The liquor license: never drink alone
By Brian R. Hardy, Esq.
A municipality may properly enact ordinances authorizing it to impose reasonable conditions when granting a liquor license.1 Because the acquisition of a liquor license constitutes a privilege and not a property right, municipalities can place restrictions and strict requirements on who is allowed to hold these privileged licenses. Thus, it is not surprising that one of the most daunting journeys in Nevada is the path to obtaining a liquor license. However, as with any journey, when undertaken with an experienced guide a liquor license applicant can avoid many of the unforeseen pitfalls.
NEVADA THREE TIER SYSTEM
Nevada liquor laws control and regulate the control and distribution of liquor within the borders of Nevada by use of a three-tier system.2 The three tier system is comprised of: 1) suppliers; 2) importers and wholesalers; and 3) retailers. Under this system the Nevada Department of Taxation controls and regulates the top two tiers. The bottom, or retail, tier is generally regulated at the local municipality level.
SUPPLIERS
A supplier, the first person having ownership of alcohol in the Unites States, must hold a valid certificate of compliance to ship to Nevada importers.3 A Nevada supplier may ship or sell alcoholic beverages only to Nevada importers or holders of permissible person permits. Suppliers must hold a certificate of compliance, pay annual fees, and file monthly reports which include copies of all invoices for shipments made to Nevada importers and wholesalers for the previous month.4
IMPORTERS AND WHOLESALERS
In Nevada, an importer is the person having first possession of alcohol in the State of Nevada after completion of the act of importation.5 A wholesaler is a person licensed to sell liquor to retail stores or to other wholesalers within the State of Nevada.6 Individuals desiring to become a licensed importer or wholesaler must initially apply to their county for approval.7 If approved at the county level, the application is forwarded to the Nevada Department of Taxation for final approval. Individuals applying for a license to import or wholesale alcoholic beverages into Nevada must first have available a warehouse located within the State and the ability to maintain within their warehouse alcoholic beverages with a wholesale value of at least $1,000.8
Because the importer and wholesaler licenses are a privileged license there are restrictions placed upon holders of these licenses. License holders cannot be involved in any of the following: (1) loaning of money or anything else of value to a retailer; (2) investing of money, directly or indirectly, in a retail store; (3) furnishing or providing premises, buildings, bar or equipment to retailers; or (4) participation, directly or indirectly, in the operation of a retail liquor store.9 RETAILERS
Under the three-tier system, retailers are the only licensees that interact with the consumer. Retailers must purchase only from wholesalers.10 The retail license is the most common liquor license in Nevada. Moreover, other than sales and use tax obligations, the Nevada Department of Taxation is not involved in the licensing of retail liquor establishments. Accordingly, most retail licenses are obtained at the local or county level. In Clark County these local levels include but are not limited to: Clark County; City of Las Vegas; City of Henderson; City of North Las Vegas; and Boulder City. Each jurisdiction generally requires that applicants submit personal history records, personal financial questionnaires, and corporate financial questionnaires. Moreover, corporate entities and their governing members must submit to background investigations by the local law enforcement agency. During the application process, applicants may be required to disclose details regarding previous business relationships, employment history, criminal records, and financial stability.
The investigation into each applicant is extremely thorough. For that reason, applicants must be meticulous when completing their personal history record and personal financial questionnaires. These forms are the spring board which investigating agents rely upon when conducting their investigation and will be scrutinized throughout the entire licensing process. Any information not disclosed in these forms will undoubtedly come to light and can taint the remainder of an applicant’s investigation. Consequently, honesty is the best and only policy.
As with most privileged licenses, liquor applicants must undergo an investigation and appear at a hearing. At these hearings, applicants and their counsel are required to answer questions that the board deems relevant in assisting them in making a determination of the applicant’s character and integrity. An applicant answers to the questions posed by the board allow the board to determine if the applicant will be a responsible and active safeguard in the community. Once the questioning is complete, and the hearing on the issue has been put to rest, a member of the board will make a motion to continue the matter, refer it back to staff, or approve/deny the license.
If an application for a liquor license is denied the applicant has little recourse against the licensing board to seek reversal of the decision. Therefore, it is important to get it right the first time. In light of the risks and rewards involved, our advice to you is simple - don’t journey alone. The best way to accomplish this goal is with an experienced guide.
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1 Coury v. Robison, 115 Nev. 84, 88, 976 P.2d 518, 520 (1999).
2 NRS 369.040 provides that liquor is a liquid containing one-half of 1% or more of alcohol by volume that is used for beverage purposes.
3 NRS 369.111.
4 NRS 369.430.
5 NRS 369.030.
6 NRS 369.130.
7 NRS 369.190.
8 NRS 369.400.
9 NRS 369.485.
10 NRS 369.487.
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