Transferring a liquor licence on a business sale in Alberta

In Alberta, a liquor licence does not travel with the business. The Gaming, Liquor and Cannabis Regulation says that neither the holder of a liquor licence nor a person registered under that part may sell, assign or transfer the licence or registration, and that a licence or registration that is sold, assigned or transferred is cancelled. A buyer of a licensed Alberta restaurant, bar or liquor store therefore cannot count on taking over the seller’s licence. This guide sets out what the regulation says, what the Alberta Gaming, Liquor and Cannabis Commission (AGLC) asks of an applicant, and what to settle with the seller and the regulator before a closing date is fixed. Alberta runs its own regime, and the AGLC, not the parties, decides how a given deal is treated. For the general question, see can I transfer my liquor licence.

What the regulation says about the licence itself

Section 76 of the Gaming, Liquor and Cannabis Regulation (Alberta Regulation 143/1996) is short. Under subsection (1), neither the holder of a liquor licence nor a person registered under that part may sell, assign or transfer the licence or registration. Under subsection (2), if the holder does sell, assign or transfer it, the licence or registration is cancelled. The practical reading for a buyer is that the regulation does not allow the licence to be sold with the business. What the buyer is purchasing is a business that, on the day of closing, may have no licence attached to it.

What the buyer applies for

The AGLC states that businesses, organizations and individuals who want to sell or supply alcohol in Alberta must have a liquor licence. It sorts licences into classes. Its application page describes Class D as the licence for liquor consumed off-site, such as a retail liquor store, and describes other classes for premises such as recreation facilities and member clubs. For Class A to F applications, the AGLC requires criminal record checks from the RCMP or local police, obtained within the last 90 days, for all requested directors and shareholders of the applicant company and the proposed manager, and it does not accept online or third-party checks. Because those checks have a 90-day life, ask the AGLC which people it will request before ordering them.

Selling part of a licensed business, or its shares

Two further sections speak to a sale of part of the business under which the licensed activities are carried out. Section 76.1 says that where such a sale results in a change in control of the business, the board may cancel the licence or registration. Section 76.2 requires the licensee to report a proposed sale of a portion of a sole proprietorship, a partnership or a corporation that is not a distributing corporation to the Commission, and it must be approved by the board before the effective date. For a distributing corporation, a sale at or above the share threshold set in section 76.2(2) of the Gaming, Liquor and Cannabis Regulation must be reported within 10 business days after the effective date and approved by the board. The board may approve with or without conditions, or refuse, and a refusal after the effective date can leave the licensee treated as ineligible. If the deal sells shares of the company that holds the licence, ask the AGLC which section it applies and what it needs before the effective date.

The AGLC bulletin, and what it covers

The AGLC publishes a bulletin on reporting changes of ownership and key employees. It is addressed to gaming licensees and registrants and cites sections 30.1 and 30.2 of the regulation, which are the gaming counterparts of the liquor sections above. The bulletin says that a registration is automatically cancelled on a sale that changes control, that a proposed change must be reported and approved before the sale takes place, and that shareholders, directors, officers and key employees must undergo criminal and financial background checks. It defines a key employee as someone who exercises influence or control over day-to-day operations or decision-making. Read it for the AGLC’s approach, but note that the liquor section says the board “may” cancel on a change in control. Ask the AGLC which wording governs your licence.

Gaps, conditions and objections

The AGLC’s licensing page lists pending liquor licence applications and describes how an objection to a pending licence is submitted, so a new application is a public step and can draw objections. The Liquor Licensee Handbook, which the AGLC says governs all types of liquor licences it issues, covers terms and conditions and inspections. Ask the seller for the existing licence’s terms and conditions, and ask the AGLC whether the buyer should expect similar ones. Where a licensee is dispossessed of the business through bankruptcy or operation of law, section 77 of the Gaming, Liquor and Cannabis Regulation lets the board cancel the licence and issue a temporary licence valid for three months or until the cancelled licence would have expired, whichever is later.

• Ask the AGLC, in writing, whether the buyer’s application can be filed before closing and what the buyer must hold on the closing date to sell alcohol.
• Decide how the deal is built (assets or shares) and ask which of sections 76, 76.1 and 76.2 the AGLC will apply to that structure.
• Identify every director, shareholder and the proposed manager early, and time their police record checks against the AGLC’s 90-day limit.
• Make the buyer’s licence outcome, or a written AGLC position, a condition of closing so the purchase price does not rest on a licence that has been cancelled.
• Collect the seller’s licence terms and conditions and any inspection history before the buyer commits.