will not be available if the customer was wearing a mask when the ID was checked, and that person subsequently causes an accident.

In short, the server must look at the customer’s face where there is any possible question about whether the customer is 21 years of age. Thus, permit holders can and should request the customer to temporarily lower or remove the mask when checking ID before furnishing any alcohol. If a customer were to refuse (which would be odd in and of itself), then the permit holder should not serve that person alcohol.

Put another way, a valid ID check probably cannot occur unless the customer’s face is seen by the server. And a restaurant still has a very real interest in ensuring that its servers are conducting valid ID checks, even when the customer is wearing a mask mandated by another law.

John N. Neal is head of the Walter | Haverfield Hospitality and Liquor Control team. He can be reached at jneal@walterhav.com or at 216-619-7866.

Ohio’s Plan to Reopen Restaurants and Bars


John NealMay 8, 2020 

On May 7, 2020, Ohio Governor Mike DeWine announced that restaurants and bars can reopen their establishments to patrons with outside dining allowed on May 15 and inside dining beginning May 21. The move comes after DeWine closed these establishments statewide for on-premises dining on March 15 due to the pandemic. Since then, DeWine established a restaurant advisory group, comprised of professionals from the Ohio restaurant industry and state and local health departments, to develop the following guidelines to reopen establishments.  Guidelines are mandatory and include “recommended best practices.”

Establishments must take affirmative preparatory steps if they intend to open for on-premises dining under these rules, including, for instance, (1) both a written, posted floor plan and kitchen floor plan designed to reflect maximum capacities in light of social distancing requirements, (2) written justifications for employees who will not wear masks, and (3) ensuring employees are conducting health assessments (e.g., temperature checks) daily before work.

Establishments MUST remember that patron mask use does not excuse the requirement that the establishment check ID to ensure no one under the age of 21 is sold or served alcohol, AND Ohio law requires that the appearance of the patron matches that of the ID.

The following rules and guidelines apply to the reopening of restaurants and bars in Ohio:

  • Clearly labeled signs at the entrance of all businesses should list COVID-19 symptoms.
  • Establishments must consider social distancing with their floor plans and ensure a minimum of six feet between parties.
  • If a six-foot distance is not possible, utilize barriers such as Plexiglas® between tables. Tall booths may also act as a barrier.
  • Groups of over 10 people are prohibited. The congregation of groups is heavily discouraged.
  • Employees are encouraged to wear masks. However, kitchen workers standing over hot surfaces such as grills are not required to wear masks while working. The final decision on face coverings will be deemed by the owner of the establishment. Businesses must have a “written justification” producible upon demand for any employee not wearing a mask.
  • Employees must perform a daily symptom assessment. If an employee exhibits symptoms, establishments must require the employee to stay home.
  • Patrons who exhibit symptoms are prohibited from entering the establishment.
  • Patrons waiting for carry-out meals should do so outside. Ordering areas should still comply with social-distancing guidelines.
  • Salad bars and buffets are only permitted if served by staff. Common-area items such as condiments should be removed completely.
  • Frequent hand cleaning and hand hygiene are required of all parties.
  • Employees, like servers and cashiers, are not required to wear gloves.
  • Daily cleaning of the entire establishment is also required. Cleaning of tabletops, chairs and menus between seatings is also required.
  • All high-touch areas should be cleaned every two hours.
  • Bars with tables and chairs are advised to follow the above guidelines.
  • Bars with open spaces where there is no seating are not permitted to reopen. Instead, it these bars may set up picnic tables or alternative seating options in order to open on the May 15 and May 21 dates.

For a complete list of the recently announced rules and restrictions governing the re-openings of Ohio restaurants and bars, click here.

The Ohio Restaurant Association is offering signs for its members to display that will describe both the state’s coronavirus regulations and a commitment of the establishment to follow the rules.

If you have additional questions regarding the reopening of Ohio restaurants and bars, please reach out to us here. We are happy to help.

John N. Neal is head of the Walter | Haverfield Hospitality and Liquor Control team. He can be reached at jneal@walterhav.com or at 216-619-7866.

Last Call for Alcohol? How the City Can Take Action Against Problem Liquor Permit Holders


October 20, 2018

“Last Call for Alcohol?  How the City Can Take Action Against Problem Liquor Permit Holders” was written by Susan M. Bungard and published In the Cleveland Bar Journal in May of 2005.

Last Call for Alcohol? How the City Can Take Action Against Problem Liquor Permit Holders


May 1, 2005

“Last Call for Alcohol? andnbsp;How the City Can Take Action Against Problem Liquor Permit Holders” was written by Susan M. Bungard and published In the Cleveland Bar Journalandnbsp;in May of 2005.