Liquor License Transfer

The License That Can Make or Break the Deal

If you're buying or selling a business with a liquor license in California, the ABC transfer process adds real complexity to the transaction. It introduces its own timeline, its own escrow requirements, its own regulatory approval process — and if any of it goes sideways, the entire deal can stall or collapse.

This isn't a formality. The California Department of Alcoholic Beverage Control runs a thorough process that includes background investigations, public notice requirements, and a protest window that gives neighbors and law enforcement the opportunity to object. Sellers can't just hand over the license at closing. Buyers can't assume they'll be approved. And both parties need to understand how the ABC timeline fits into the broader transaction.

We've coordinated dozens of liquor license transfers as part of bar and restaurant sales across Southern California. This is one area where California-specific expertise matters — the rules are different here, the timelines are longer than most buyers expect, and the consequences of getting it wrong range from costly delays to killed deals.

Types of California Liquor Licenses

California issues more than 70 types of liquor licenses, but for restaurant and bar transactions, five types account for the vast majority of deals. Understanding which license a business holds — and what it allows — is fundamental to evaluating the opportunity.

Type 41 — On-Sale Beer and Wine

Allows the sale of beer and wine for consumption on the premises. Common in restaurants, cafes, and casual dining concepts that don't need a full bar. Type 41 licenses are generally easier to obtain and transfer than general licenses because they're not subject to the same population-based caps. If the business doesn't need spirits, this license keeps things simpler and less expensive.

Type 47 — On-Sale General (Eating Place)

The most valuable and most common license for restaurants with a full bar. A Type 47 allows the sale of all alcoholic beverages — beer, wine, and spirits — for on-premises consumption in a bona fide eating establishment. The key restriction: the premises must operate primarily as a restaurant. Meals must be available during all hours the bar is open.

Type 47 licenses are limited by county population. In many Southern California counties, all available licenses have been issued, which means the only way to get one is to buy an existing license from a current holder. This supply constraint is what drives their value — in desirable markets, a Type 47 can be worth $50,000 to $100,000 or more as a standalone asset, separate from the business itself.

Type 48 — On-Sale General (Public Premises)

The bar and nightclub license. A Type 48 allows full alcohol sales without the food service requirement of a Type 47. This is what bars, lounges, and nightclubs hold. Type 48 licenses carry additional regulatory scrutiny — they're more likely to face conditional use permit requirements, proximity restrictions near schools and churches, and protests from neighbors or local law enforcement. The transfer process for a Type 48 tends to be more involved than for a Type 47.

Type 20 — Off-Sale Beer and Wine

Allows the sale of beer and wine for consumption off the premises. Common in grocery stores, convenience stores, and specialty food shops. Relevant when these types of businesses change hands.

Type 21 — Off-Sale General

Allows the sale of all alcoholic beverages for off-premises consumption. This is the liquor store license. Like Type 47, Type 21 licenses are population-limited and can carry significant standalone value in areas where all licenses are issued.

The ABC Transfer Process — Step by Step

The license transfer runs as a parallel track alongside the business sale. Both need to close together, which means the ABC timeline effectively sets the floor for how quickly the overall transaction can close. Here's how it works:

1. Escrow Opens with an ABC-Approved Company

California law requires that the sale of a business with a liquor license go through an escrow company approved by the ABC. This is not optional, and not every escrow company qualifies. The escrow company handles the bulk sale requirements under California's Bulk Transfer Law, including creditor notifications and the ABC transfer paperwork.

2. ABC Form 227 Filed by the Buyer

The buyer files an Application for Alcoholic Beverage License (Form 227) with the ABC, along with the required filing fees, personal history questionnaires, and fingerprint cards for all owners. If the buyer is a corporation or LLC, every person with a 10% or greater ownership interest must be included in the application.

3. Publication Requirement

The ABC requires that a Notice of Intended Transfer be published in a newspaper of general circulation in the city where the business is located. The notice must run for a minimum of 30 days. This public notice period is one of the reasons the process takes as long as it does — it can't be shortened or waived.

4. ABC Investigation

An ABC investigator is assigned to the application. The investigation includes a background check on the buyer (criminal history, prior ABC violations, financial standing), a premises inspection, and a review of the business's compliance history. The investigator may also interview neighbors and local law enforcement. If the license has prior violations or the location has a history of complaints, expect additional scrutiny.

5. Protest Period and Conditional Approval

During the public notice period and investigation, any interested party can file a protest against the transfer — neighbors, law enforcement agencies, community organizations, or local government. If a protest is filed, the ABC will schedule a hearing, which can add weeks or months to the process. If no protests are filed and the investigation is clean, the ABC may issue conditional approval or full approval.

6. Transfer Completion

Once the ABC approves the transfer, the license is reissued in the buyer's name, escrow closes, and the buyer can legally operate under their own license. We coordinate this final step with the business sale closing so that both happen simultaneously — the buyer takes possession of the business and the license on the same day.

Typical timeline: 45 to 90 days from application filing to approval. Deals with protests, prior violations, or complex ownership structures can take longer. We build the ABC timeline into the overall transaction schedule from day one so that neither party is surprised by the timeline.

Person-to-Person Transfer vs. Entity Purchase

There's an important structural distinction that affects whether a full ABC transfer is even required.

