The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act imposes a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would authorize the department to issue up to 10 additional new original on-sale general licenses for bona fide public eating places in the first calendar year following any year in which the county reaches the limit on on-sale general licenses, subject to specified provisions. The bill would authorize the county board of supervisors, by resolution submitted to the department on or before July 1, to limit the maximum number of additional licenses issued in the county pursuant to the bills provisions in that year, as specified. The bill would authorize the department to designate licenses issued pursuant to this section the bills provisions as on-sale general for special use.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for imposes a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would authorize the department to issue up to 10 additional new original on-sale general licenses for bona fide public eating places in the first calendar year following the any year in which the county reaches the limit on on-sale general licenses, subject to specified provisions. The bill would authorize the county board of supervisors, by resolution submitted to the department on or before July 1, to limit the maximum number of additional licenses issued in the county pursuant to the bills provisions in that year, as specified. The bill would authorize the department to designate licenses issued pursuant to this section as on-sale general for special use.

The Alcoholic Beverage Control Act, administered by the Department of Alcoholic Beverage Control, regulates the sale and distribution of alcoholic beverages and the granting of licenses for the manufacture, distribution, and sale of alcoholic beverages within the state. The act also provides for a limitation on the amount of on-sale general licenses that may be issued by the department based on the population of the county in which the licensed premises are located, as provided.

This bill would authorize the department to issue up to 10 additional new original on-sale general licenses for bona fide public eating places in the first calendar year following the year in which the county reaches the limit on on-sale general licenses, subject to specified provisions.

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1028 (Alvarado-Gil) - Alcoholic beverage licensees: on-sale general licenses for bona fide eating places

Bill Summary:

SB 1028 authorizes the Department of Alcoholic Beverage Control (ABC) to issue up to 10 additional new original on-sale general licenses for bona fide eating places in counties that have reached their limit of on-sale general licenses.

Fiscal Impact:

• Ongoing annual costs of approximately $502,000 to the Department of ABC for increased licensing and enforcement workload (Alcohol Beverage Control Fund).
• Unknown increase in license fee revenue, which may offset the department’s administrative costs to process new applications to some extent. However, the department notes that ongoing enforcement costs would eventually exceed all total new revenues.
• Potential one-time IT cost of approximately $15,000 if the department determines that a new license type is required to track and regulate additional licenses issued pursuant to this bill.

Background:

An on-sale general eating-place license, or Type 47 license, authorizes the consumption of beer, wine, and distilled spirits for consumption on the licensed premise. The licensee is required to operate and maintain the licensed premises as a bona fide eating-place, which must include suitable kitchen facilities. The licensee must make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51% of all gross sales from food. As such, a Type 47 license is one of the most common types of liquor licenses for restaurants in California. As of February 29, 2025, there were approximately 15,934 on-sale general licenses statewide.

Existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a given year, the Department ABC will issue five new licenses in that county.

If the Department of ABC receives more applications than there are licenses available, a public drawing is held. To participate in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the date of the scheduled drawing. Successful drawing participants will be notified that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $15,835 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell their license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and can reach upwards of $400,000.

Proposed Law:

• In any county that has reached its limit of on-sale general licenses for bona fide public eating places, authorizes the department to issue up to 10 additional new original on-sale general licenses for bona fide public eating places after July 1 of the first calendar year following any year the limit is reached.
• Authorizes the board of supervisors for a county in which additional licenses are otherwise authorized to be issued to further limit the maximum number of those additional licenses by adopting and submitting a resolution to the department.
  • Specifies an adopted resolution is effective for the year commencing the following July 1.
  • Specifies that if a resolution is not submitted before July 1 of any year, the department may issue up to 10 licenses that have not been issued during that year commencing July 1.
• Authorizes the department to designate licenses issued under the expanded cap on-sale general licenses for bona fide public eating places as on-sale general for special use.
• Provides that a person who currently holds a valid on-sale general license for seasonal business may apply for an original on-sale general license pursuant to this bill.
• Prohibits a license transfer from one county to another, or from being sold or transferred for a price greater than the original fee paid by the seller or transferor.

