SC Alcohol License Applications: Top 5 Traps for the Unwary
After surviving COVID-19 lockdown restrictions, selling and serving alcohol in South Carolina restaurants and hotels is a huge industry showing no sign of slowing down. Even businesses not traditionally associated with selling alcohol are discovering that alcohol sales can boost most revenue models. Alcohol is, indeed, liquid gold.
I’ve had the honor of assisting clients with obtaining South Carolina beer, wine, liquor, brewery, and brewpub licenses for over 200 separate locations, yet somehow it is easy to learn something new about the SC Dept. of Revenue and State Law Enforcement Division’s review process each time. However, below is a list of completely preventable problems applicants are likely to experience without engaging with experienced licensing counsel.
- “To Go” Sales. Many new and existing restaurants are either obtaining or “upgrading” existing licenses to allow for selling alcohol “to-go” to supplement on-premises sales. For example: (i) a hotel offers a “cantina” or gift shop selling bottled beer and wine only steps away from the hotel’s traditional restaurant amenity, (ii) a “taproom” sells pints of craft beer for on-premises consumption while simultaneously offering canned or bottled versions of the same brand, and (iii) a grocery store allows customers to “sip while they shop” while also selling bottled beer and wine traditionally at checkout. However, since South Carolina offers multiple differing retail-tier beer and wine licenses, it is important to identify exactly which license is minimally required to allow for a business’s intended use. A failure to apply for adequate licensure can slow down the application’s review process, and obtaining “upgraded” (ie, expensive) licensure covering “all of the above” sales at a location can unnecessarily cost a business thousands annually in licensing fees.
- Proximity Issues. Particularly in high-density environments, such as downtown Charleston, SC, it is common for a beverage retailer to run afoul of proximity regulations designed to restrict spirituous liquor sales from occurring within three hundred (300) feet (See S.C. Code of Laws Section 61-6-120) of a school, playground or place of worship. It is important for counsel to communicate exactly how these proximities are to be measured under the South Carolina Code of Regulations. Measuring the distance between an exterior corner of the intended licensed premises to the exterior corner of a school or place of worship will almost always yield proximity violations in inner city areas. Instead, walking meter measurements between a public entrance of the premises to the public entrance of a school or place of worship provides for measurements more favorable to the applicant. Also, some accessory buildings to schools and places of worship, such as administrative offices or supplementary “chapels” may not qualify as a “school or church” requirement measurement at all. Counsel can also assist with negotiating with a school, church, or playground owner to waive this proximity requirement, particularly for upscale restaurant and hotel concepts. Also, selling spirituous liquor “to-go” is unlawful for any business holding an on-premises consumption license and is reserved exclusively to “retail dealer” licensees (ie, package store owners).
- Public Protests. Thankfully, public protests resulting from an application’s required newspaper publication (See S.C. Code of Laws Section 61-6-180(B)(2)) are rare in South Carolina, and when they do occur, it is statistically highly likely the applicant will be the victor after holding a public hearing. However, public protests can destroy first-year profit margins, as the turnaround time for scheduling a required hearing to resolve at the SC Administrative Law Court can be weeks or months. Counsel regularly involved in licensing matters can assist with submitting required documents to the court for an expedited hearing, can assist with handling the hearing itself, and can also ideally negotiate with a public protestant to resolve the matter before the hearing. It is important for counsel to also confirm that a public protestant is actually qualified to submit a public protest, as South Carolina generally only allows for residents of the county in which a restaurant or hotel concept is located in to submit protests, with some exceptions.
- Intervening Businesses. Restaurant or hotel concepts located within shopping centers, office buildings, or marinas are likely to be more strictly reviewed by state licensing regulators to ensure the premises of other adjacent businesses “intervene” or invade the premises controlled by the license applicant. Navigating “intervening business” regulations can be particularly troublesome inside shopping malls or other locations featuring “food court” concepts. Sometimes physical barriers or vegetation can be used to satisfy state authorities. In the case of office buildings, providing evidence of restaurant employee keycards or keypads designed to restrict access to non-employee personnel can help quell the state’s concerns.
- Outdoor Amenities. Serving spirituous liquor for on-premises consumption in South Carolina may generally only be done in a climate-controlled building with a certified “Grade A” health rating provided by the SC Department of Health and Environmental Control with the ability to serve hot meals for at least 40. However, general rule can cause problems when serving spirituous liquor within expansive restaurant patios, decks, or poolside. Many exceptions to this general restriction exist which enable golf courses and hotels to freely serve spirituous liquor outdoors. However, expert licensing counsel can help navigate these exceptions when it is not immediately clear to state regulators how an outdoor liquor exception might apply to a particular business model.