How to buy a liquor store or licensed bar in Saskatchewan: licences, ownership rules and what transfers

Buying a liquor store or licensed bar in Saskatchewan means dealing with the Saskatchewan Liquor and Gaming Authority (SLGA), which issues commercial liquor permits under The Alcohol and Gaming Regulation Act, 1997 and The Alcohol Control Regulations, 2016. SLGA’s manual for commercial permittees says that as a general rule a permit cannot be transferred, and that a change of ownership of an existing establishment needs an application for a new permit. The route then splits: a tavern or restaurant is handled one way and a retail store another. This guide follows SLGA’s own documents. For the national picture, see buying a liquor and beer retailer in Canada.

Who regulates liquor permits in Saskatchewan

SLGA’s manual says the operation of an establishment is governed by The Alcohol and Gaming Regulation Act, 1997, and that the manual does not replace the Act or the regulations. Applications go through SLGA’s Liquor Licensing Services. SLGA’s commercial liquor permits page covers restaurant, tavern and special use permits, and the manual treats the retail store permit as its own permit type with its own chapter. Which permit the business holds decides which sale route applies, so start by asking the seller for the permit itself and any endorsements on it.

A permit is not simply handed over

The manual says an application for a new permit is required where there is a change of ownership for an existing establishment, a relocation of an existing establishment, or a requested change to the type of permit. In practice that means the buyer should never assume that signing a purchase agreement entitles them to pour or sell. The permit follows SLGA’s decision, not the contract. Ask Liquor Licensing Services what it needs for the specific structure of the deal before the agreement is signed.

Buying a tavern or restaurant

SLGA’s manual says a purchaser or tenant of an existing commercial liquor permitted establishment other than a retail store, such as a tavern or restaurant, must be granted a new permit before providing beverage alcohol sales or service in the establishment. It adds that the parties should provide sufficient time in the transaction for the purchaser or tenant to obtain that permit before taking over operations. A closing date set without that time can leave a buyer owning a bar it may not legally serve in. The manual also addresses when floor plans are needed, so ask SLGA whether the plan on file matches the current layout.

Buying a retail store permit

Retail stores are different. SLGA’s manual says an owner of a retail store can sell the interest in the retail store permit associated with the store to a new owner, and that the purchaser must apply for a new permit. The interest may be sold with or without any associated premises or businesses. Buying the interest does not automatically qualify the buyer: SLGA reserves the right to deny an application from a purchaser who does not qualify under the Act and the Regulations. It will issue the permit if the buyer applies, qualifies and establishes a retail store that meets SLGA’s facility standards. Those standards depend on the store type and community, so read the manual’s retail store chapter. The manual also says a buyer must be issued a permit and open and operate a permitted retail store for one day before selling the interest on. Its transfer section adds that a security holder referred to there is not required to operate the retail store before selling its interest in the permit.

Changes to shareholders, officers and directors

Buying shares instead of assets does not avoid SLGA. The manual says that if a permittee is a corporation or other organization, any proposed changes to its officers, directors, partners or shareholders must be reported immediately to Liquor Licensing Services, and that in most cases they will require an evaluation of an individual’s character under the Act. A permittee that skips this risks delays in renewal, because SLGA may refuse renewal until the evaluation is complete. SLGA shall not issue a permit to an applicant if there is evidence that SLGA considers credible and reliable that the applicant is not of good character, and it may look at ownership structure and people who can influence the applicant. The application package lists which shareholders, directors and officers must supply personal history forms.

The few transfers SLGA can authorize

The manual does allow SLGA to authorize a transfer of a permit in listed cases. They include a partner withdrawing from a partnership, certain restructurings of the same owners into a corporation, partnership or sole proprietorship, a trustee in bankruptcy or court-appointed receiver acquiring the business, and a mortgagee, franchisor or lessor taking lawful possession of the premises. An arm’s-length sale to a new owner is not on that list. The manual also says SLGA shall not grant a transfer if, among other things, the good character requirement has not been met or the permit was surrendered or is no longer in effect. Legal documentation is required, which for a change in ownership structure may include a sale of shares agreement.

Federal tax registration after a sale

Separately from SLGA, a federal rule applies. For a sole proprietorship that is sold, the Canada Revenue Agency says the new owner cannot continue using the old business number and will have to get a new one, with new program accounts. For a corporation, it says ownership changes must first be updated and validated with the federal or provincial incorporating authority before the CRA is contacted. Raise this with the seller’s and buyer’s accountants early, so tax accounts are not an afterthought at closing.

What to ask the seller for

• A copy of the current SLGA permit, its endorsements and any terms and conditions attached to it, to confirm what type of permit the business holds.
• For a retail store, written proof of who owns the interest in the retail store permit and whether the seller has met the one-day operation rule, plus the facility details SLGA will assess.
• For a corporate seller, the shareholder, officer and director records, so the buyer can tell which people SLGA may need to assess for good character.
• Any correspondence with SLGA about suspensions, new terms and conditions or penalties, because the manual says these can stop a transfer.
• The lease and any security held over the premises, to confirm the buyer will have enough control of the premises to meet permit requirements.