If you are buying a licensed business in Michigan, or selling one, the liquor license is often the part that takes the longest and causes the most worry. The good news is that the process follows a fairly predictable path. This article walks through the usual steps, what tends to slow a transfer down, and what you can do to plan for it.
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In this article
A license doesn't simply change hands
In Michigan, liquor licenses are issued and regulated by the Michigan Liquor Control Commission (MLCC). A license is issued to a particular licensee at a particular location. When a licensed business is sold, the buyer cannot just take over the seller's license by handing over the keys. The Commission has to approve the new owner, and the new owner has to meet its requirements.
That is why a purchase agreement for a licensed business should treat the license as a condition of the deal, not an afterthought. If the license is not approved, the buyer should know in advance what happens next.
The usual steps
Step 1: Agree on the deal and the license condition. The purchase agreement should say that the sale depends on approval of the license transfer, and what happens if approval is delayed or denied.
Step 2: Gather the buyer's information. The Commission looks at who owns and controls the buyer, and where the money for the purchase comes from. Be ready to identify every owner and to document the funds.
Step 3: File the applications. The buyer submits the required application and supporting documents to the Commission, and, where it applies, to the local municipality.
Step 4: Local approval. For many license requests, the city, village or township where the business is located must approve or recommend the request before the Commission acts. Local meeting schedules can affect timing.
Step 5: Commission review and decision. The Commission reviews the application, may ask follow-up questions, and then approves or denies the request.
Step 6: Closing and opening under the new license. The closing and the start of operations should be timed with the approval, so that the business is not selling regulated products before the proper authorization is in place.
What slows a transfer down
Incomplete or inconsistent paperwork, especially about who owns the buyer
Hard-to-document sources of funds for the purchase
Unresolved violations or open compliance matters at the business
Local zoning or approval issues that were not raised early
A purchase agreement and closing date that assume the license will be ready on a fixed day
When a company's owners change
Not every change involves selling the business. Sometimes the same company keeps operating while its owners change: a partner is bought out, a new investor joins, or shares or membership interests are transferred. Even though the licensed company stays the same, the change in ownership usually has to be reported to the Commission, and some changes need approval before they take effect.
If you are planning an ownership change in a licensed company, plan the paperwork and the filings together. We cover this on our stock and membership interest transfers page, and on our liquor licensing page.
Frequently asked questions
How long does a Michigan liquor license transfer take?
There is no single answer. It depends on the type of license, the municipality, how complete the application is, and whether any questions come up along the way. The safest approach is to start early and build flexibility into the closing date.
Can the buyer start operating before the transfer is approved?
Generally, selling under a liquor license requires proper authorization first. If you are considering any arrangement for the period between closing and approval, talk to a lawyer before you sign anything.
Do I always need local approval?
For many license requests, yes: the local governing body is part of the process. Requirements can vary by license type and community, so check what applies to your location.
Planning to buy or sell a licensed business? Schedule a consultation or call 248-948-1500, and we will map out the approvals and timeline with you.