Staff Comments:

The Department of ABC’s fiscal estimate is based on the 23 counties that would currently qualify for the first round of 10 new licenses authorized under this bill. The department notes that this could equate to 230 additional on-sale general licenses issued over the course of a one year period after this bill takes effect. This number could grow over time as licenses are cancelled or revoked and added back to the available license count, as well as additional counties that could become eligible that are not currently.

The total annual ongoing cost estimate of $502,000 for administrative and enforcement workload includes $102,000 for processing new applications and licenses and $400,000 in ongoing enforcement costs. These costs assume 620 licenses issued in total over the next six years.

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SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Bill Dodd

Chair

2023 - 2024 Regular

Bill No: SB Hearing Date: 3/12/2024

NOTE: This analysis reflects amendments that the author will be taking in committee.

SUBJECT:

DIGEST: This bill authorizes the Department of Alcoholic Beverage Control (ABC), in counties that have reached its limit of on-sale general licenses, to issue up to 10 additional new original on-sale general licenses for bona fide eating-places, as specified.

ANALYSIS:

Existing law:

1. Establishes the Department of ABC and grants it exclusive authority to administer the provisions of the ABC Act in accordance with laws enacted by the Legislature. This involves licensing individuals and businesses associated with the manufacture, importation, and sale of alcoholic beverages in this State and the collection of license fees.
2. Provides that the Department of ABC must deny an application for a license if issuance would create a law enforcement problem, or if issuance would result in, or add to, an undue concentration of licenses in the area where the license is desired. However, for liquor stores and other specified retail licenses, the Department of ABC is authorized to issue a license if the respective local government determines that public convenience or necessity would be served by granting the license.
3. Caps the number of new on-sale and off-sale general licenses issued by the Department of ABC. The ratios are one on-sale general license for each 2,000 persons in the county in which the premises are situated and one off-sale general license for each 2,500 persons.
4. Defines an “on-sale” license as authorizing the sale of all types of alcoholic beverages: namely, beer, wine and distilled spirits, for consumption on the premises (such as at a restaurant or bar) and an “off-sale” license as authorizing the sale of all types of alcoholic beverages for consumption off the premises in original, sealed containers.
5. Defines “bona fide public eating place” to mean a place which is regularly and in a bona fide manner used and kept open for the serving of meals to guests for compensation and which has suitable kitchen facilities connected therewith, containing conveniences for cooking an assortment of foods which may be required for ordinary meals, the kitchen of which must be kept in a sanitary condition with the proper amount of refrigeration for keeping of food on said premises and must comply with all the regulations of the local Department of Health.
6. Authorizes, beginning January 1, 2017, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions.
7. Provides that in Napa County, from January 1, 2017, to December 31, 2017, the Department of ABC, in addition to those licenses currently issued under the law may issue no more than five additional new original on-sale general licenses for bona fide public eating places. Any premises to qualify for a license shall have a seating capacity for 25 or more diners.
8. Authorizes, beginning January 1, 2018, the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issued, to premises located in any of the census tracts, as specified, within the City and County of San Francisco.
9. Authorizes, beginning on January 1, 2018, the Department of ABC, to issue a maximum of 20 new original on-sale general licenses, over a four-year period, in the County of Napa, as specified.

This bill:

1. Authorizes the Department of ABC, in counties that have reached its limit of on-sale general licenses, to issue up to 10 additional new original on-sale general licenses for bona fide eating places following any year the limit is reached.
2. Provides that the board of supervisors for the county in which additional licenses are authorized to be issued may further limit the maximum number of those additional licenses by adopting and submitting to the Department of ABC a resolution, as specified.
3. Prohibits a license issued under this bill to be transferred from one county to another.
4. Prohibits a license issued under this bill from being sold or transferred for a price greater than the original fee paid by the seller or transferor.
5. Provides that after the cancellation or revocation of a license issued under this bill, the Department of ABC shall issue one additional license the following year.
6. Authorizes the Department of ABC may designate licenses issued under this bill as on-sale general for special use, as specified.

Background

Author Statement. According to the author’s office, “SB 1028 will allow the Department of ABC to issue up to 10 additional on-sale general licenses for bona fide eating places to a county after the county reaches its limit. These licenses, also called Type 47, allow an eating-place – like restaurants and resorts – to sell beer, wine, and liquor for consumption on the premises. Current law caps the number of these licenses to counties based on a population ratio of one license per 2,000 residents. Oftentimes a growing county will be hindered by the large discrepancy between the demand for licenses and the supply that ABC can provide.”

