Permits, Approvals, Licenses, Notices, Certificates...

What you don't know can hurt you! Here's an invaluable preview of all the governmental processes you'll need to handle BEFORE opening your alcoholic beverage-related business.

This article applies to:

The grand opening is next week. You've hired a great band and the first batch of beer is ready to serve. Only the final inspections and sign offs' for the local licenses are still pending. The Fire Marshal arrives for the safety inspections and he notices the sound system and dance floor. He asks if you have a "cabaret" or entertainment license for live music and dancing. "No," you answer slowly; you've never heard of such a thing. "Sorry," he replies. "You can't have music or dancing without one." So, it's back to City Hall where they say it will take 3 weeks to process the application. You plead, you beg, and explain that you need it for your grand opening next week. The person at the counter listens patiently and then points to that ever present sign, "The lack of planning on your part does not constitute an emergency on our part." What can you say? "Where do I file an application to turn back the hands of time?"

Until they start granting those, the best approach is to plan ahead and make the necessary applications for all your permits and licenses early enough that they can be processed and in place when you are ready to open. While surprises are inevitable in any large project, you can avoid a lot of them by researching the requirements, planning and scheduling the approval processes into your time line. National restaurant and brewpub chains have made this a science, and you can apply the same techniques to insure a smooth start up.

Starting the Process

While it may seem obvious, the first step in the process of getting all the permits is to find out what permits, licenses and approvals are required. To aid you, we have included a list of the most common types of permits, licenses and approvals necessary to open a brewpub restaurant. While the list is as comprehensive as possible, remember that many of the requirements are local and vary from state to state, even city to city. Many may have different names in your locality. Furthermore, there may be additional requirements. (click here to see commonly needed permits and approvals)

Think of the process of finding out as treasure hunt, in which the prize is a perfectly timed and well executed opening. Often the local or state Chamber of Commerce is a good place to start. The California Chamber of Commerce has several books that attempt to list all the permits required with forms and instructions. Many states, counties and cities have also established permit centers or an ombudsman office to assist new businesses. But remember, all such sources are second hand and at best only point you in the right direction.

It is necessary to actually visit or call each of the agencies that issues a needed permit or license to determine the actual requirements, understand the processing time lines and obtain the application forms. Sometimes it is a little tricky to find the right agency or department. For example, in Chicago, liquor licenses are issued by the Mayor's License Commission, but the application process is handled by the Department of Revenue. In Schaumburg, Ill. the mayor's office also issues the liquor licenses, but they will refer you to the Planning Department first.

The project planning process is an important part of your "due diligence" for a new site. Don't sign a lease until you've investigated all of the permits or licenses which might be necessary and what the requirements for each are. Recently, a client requested that we check on licensing requirements in a major city early in their location search. A week later, he called from a negotiating session with the landlord to ask about any additional requirements and restrictions for an outdoor seating area. The answers prompted further negotiations with the landlord.

Zoning, land use, use permit requirements are the obvious things to check first. Ask if any special water or sewer permits or connections are needed. Since your business involves alcoholic beverages, you should check on whether licenses are available (some areas have quotas or even moratoriums), whether you must serve food, whether there are distance requirements from other uses such as churches, schools, residences, or whether there are restrictions on what can be served in addition to your beer.

If this is not your first alcoholic beverage license, you should investigate any "tied house" restrictions that might prohibit you from holding a brewer's license in addition. Tied house laws also affect who can be investors in your new brew pub. In some states there are "residency" requirements, which may require you to create an entity in that state to hold the license or designate a local manager who meets the residency requirements.

Setting up a time line for approvals & licenses

While finding out what permits are required, inquire about the time it takes to process the applications and get the permit or approval. Many of the agencies have very specific time lines to which they must adhere, others have only estimates of the time it takes. Make sure to ask about contingencies, other required steps such as inspections by, or referrals to, other departments or agencies such as police or fire, and other prerequisites which may add time to the overall process. In some states, the state license issues in just a week, but only after the local permit is issued, and often, the approved Brewer's Notice from ATF is also required.

The next step is to organize this information so you know when each of your applications must be submitted to meet your timetable. There are many methods of doing so, but the best way is to use a spreadsheet or project manager software program, which allows you to adjust all the dates automatically if the schedule changes. It also allows you to sort the information in various ways and keep track of the milestones and accomplishments.

