Transferring a liquor licence on a business sale in Manitoba

The Liquor, Gaming and Cannabis Authority of Manitoba (LGCA) states plainly on its general liquor service licence page that liquor licences cannot be transferred. It adds that anyone wanting a new licence, buying a business that previously held a licence, or adding another licence must apply for a new liquor licence. For a buyer, the consequence is that the licence is not a closing deliverable the seller can hand over. It is a separate approval the buyer earns through its own application, and the sale of the business and the grant of the licence are two events that may not land on the same day. This guide covers the regulator’s position, what the Act says about transfers, and what a buyer should ask before building a closing schedule around alcohol sales. For how licences generally fare in a sale, see what licences transfer when I buy a business.

The regulator’s position and the Act

The Liquor, Gaming and Cannabis Control Act speaks to transfers in section 110. Subsection (1) says a transfer or assignment of a licence is not valid without the written consent of the executive director. Subsection (2) says a licence ceases to be valid if there is a prescribed change in control of the holder, unless the executive director approves the proposed change in accordance with the regulations. The statute therefore contemplates consent in some circumstances, while the LGCA’s published guidance tells buyers to apply afresh. Do not assume the consent route is available on your facts; ask the LGCA, in writing, which route it will use for your deal and whether a change in the holder’s control is caught by the regulations.

What the buyer applies for

The LGCA’s page says an applicant should be the owner of the business and have a valid interest in the property where the establishment will be located, meaning it owns the property or holds a lease on it. The page says application fees are non-refundable, that the process has multiple stages, that each stage must be complete before the next, and that incomplete applications are returned. A complete application may be emailed to the LGCA. The practical lesson for a buyer is to hold the lease, or at least a signed lease assignment or new lease, before the application is made, since the page ties applying to having that property interest.

Background investigation and public notice

The LGCA conducts background investigations on all applications. It states that failing to disclose complete and relevant information results in a more detailed investigation, longer processing time and possible denial, and that investigations involving criminal charges, bankruptcies or civil proceedings do not automatically result in denial. Section 105 of the Act adds that once the executive director is satisfied with the results of a background investigation of an applicant for a liquor service licence or a retail beer vendor licence, the applicant is directed to give public notice by posting a notice on the premises and publishing a notice in a newspaper in the area, and in any other manner the executive director considers appropriate. An applicant is not required to give notice if it seeks a liquor service licence for premises for which the executive director issued the same category of liquor service licence in the year before the application (section 105(2)). Ask the LGCA whether that exception fits a buyer taking over an operating bar.

Timing, objections and the gap

The LGCA lists the factors that can affect processing time, including the time needed to obtain necessary municipal, provincial or federal approvals, further investigation of the information provided, public objections to the application, and proposals that are unique or new to the Manitoba market. Because timing can turn on those factors, ask whether the buyer can apply before closing, what happens to the seller’s licence on closing, and whether the buyer will be allowed to serve alcohol on day one. The LGCA page says that while an applicant goes through the licensing process, the establishment can be open but no liquor can be kept on the premises, sold or served until the applicant is licensed. Under section 105(5) of The Liquor, Gaming and Cannabis Control Act, a person may object to the issue of a liquor service licence or a retail beer vendor licence by filing a written objection with the authority within 14 days after public notice is given. If the answer is no, the purchase agreement should say who bears the cost of the gap, whether closing can be deferred, and whether the price is adjusted if alcohol sales cannot start on the closing date.

Other permits that follow the ownership change

A licensed restaurant has other approvals to carry over. Manitoba Health says that to prepare or sell food to the public you must register your food handling establishment and obtain a permit from your public health inspector before operating, and that when ownership of an existing business changes you submit the permit registration form, the menu and a detailed floor plan to the area inspector. That is separate from the liquor licence, so run the two applications in parallel. As a matter of federal registration, the CRA says that a new owner of a sold sole proprietorship cannot continue using the old business number.

• Ask the LGCA in writing whether it will treat the deal as a new application or as a consent under section 110, and obtain the answer on file.
• Hold the lease, or a signed assignment, before applying, because the LGCA ties the application to a valid interest in the property.
• Disclose bankruptcies, charges and civil proceedings fully, since non-disclosure lengthens the investigation.
• Work out the public notice requirement under section 105 of The Liquor, Gaming and Cannabis Control Act, and whether its exception for premises that held the same category of licence in the year before the application applies.
• Allocate the closing gap between buyer and seller in the purchase agreement.