Additionally, “many rural counties have relatively small permanent populations while hosting a large tourist population throughout the year. Unfortunately, tourism is not a factor when determining the number of Type 47 licenses a county may receive. The Legislature has routinely passed bills that allow ABC to issue 10 more licenses to a specific county. SB 1028 will apply this policy statewide and allow any county to request up to 10 additional Type 47 licenses to accommodate their increased needs and encourage economic growth.”

Type 47 Alcohol License. An on-sale general eating-place license, or Type 47 license, authorizes the consumption of beer, wine, and distilled spirits for consumption on the licensed premise. The licensee is required to operate and maintain the license premises as a bona fide eating-place, which must include suitable kitchen facilities. The licensee must make actual and substantial sales of meals for consumption on the premises. Generally, this means that the business must generate at least 51% of all gross sales from food. As such, a Type 47 license is one of the most common types of liquor licenses for restaurants in California.

Some common businesses that use the Type 47 license include full-service restaurants, hotels and resorts, bowling alleys, golf courses and other eating establishments. As of February 29, 2025, there were approximately 15,934 on-sale general (Type 47) licenses statewide.

Alcohol License Limitation. Existing law provides for a limitation on the number of new on-sale general licenses that may be issued in a given year by the Department of ABC based on the population growth of the county in which the licensed premises are located. The ratio is one on-sale general license for each 2,000 residents. For example, if a county grows by 10,000 people in a given year, the Department ABC will issue five new licenses in that county.

If the Department of ABC receives more applications than there are licenses available, a public drawing is held. To participate in such a drawing, an applicant must have been a resident of California for at least 90 days prior to the date of the scheduled drawing. Successful drawing participants will be notified that they have 90 days to complete a formal application for their specific premises. The cost of these new licenses is $15,835 each.

Individuals seeking to open a full-service restaurant with a bar or cocktail menu who fail to obtain a liquor license through this process typically must locate an existing licensed owner willing to sell their license. Usually, that is done by contacting a liquor license broker. The cost of obtaining a license on the secondary market is driven by supply and demand and can reach upwards of $400,000.

Impact on Counties. As previously noted, when a county experiences a population growth, the Department of ABC issues additional licenses based on the population growth; currently 2,000 residents per one on-sale license. While this system tends to work for some counties, there are a substantial number of counties where the demand for alcohol licenses far outweighs the current number of alcohol licenses in those counties. The reasons for the lack of licenses are generally a lack of population growth or because of the amount of tourism in the particular county, which results in higher demand for these types of businesses.

For example, in Napa County the number of visitors to Napa continues to increase while the population of the county has not grown. While the majority of visitors to Napa take day trips, more than one million of these visitors spend at least one night in local lodgings. Tourism has therefore become one of the major economic drivers in the region. While legislation in 2017 authorized the issuance of five additional license over a four-year span, demand far outweighs the availability of these licenses. In 2018 for instance, while the Department of ABC issued five new licenses to Napa, there were a total of 38 applications for those five licenses.

According to the Department of ABC, in 2022 there were 31 counties that were eligible for more licenses because of population growth and 27 counties that were not eligible for more licenses because of a lack of population. Of those 27 counties, five counties received a handful of licenses through special legislation. If this bill were to become law, each of those 27 counties would be eligible for up to 10 additional new original on-sale general licenses for bona fide public eating-places. As proposed to be amended, those 27 counties would have the opportunity to reduce or completely eliminate the number of additional licenses that could be issued by the Department of ABC.

Issuance of Additional Licenses. Over the years, various counties have sponsored legislation to authorize the Department of ABC to issue additional Type 47 licenses in their county. Like this bill, previous bills also prohibit the sale of these licenses from being sold for a price greater than they were obtain from the department and prohibit the licensed from being transferred between counties.

