How do I buy a liquor store in British Columbia?

If you want to know how to buy a liquor store in BC, start with the part that is not up to you or the seller: the liquor licence. In British Columbia the licence is a regulated permission, and the general manager under the Liquor Control and Licensing Act decides whether it moves to a new owner. Everything else in the purchase, from the lease to the stock to the price, sits on top of that decision. A buyer who treats the licence as one more asset handed over at closing has misread how the province runs it.

The licence moves only when the general manager transfers it

Section 21 of the Liquor Control and Licensing Act says the general manager may, on application by a person, transfer a licence. The same section says a licensee must not purport to transfer or otherwise deal in a licence before the general manager transfers it. In practical terms, a seller cannot sign something that hands you the licence on closing day and treat that as the transfer. The transfer is an act of the regulator. The Liquor and Cannabis Regulation Branch, which the BC government says oversees provincial liquor and cannabis regulation, is where applications and changes to a licence are handled.

What the general manager can refuse on

The Act sets out several grounds, and a buyer should read them as a list of things to prepare for. The general manager must not issue, renew, transfer or amend a licence if, in the general manager’s opinion, doing so would be contrary to the public interest. The general manager may also determine whether an applicant, or an affiliate of the applicant, is fit and proper, and must not transfer the licence if of the opinion that the person is not. Section 19 also lists other cases in which the general manager must not transfer a licence, including, for licences outside a prescribed class, that the applicant does not own the business the licence relates to, and, subject to regulations exempting some licence classes, that the applicant neither owns the premises nor has an arrangement that the general manager determines gives enough control of them to comply with the Act and is of a satisfactory duration. Separately, the general manager may refuse a transfer if the applicant fails to disclose a material fact required by the application or makes a false or misleading statement in it. If a transfer is refused, the Act requires written reasons to be given to the applicant.

Running the store while the application is pending

A gap between signing and approval is a practical problem, because the store trades under its licence. Section 22 of the Act deals with use of a licence by a proposed transferee. It says that if a licence is the subject of a transfer application and the general manager has not completed the determinations under section 19, the proposed transferee may use the licence pending those determinations, despite sections 18(1) and 21(2). The section also deems the proposed transferee to be the licensee meanwhile, and says that on a refusal the general manager may suspend the licence, authorize its transfer to a person at arm’s length from the proposed transferee, or cancel it. Do not assume the section works in your favour. Have a lawyer read it against your facts before you take over the till.

Tax and lien checks that follow a BC purchase

The province’s PST guidance for buying a business says a purchaser should ensure they have a clearance certificate issued by the ministry before buying a business, and that a purchaser without one is liable for an amount equal to any outstanding amount owed by the collector. Ask the seller to apply for it early: the guidance says the collector can apply for copies and give one to the purchaser, and that the purchaser may request a copy directly with the collector’s consent. The Personal Property Registry records security interests and liens against a business’s personal property, so search it before you buy and confirm that anything registered against the stock, fixtures or equipment will be discharged at closing.

Where this differs from a restaurant purchase

For a restaurant, the licence question sits alongside the property and the kitchen. For a liquor store, the licence is what lets the store trade at all. The restaurant licence answer covers the property-side question. Here, the practical difference is that you cannot sensibly close and then sort the licence out. Ask the seller early which licence the store holds, ask the Branch what the application for your situation requires, and keep the timeline for the general manager’s decision in front of your lender and your landlord, and ask each what they need from you while the transfer is pending.

Written reasons and what you can do with them

The Act’s requirement that the general manager give written reasons on a refusal matters for planning. If a transfer is refused, the reasons tell you and your lawyer what the decision turned on, whether that is the public interest, the fit and proper determination or the application itself. Build the agreement so that both sides know what happens next: whether the deal ends, whether the closing date moves, and who bears the cost of the work done so far.

What to build into the purchase agreement

• Make the general manager’s transfer of the licence a condition of closing, with a clear outside date and a plan for what happens if the transfer is refused.
• Prepare the disclosure the application requires well before you sign, since an omitted material fact is a stated ground for refusal.
• Confirm who the application must list, including any affiliates, because the fit and proper determination can reach them.
• Obtain the PST clearance certificate and a registry search result before funds are released.
• Ask the seller to confirm that no one has purported to deal in the licence, for example through a side security arrangement.