You are required to provide the local Community Board (CB) with notice at least 30 days prior to filing an on-premise liquor license application the New York State Liquor Authority (NYSLA). The CB may then put you on their hearing agenda to find out more about your project. At the CB hearing they may ask you about everything from the type of cuisine that you plan on selling to your affiliations with any other NYSLA licensed premises. Nothing is off limits.

I am always asked, Do I need to have a lawyer with me at this hearing?  My response, which is not going to please my fellow attorneys, is absolutely not. In fact, I typically recommend that you don’t bring an attorney there and that you should never have an attorney go in place of you. The reason is simple. If you were a CB member, would you want to hear the details about the restaurant / bar project from an attorney or directly from the owner/operator of the project? The CB does not want to hear an attorney describe the type of cuisine that you are offering, or what you will do to prevent people from lining up outside, or that you will not have dancing in your premises. They want to hear these assurances from you . . .the operator; the person responsible for ensuring that all of these assurances are going to be kept. I typically recommend that you retain an attorney to be present at the CB hearing only in the event that (i) you anticipate strong opposition to your project, or (ii) are uncomfortable with public speaking. Otherwise, save yourself money and have the person who is best able to present the details of your project present them. . .you.

In a related matter, Community Board 1 in Queens, NY, has just voted against the issuance of a liquor license for a bar where all the female staff would serve wearing only bikinis. The CB cited, amongst the reasons, that this type of establishment would not be appropriate surrounding family oriented community. The proposed name of the bar . . . “Racks.”

The new coronavirus disease that was first identified in Wuhan has received an official name from the World Health Organization: “COVID-19.” “COVI” comes from coronavirus. The “D” stands for disease. The 19 represents 2019, the year the virus was first identified, in December.

COVID 19 has commenced its destruction on the NY restaurant, bar, and nightclub industry and hospitality and foodservice owners are now trying to figure out their next steps.

Restaurants and bars in New York are ordered to close to anything but take-out and delivery business (although grocery stores can stay open for now). This shut down will be the largest disruption hospitality industry far eclipsing the shut down resulting from the September 11 terrorist attacks, the 2008 financial crisis, and Hurricane Sandy.

The NYSLA is now permitting businesses with on-premises liquor licenses to sell alcohol to customers off-premises (must be accompanied by food). However, the revenue generated from off-premise liquor sales along with take-out and delivery will be a small fraction of the revenue typically generated. That revenue will most likely not even be enough to cover the necessary operational costs of the establishment.

The harsh reality is that a large number of NY restaurants will not be able to wait out this viral storm and will be forced to permanently shut their doors as a result. The restaurant industry is hoping for some type of government “bail-out” but any such financial help (other than low or no interest loans) seems unlikely in the immediate future. Additionally, while NY is suspending evictions indefinitely, all that unpaid rent will be accumulating and will need to paid at some point in the future.

As such, restaurants need to carefully evaluate their options and plan ahead accordingly. Just because you can legally stay open for delivery and take out purposes doesn’t mean that it makes financial sense for you to do so. At this time, restaurant and bar owners should have their leases carefully reviewed by qualified legal counsel. Your lease may have clauses in it – such as a force majeure clause – which may provide you with some options and negotiation leverage to get you through the tough times ahead. Additionally, now is also the time to pull out that insurance policy to have that reviewed to determine if you have coverage for this type of business interruption or ingress / egress disruption. Further, all restaurateurs should be actively monitoring the actions that government is taking to help our industry as you will want to take advantage of the programs they may have offer – such as interest free loans which are presently being offered. Some of my restaurant clients have (i) implemented a program of selling discounted gift cards for their establishments similar to a bond (eg, buy a $100 gift card for $75 now which may be redeemed no sooner than 3 months from date of purchase), (ii) offered various creative delivery specials (eg, a few appetizers offered for a $1 each with purchase of entree; free bottle of wine with order over $60.00, etc); and (iii) offered a daily delivery of a day’s worth of prepackaged meals.

In conclusion, we all know we are looking at uncertain and tough times ahead but taking the right actions now and in the immediate future may just make the difference between a restaurant that survives COVID 19 and one that permanently goes under as a result.

Most importantly, stay safe and healthy.

The New York City Council overwhelmingly voted on October 31, 2017, to pass legislation (Int. 1652) that repeals the City’s longstanding Cabaret Law. At the same time, Int. 1652 retains certain security requirements of the old law for large establishments. The legislation has the support of Mayor Bill de Blasio, who is expected to sign Int. 1652 into law shortly.

