The Akron Legal News

Bill would streamline liquor license transfers throughout Ohio

TIFFANY L. PARKS
Special to the Legal News
Published: April 15, 2013

Senate Bill 48 has been described as a common sense proposal to streamline the process of transferring a liquor license when the previous liquor license was “trexed” or transferred into a taxing district from another taxing district.

“Current law requires that if a liquor permit has been trexed into a taxing district (through) an economic development project, any subsequent transfer of ownership of that permit requires that the permit be processed again as a trex,” said Marc Myers, a Worthington attorney who specializes in liquor issues.

“That requires that the transferee must get approval from the local authorities as an economic development project even though the local authorities have already previously approved the transfer of the permit to the district as a trex. This can result in a significant delay in getting the permit transferred and works as a burden to the buyer of the business.”

Attorney Scott Simon, whose Columbus-based practice also specializes in liquor issues, agreed.

“Some legislative authorities will send this request to obtain signature and approval by sending it to their local legislative committee who then will send it before their city council for a first reading, second and third reading,” he said.

“This process can take weeks to obtain the required signature on the division’s form to file with its transfer.”

SB 48, sponsored by Sen. Troy Balderson, R-Zanesville, was drafted to help facilitate the liquor permit transfer process and treat such transfers just like a standard transfer of ownership by the applicant.

The proposal would permit a specified C or D liquor permit that has been transferred for an economic development project in a quota-restricted city or township to subsequently be transferred to a location that does not qualify as an economic development project regardless of the quota.

The bill, which could result in a slight increase of liquor permit transfers, unanimously was passed by the Senate in late March.

Before the measure was passed by the Senate, Dominic Panzera, legal counsel for the Ohio Department of Commerce Division of Liquor Control, offered proponent testimony for the bill.

Panzera said the liquor control division is responsible for controlling the manufacture, distribution, licensing, regulation and merchandising of beer, wine, mixed beverages and spirituous liquor.

“The regulatory function of the division is based in a permitting process,” he said. “Annual licensing is required to manufacture, distribute or operate as a retailer of alcoholic beverages for consumption in the state. In some cases, the numbers of permits, also known as licenses, which are issued in a geographic area are limited by quota ... based on the population of the area.”

Since 1994, Panzera said, the law has allowed the transfer of a liquor license from one area of the state to another area of the state to aid economic development.

“Under this process the applicant must file information about the economic impact the business will have on the community. This would include things like: investments in construction, projected sales, tax revenue and employment,” he said.

“The city or township to which the permit is to be transferred must also attest to the economic development project. Currently, the law requires that if that license were to subsequently transfer to a new owner, the process would have to be done all over again.”

Panzera said division officials believe the resubmission process places an “unnecessary burden upon the applicant and, in most cases, slow down the liquor license transfer processes unnecessarily.”

“The division processes approximately 60 -70 transfers each year, requiring special processing due to the current statutory requirement. This is in addition to the more than 30,000 annual renewal or new licenses we process,” he said.

“Elimination of this requirement will benefit the division through the elimination of additional paperwork ... as well as making time and attention available to focus on more complex applications.”

If SB 48 is signed into law, Panzera said, it is important to note that cities and townships will still have the right to object to transfers.

Like Panzera, Myers said the current guidelines create confusion and are burdensome.

“I recently represented a well-known chain restaurant that has locations in a number of states along the East Coast and 18 locations in Ohio. The entity which holds the liquor permits recently converted from a corporation to a limited liability company,” he said.

“As a result of the conversion, transfers of ownership of all the liquor permits had to be filed. The beer portion of one permit in Springfield was originally trexed to the permit holder.”

As a result, Myers said, the division of liquor control could not accept the transfer of ownership for that location until he secured the support of local authorities.

“While the local authorities were supportive, the process caused a delay in getting that one permit transferred while the other 17 transfers were being completed,” he said. “This can cause significant accounting issues especially with regard to the filing of sales tax when the business has 17 liquor permits in one name and one permit in another name.”

Myers praised the merits of SB 48.

“The bill retains the ability of local authorities to object if they perceive a problem but removes the additional, and I believe unnecessary, steps to get trex approval upfront before a transfer of a permit previously trexed is filed,” he said.

The bill is awaiting a House committee assignment.

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