As many of the permits are local and the process varies widely from place to place, it is not possible to give definitive time frames in a national magazine. However, since the common order of the steps is generally the same from town to town, we have provided a typical time line for the process. (click here to see timeline)

Once you have selected a site and started forming your business structure to own the brewpub, the permit process starts in earnest with applications for use permits or other local land use approvals relating to zoning and the service of alcoholic beverages.

Find out if you can apply for any local alcoholic beverage license before starting construction. Many local licensing authorities provide for a conditional approval process. As the Chicago information booklet on liquor licenses says: "The City recognizes that opening a restaurant is a major financial commitment that involves a large amount of risk. In order to minimize that risk as much as possible, the City has established a conditional approval process for Liquor-Consumption On Premise applications." After conditional approval is granted Chicago allows one year for the "build out" according to approved plans. California has a similar process where a license transfer is approved and the license "held" pending completion of construction. Many local agencies say they do not have "conditional" approval process, but when presented with the reality of the applicant's financial commitment and risk, persistence and sincerity often carry the day, and they will find a way to accommodate the serious player.

After local land use and design approvals are given, final construction plans are submitted for the issuance of a building permit. Before granting the building permit, your plans are "checked" and often revised, utility connections confirmed, the Health Department consulted, and compliance with access requirements for the disabled considered. If food service will be included, you may apply for the "food service" license or permit at this time, subject to final inspections. Any permits for equipment like boilers, grease traps, waste pre-treatment should also be applied for at this stage.

For the brewer, the next applications are the most important. Four or five months before opening, its time to submit applications to Bureau of Alcohol, Tobacco and Firearms for an approved Brewer's Notice and any state or local "brewers" or "brewpub" permit or license. All ATF applications are now processed at the National Revenue Center in Cincinnati and ATF is systemizing and streamlining the process. In addition to the application, a Brewer's Bond is required on ATF's form. As a manufacturer and retailer, a brewpub needs Federal Tax Stamps for both activities from ATF. A Special Occupational Tax Registration and Return needs to be filed with ATF at or before commencing brewing. Special Tax is prorated for the first year.

On the state and local level, the approval process varies widely. Remember that to operate a brewpub, you often need both a manufacturer's license and a retail license. In some areas, the state is the lead agency for all licenses, and local approval is not necessary except to confirm proper zoning. The state license process may involve investigation and inspections, but often the state license will not issue till the approved Brewer's Notice is given by ATF. In other places, the local licensing authority acts as the lead agency and issues the retailer's license, while the state issues the "brewpub" or manufacturer's license, in some states, the state also issues a retailer's license. States frequently require a bond for the payment of the state's excise taxes on the beer you produce.

Most all agencies will want detailed information about your business structure, the people involved, the sources of investments, and information on your proposed operations. Any changes in ownership structure or investors at this point can cause delays by requiring the submission of additional information, or even force you to start over on the process.

Six weeks before opening, numerous "final" inspections should be scheduled with the various agencies. ATF routinely inspects the premises once the equipment is installed and brewhouse construction is substantially complete. The inspector often gives "verbal" approval to start brewing operations so you can test equipment and start building inventory. Before commencing, however, make sure to find out if local authorities will also give their go ahead. As soon as you get your Brewer's number, provide it to the state or local ABC.

The local or state ABC may also want to inspect the premise, but generally they refer the inspections to other departments such police, fire marshals, or the building department. These inspections may bring further items to be completed before "sign off," and re-inspections may be necessary. The Health Department will also inspect once the kitchen is set up and the Building Department will do a final inspection when the construction is substantially complete. At this point, the goal is to get the Certificate of Occupancy, which is often required for the issuance of the local alcoholic beverages licenses. There is no harm in asking the inspectors to submit their reports as quickly as possible and follow up with regulators to ensure that they got the reports, so the licenses can issue.

While many permits and approvals are need to open a brewpub, the task of getting them on time for your opening is not insurmountable. Good planning and clear communication with the various agencies will lead to success. Treat the process as you would treat your premium beer recipe—leave nothing to chance, keep a close eye on the process, and expect the best.