The existing Cabaret Law, established nearly a century ago during Prohibition, requires any business venue where dancing occurs to obtain a Cabaret license from the New York City Department of Consumer Affairs before operating. The law also prohibits musical entertainment, singing, or other forms of amusement without a Cabaret license at establishments in New York City. Currently, premises required to hold a Cabaret license also must provide a copy of it to the New York State Liquor Authority in order to be licensed to sell or serve alcohol at the premises.

While active enforcement of the Cabaret Law has been on the decline in the past several years, this legislative effort marks the end of decades of strong opposition by venue operators and performers to the law as written.

The legislation will repeal the entire Cabaret Law while retaining certain requirements of the law relating to security measures at large entertainment establishments. Once this legislation becomes law, neither operators nor performers will need to apply for a Cabaret license for any reason. Operators of certain large entertainment establishments (as defined by the New York City zoning laws), however, will need to maintain existing requirements regarding the use of video surveillance cameras and security guards. The requirements will be codified under new section 10-177 in § 2, Title 10 of the Administrative Code of the City of New York.

Are Community Boards notified of when the NYSLA receives applications in their neighborhoods?

For certain types of establishments, Community Boards are notified before the NYSLA receives an application. The Alcoholic Beverage Control Law requires that anyone applying for an on-premises license notify their community board of their intention to apply for a liquor license 30 days before filing an application with the State Liquor Authority. Proof of the 30 day notice must be submitted with the application. The community board may submit an opinion, either in favor of or against granting the license. That opinion will become part of the record used by the NYSLA in deciding whether to approve the application.

What are the different types of licenses granted by the NYSLA?

There are several types of licenses granted by the NYSLA, the following are the four basic ones issued:

On-Premises Liquor: Generally considered to be the standard “bar” license. Allows on-premises consumption of liquor, wine and beer and also allows for sale of beer (only) for off-premises consumption.  Food, such as soups and sandwiches, MUST be served.

Grocery Beer/Wine: Off-premises beer license as listed above, see “Grocery Store Beer”. Additionally a “wine product” is defined as a beverage containing wine with added juice, flavoring, water, citric acid, sugar and carbon dioxide, not containing more than six percent alcohol by volume (typically referred to as “wine coolers”).

Catering: Allows providers of food for banquet halls, dining halls, etc., to provide liquor, wine and beer for consumption for an assemblage for a particular function (i.e. retirement dinner, wedding reception, private party) to which the general public is not admitted. This license is for this type of function only.

Liquor Store: For the sale of liquor and wine (no beer) for consumption off the premises. The only additional items allowed to be sold, such as ice and corkscrews, are listed in the ABC Law. Only one license is allowed per person (corporation, partnership, etc.).

What is the 500 foot rule and how does this apply to community boards? When the NYSLA receives an application, there is a general presumption that it will be approved unless there is a good reason not to approve it. However, for on premises license applications falling under the 500 foot rule, (meaning there are already 3 or more existing establishments with the same type of license within 500 feet of the proposed applicant), the presumption switches, and by law the application cannot be approved unless the SLA finds that issuing the license would be in the public interest. The 500 foot law requires the NYSLA to consult with the community board and conduct a hearing to gather facts to determine whether the public interest would be served by issuing the license. Generally speaking, if there is no opposition to the application, and no other issues presented that requires consideration by the Members of the Authority, the application is acted on by the NYSLA’s Licensing Bureau. In cases where the community board or other interested parties oppose the application, or there are other issues requiring review by the Members of the Authority, the matter is referred to the Members for determination. It is important to note that the fact that there is opposition to an application does not necessarily mean that the Authority will disapprove the application. The Authority may also applications even when there is no opposition. In situations where there is opposition to an application, applicants may come to an agreement on stipulations concerning the operation of the establishment (e.g. closing hours, live music, etc). In such cases, the applicant may incorporate those stipulations into the approved method of operation. These stipulations then become conditions of the license privilege and failure to comply subjects the licensee to disciplinary action. The SLA can impose certain conditions on the operation of the establishment without the consent of the applicant if there is good cause to do so.

Stipulations: Before a license is issued, if a Community Board and applicant agree to certain conditions of the license, some of which can be written into the license and some that cannot, how can the Community Board handle this? If the Community Board and the applicant reach an agreement with respect to the operation of the establishment, the applicant can incorporate into the application those conditions that are relevant to the operation of a licensed establishment.

What is the 200 foot rule? Under the 200 Foot Rule an establishment cannot be licensed to sell liquor at retail if it is on the same street and within 200 feet of a school, church, synagogue or other place of worship. The rule also applies to wine stores. It does not apply to on premises establishments that are licensed for wine and/or beer only and to grocery stores. There are two exceptions under the law if the establishment existed prior to the enactment of the law in 1934 or if the location was licensed prior to the existence of the school or place of worship and has been continuously licensed ever since.