Generally, these bills receive unanimous support in the Legislature and signed into law. Once those bills become law, the Department of ABC, if there are more applicants than there are licenses available to be issued, holds a random drawing that establishes priority rankings to apply for alcohol licenses. Applicants must still go through the normal application process, which includes local posting requirements and pay all appropriate fees.

Prior/Related Legislation

AB 1668 (Patterson, Chapter 282, Statutes of 2023) authorizes the Department of ABC to issue no more than 10 new original on-sale general licenses for bona fide public eating places in the County of Placer, as specified.

SB 787 (Dahle, Chapter 113, Statutes of 2023) authorizes the Department of ABC to issue to more than 10 new original on-sale general licenses for bona fide public eating places in the County of Nevada, as specified.

SB 1452 (Dahle, Chapter 889, Statutes of 2022) authorized, beginning on January 1, 2022, the Department of ABC to issue up to 10 new original on-sale general licenses for bona fide public eating places in both the County of El Dorado and in the County of Shasta, as specified.

AB 2459 (Bigelow, Chapter 53, Statutes of 2020) authorizes the Department of ABC to issue up to 10 additional new original on-sale general licenses in Mariposa County and up to 10 additional new original on-sale general licenses per year in Napa County for a period of five years.

SB 866 (Dodd, 2020) would have authorized the Department of ABC to issue up to 10 additional new original on-sale general licenses per year to bona fide public eating places in Napa County for a period of five years. (Never heard in Senate Governmental Organization Committee)

SB 352 (Dodd, 2019) would have authorized the Department of ABC in counties that have reached its limit of on-sale general licenses, to issue up to 10 additional new original on-sale general licenses for bona fide eating places following the year the limit is reached. (Held in the Assembly Appropriations Suspense File)

AB 471 (Ting, Chapter 442, Statutes of 2017) authorized the Department of ABC to issue no more than five new original neighborhood-restricted special on-sale general licenses per year, until a total of 30 licenses are issues, to premises located in any of the census tracts, as specified, within the City and County of San Francisco. Additionally, authorized the Department of ABC to issue a maximum of 20 new original on-sale general licenses, over a four-year period, in the County of Napa, as specified.

SB 1285 (Leno, Chapter 790, Statutes of 2016) authorized, beginning January 1, 2017, the Department of ABC to issue no more than a total of five new original “neighborhood-restricted” special on-sale general licenses, for premises located within specified City and County of San Francisco neighborhoods, subject to certain requirements and restrictions.

AB 1670 (Dodd, Chapter 347, Statutes of 2016) authorized the Department of ABC to issue a maximum of five new original on-sale general licenses, over a one-year period, for bona fide public eating-places in the County of Napa, as specified.

AB 1558 (Mathis, Chapter 256, Statutes of 2016) authorized the Department of ABC to issue, over a two-year period, five additional new on-sale general licenses for restaurants, with a seating capacity of 50 or more, in Inyo County.

AB 461 (Achadjian, Chapter 110, Statutes of 2013) authorized the Department of ABC to issue no more than a total of five new original on-sale general licenses, over a three-year period, for bona fide public eating-places in the County of San Luis Obispo.

AB 1320 (Allen, Chapter 467, Statutes of 2012) authorized the Department of ABC to issue a maximum of 15 new original on-sale general licenses, over a three-year period, for bona fide public eating-places in the County of Marin.

AB 2266 (Evans, Chapter 130, Statutes of 2008) authorizes the Department of ABC to issue a maximum of 15 new original on-sale general licenses, over a three-year period, for bona fide public eating places in the County of Napa.

SB 762 (Cox, Chapter 193, Statutes of 2007) authorized the Department of ABC to issue 10 new original on-sale general licenses for bona fide public eating-places in the County of Mono.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

California Craft Distillers Association

Paso Robles Distillery Trail

Travel Paso

Westfield Galleria

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to Westfield Galleria in Roseville, “the current dearth of available licenses is dire. Many new or growing businesses are deterred from moving forward with their venture or expanding their operations for a couple of reasons: first, the application process often takes months before there is even the possibility of securing a license. Second, a license from the state is usually unavailable due to population restrictions, and the few available on the market are cost prohibitive. A secondary license easily costs over $250,000 or more. This is a major impediment for businesses that are starting out. SB 1028 would help support businesses and ensure restaurants thrive.”