In a person-to-person transfer, the buyer is acquiring the license from an individual or entity and putting it in their own name. This triggers the full ABC application process described above — Form 227, background check, publication, investigation, and approval.

In an entity purchase, the buyer is purchasing the business entity itself — the LLC or corporation that holds the license. If the entity stays intact and the license stays in the entity's name, a full transfer application may not be required. Instead, the ABC requires notification of the change in ownership or control, which is a simpler and faster process.

However, entity purchases come with their own risks. The buyer inherits the entity's liabilities — including any outstanding ABC violations, tax obligations, or legal claims. This is why thorough due diligence on the entity's history is critical when structuring a deal this way. We work with the buyer's attorney to evaluate whether an entity purchase or asset purchase makes more sense given the specific circumstances of the deal.

Common Issues That Delay or Block Transfers

Most ABC transfers go through without incident, but problems do arise. Here are the most common issues we see — and the ones we screen for during due diligence:

• Prior violations on the license: If the existing license has a history of violations — overservice, underage sales, operating outside permitted hours — the ABC will scrutinize the transfer more closely. Unresolved violations or outstanding fines must be cleared before the transfer can proceed.
• Buyer background issues: Felony convictions (particularly drug or alcohol-related offenses), prior ABC license revocations, or outstanding warrants will delay or block the buyer's application. We discuss background considerations with buyers early in the process to avoid surprises.
• Protests from neighbors or law enforcement: Any interested party can protest a license transfer. Bars and nightclubs (Type 48) are more likely to face protests than restaurants. A protest triggers a hearing process that can add months to the timeline.
• Conditional use permit problems: Many municipalities require a conditional use permit (CUP) for businesses with liquor licenses, especially Type 48 (bars and nightclubs). If the CUP has conditions that haven't been met, or if the business is operating in violation of its CUP, the transfer can be held up until compliance is restored.
• Proximity restrictions: California law restricts certain license types near schools, churches, and other sensitive locations. This primarily affects Type 48 licenses. If the premises is within a restricted zone, the buyer may need to apply for an exception — which adds time and uncertainty.
• Incomplete or inaccurate applications: Simple paperwork errors — missing signatures, incorrect entity names, incomplete personal history questionnaires — cause avoidable delays. We review all ABC paperwork before submission to catch these issues early.

How License Type Affects Business Value

The liquor license isn't just a permit — in California, it's often a significant financial asset that directly affects the sale price and deal structure.

Type 47 licenses in high-demand areas command the highest premiums because supply is fixed. The ABC allocates on-sale general licenses based on county population, and in most Southern California counties, every available license has been issued. When a restaurant with a Type 47 closes and the owner doesn't transfer the license, it doesn't go back into a pool — it can be sold separately to anyone who wants to open a licensed establishment in that county.

This scarcity creates a floor under the value of any business that holds one. Even a struggling restaurant with weak financials might be worth acquiring if it holds a Type 47 license in a county where licenses are trading at $75,000 to $100,000. The license alone has value independent of the business operations.

For buyers, this means the purchase price of a bar or restaurant often includes a premium for the license. We help buyers understand how much of the asking price is attributable to the license versus the operating business — because that distinction affects everything from how you negotiate the deal to how you finance it. SBA lenders, for example, will appraise the license value separately from the business value.

For sellers, a valuable license is leverage. If you're selling a restaurant with a Type 47 in a supply-constrained county, that license adds real dollars to your asking price. We make sure it's properly valued and marketed as part of the sale.

How We Help with ABC License Transfers

We don't file ABC applications or practice law — that's what ABC attorneys do, and we connect you with good ones. What we do is coordinate the entire process so that the license transfer, the business sale, the escrow, and the lease assignment all move in sync.

Here's what that looks like in practice:

• Early identification of license issues: During due diligence, we check the license's compliance history, verify there are no outstanding violations or fines, and confirm the license type matches what's been represented. We flag problems before the buyer is deep into the transaction.
• Timeline coordination: The ABC process sets the minimum transaction timeline. We build the ABC schedule into the overall deal calendar from the beginning, so that escrow, financing, and lease assignment all track to the same closing date.
• ABC attorney coordination: We connect buyers and sellers with attorneys who specialize in California ABC licensing and coordinate their work with the escrow company, the lender, and both parties' transaction attorneys.
• Escrow management: We ensure the deal is placed with an ABC-approved escrow company and that the bulk sale and transfer requirements are handled correctly. ABC escrow has specific procedural requirements that general escrow companies don't always know.
• Interim operations planning: If the buyer needs to operate the business while the transfer is pending, we help structure interim operating agreements that keep the business running legally during the transition.
• Deal structure advice: We help evaluate whether an asset purchase with a full license transfer or an entity purchase with a change-of-control filing makes more sense for the specific deal — balancing speed, liability exposure, and regulatory requirements.

Frequently Asked Questions

Start the Conversation

Whether you're buying a bar, selling a restaurant with a Type 47, or trying to understand how the ABC process fits into a deal you're already working on — we can help you think through it. We've handled these transfers across San Diego, Orange County, Los Angeles, and the Inland Empire, and we know how to keep them from becoming the bottleneck that kills the deal.

Fill out the form to schedule a confidential conversation. We'll give you a clear picture of what the ABC process looks like for your specific situation, what it will cost, and how long it will take.