What weight does the CB have in recommending approval or denial of retail license? While not binding on the Members of the Authority, the NYSLA considers input from community boards in all licensing decisions. However, courts have held that, for applications not subject to the 500 foot rule, community opposition alone is not sufficient to disapprove an application.

How do I know what Community Board represents me? The following link is from the Mayor’s Community Affairs Unit. http://www.nyc.gov/html/cau/html/cb/directory.shtml

Can a bar or nightclub transfer their license to another owner? Does the Community Board need to be notified? Does a transfer require NYSLA approval? Licensees may not transfer a license, in the way transfer is commonly understood (i.e. licenses may not be sold or given from one person or company to another). The NYSLAs Licensing Bureau staff uses the terms transfer and new applications only to differentiate between an application for an establishment that is currently licensed and selling their business (transfer) and an establishment that is not currently licensed (new). In both cases, the license applicant must go through the same process, including notifying their CB and holding a 500 foot-hearing if applicable. A corporate licensee may have a change of officers, directors and stockholders without going through the entire application process. In such a case the licensee has to submit information regarding the new persons coming into the corporation and the financing involved.

How do temporary permits work? If a license applicant gets a temporary, does this mean they will get a full liquor license? A license applicant who is purchasing the existing business that is currently licensed to sell alcoholic beverages may file an application for a Temporary Retail Permit. This allows the license applicant to begin operating the business and serving alcoholic beverages while their application for a permanent license is being reviewed. In order to qualify for this permit, the establishment must have been open and operating at least 30 days prior to the filing of the application. The permit is granted at the discretion of the NYSLA for a period of 90 days, and may be renewed. Issuance of the permit is not a guarantee that the licensee will be approved for a permanent license.

Does the license expire once the licensee’s establishment ceases to exist? A liquor license is connected to the individual and a specific location. If the establishment ceases to exist their license certificate must be returned to the NYSLA. If the entity has vacated the premises is considered abandoned, the NYSLA Licensing Bureau sends out an abandonment letter to verify if the prior tenant has vacated the premises. When a licensee closes their business, they are required to alert the NYSLA and hand in their license, this is referred to as surrendering the license. Licensees are entitled to a refund on the unused portion of their licensing fee.

Are there any routine unannounced inspections of establishments by NYSLAs enforcement unit to ensure compliance with the Alcoholic Beverage Control Law or is it complaint driven? The SLA conducts unannounced undercover inspections as part of its investigation of a licensee. An investigation by the SLA may include: 1. on-site inspections of a licensed establishment; 2. on-site undercover investigations by NYSLA Investigators and other law enforcement agencies; 3. a review of reports and investigations by other law enforcement and regulatory agencies; and 4. interviewing potential witnesses/complainants and collecting evidence of potential violations. Information comes to the NYSLA from a variety of sources, including police and other law enforcement agency referrals, complaints by other government agencies or officials, and complaints made by the public. The identity of a person making a complaint is kept confidential.

Unlimited drink specials are illegal in New York (with limited exception for private events).   This Prohibition included “bottomless glass” of champagne brunch specials but it is regularly ignored because most owners are simply not aware of it. However, the prohibition was recently placed into the spotlight and the New York State Liquor Authority (NYSLA) issued the following statement on Feb. 26, 2014 which was supposed to ease and clarify the prohibition:

Serving unlimited drinks to a patron is prohibited under the Alcoholic Beverage Control law, and instances of over serving by our licensees will be investigated and prosecuted. However, there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials. Even under these limited exceptions, licensees still have a legal obligation not to over serve patrons.  The SLA will continue to take a balanced regulatory approach by allowing licensees to conduct specials where alcohol is an accompaniment, while simultaneously cracking down on specials that promote excessive drinking. -New York State Liquor Authority

The New York City Hospitality Alliance publicly commended the NYSLA for issuing this statement and for providing such clarity. However, all the rest of us must have missed the clarity that the NYC Hospitality Alliance apparently saw in that statement.

there is a limited exception in the statute when the service of alcohol is incidental to the event, such as in the case of certain brunch specials. When is the service of alcohol incidental to the event/brunch?  Always?  Sometimes?  When there are pancakes on the menu? Why just brunch?  If the service of alcohol can now be now deemed incidental during brunch, why is it not deemed incidental during lunch or dinner as well?

The reality is that the NYSLA statement provides no clarity whatsoever on the prohibition and in fact causes more confusion because now there appears to be some new exception to the prohibition that applies to certain brunch specials . . .but leaves us all in the dark as to the necessary elements of this exception.  Until there is some actual clarification or specifically stated exception to the prohibition, we still recommend that you do not offer any unlimited drink specials during brunch, lunch, dinner or otherwise.

BYOB, or Bring Your Own Bottle, where owners of establishments allow their customers to bring alcoholic beverages to their premises to be consumed on site, is NOT PERMITTED in unlicensed businesses in New York State unless the Certificate of Occupancy for the premise is for less than 20 people.

GENERAL RULE: BYOB is illegal in New York.

You MUST have a license or permit to sell/serve beer, wine or liquor to the public. Venues without a license or permit may not allow patrons to bring their own alcoholic beverages for consumption.  In addition, owners of businesses may not give away alcoholic beverages to their patrons. Those that do are in violation of the NYS Alcoholic Beverage Control Law.

Applicants should be aware that allowing BYOB without a license may jeopardize their chances for approval of their license.

When applying for a liquor license, the application of the 500 foot rule often results in the application being rejected. It is imperative that an applicant know whether the rule will apply to their license application and, if it does, to prepare accordingly.

GENERAL RULE: No license for on-premises liquor consumption may be granted for any premise within 500 feet of three or more existing premises licensed and operating with an on-premises liquor license. BUT the State Liquor Authority, in it’s discretion, may still issue the license if they determine that the license would be in the public interest after consulting with the local Community Board and holding a public hearing upon notice (a/k/a The 500 Foot Hearing).

Factors the Liquor Authority consider relevant when determining if the license would be in the public interest include the type of the proposed establishment (i.e., restaurant or bar), and the number, classes and types of businesses licensed within 500 feet of the proposed premise. They also consider whether the applicant has had prior violations or complaints at other establishments and quality of life issues such as anticipated increased traffic, potential parking problems and noise issues.

The 500 foot hearing is held at the Liquor Authority and individuals and community groups may appear to challenge the granting of a license. A consultation with an experienced liquor license attorney is highly recommended prior to attending this hearing. But in general, wear a suit and be prepared to answer any and all questions regarding your proposed establishment. Bring a copy of your completed liquor license application with you along with all supporting documents filed therewith.

NOTE: The 500 Foot Rule is not applicable if the premises has been continuously licensed on or prior to November 1, 1993 or if the County has a population of less than 20,000.

The New York State Liquor Authority (SLA) recently concluded an underage sting operation in New York City where SLA investigators sent underage volunteer decoys into 239 licensed premises in all five New York City boroughs. In total, the decoys were able to purchase alcohol at an astounding 124 establishments.  The sting was conducted from March 29 through April 5, 2012.

The outcome of this sting is surprising.  More than half of the premises that were raided had violated the law and served alcohol to minors. These violations are accompanied by monetary penalties and worse. For a first offense, a Licensee may be able to get away with paying a fine in the amount of $2,500.00 or so to the SLA to settle the charge . . .but if it is not their first violation, they may be looking at having a costly suspension or revocation hearing at the SLA.

However, the good news is that avoiding these violations are very easy.  Licensee’s must (i) train their employees as to what forms of ID are acceptable; (ii) insist that their employees require valid ID from all individuals that appear to be less than the age of 45 (just to safe) and (iii) inform employees that they are subject to job termination should they fail to properly check ID.

MUNICIPAL NOTIFICATION CHANGES:  Effective immediately there are major changes in the 30 day advance municipal notification requirements. Some changes affect the entire state, others affect licensees in New York City and still others affect licensees outside of the five boroughs of New York City. Here is a breakdown of the changes:

STATEWIDE: Municipal notification for original on premises applications remains in place statewide;
All licensees must now pay the same $128.00 corporate change fee. 

OUTSIDE OF NEW YORK CITY: All alteration and license renewal notification requirements for licensees are eliminated outside of the City of New York.

NEW YORK CITY:  Substantial corporate changes (80% ownership interest or more) will now require 30 days prior notification to Community Boards for New York City licensees.  Alteration and license renewal notification requirements remain in place for New York City licensees with the exception of off premises licensees who will no longer need to notify Community Boards of alterations.

In anticipation of their upcoming IPO, Groupon requested a declaratory judgment from the New York State Liquor Authority (NYSLA) regarding whether there was any violation involved with having Groupon offer 50% off of alcoholic beverages at various establishments in New York.

After much deliberation, the NYSLA ruled that the 50% off offer was perfectly legal. The NYSLA stated that since customers received no more than 50% off of the retailers drink prices, it did not constitute a violation of the unlimited drinks offering prohibition.