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Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

Arizona State Senate

Issue Brief

August 3, 2018

ARIZONA LIQUOR LICENSES

INTRODUCTION

The regulation of liquor in Arizona precedes statehood. The 1864

Howell Code assessed liquor taxes on vendors of wines and distilled

spirits and represented Arizona’s first liquor regulations. However,

congressional passage of the Volstead Act of 1919 enacted a national

Prohibition and eliminated the need for liquor regulation. With the

repeal of the Volstead Act and the end of Prohibition in 1933, the 21st

Amendment to the U.S. Constitution gave individual states the right

to choose their own system for regulating alcoholic beverages.

Arizona placed the responsibility for liquor regulation with the

Temperance Enforcement Commission under the State Tax

Commission until 1939, when the Arizona Legislature established the

Department of Liquor Licenses and Control (DLLC).

The courts and the Legislature have stated that the objective and

purpose for establishing the DLLC center on protecting the public

health, safety and welfare. The Legislature, in Laws 1984, Chapter

322, defined the purpose of the DLLC: “… to regulate the liquor

industry through the license control process, collect fees and taxes for

the maintenance of government and enforce statutes in order to

maintain the health and welfare of the community.” As such, the

DLLC licenses, investigates and regulates the production, distribution

and sale of alcoholic beverages throughout the state. Separate from

the DLLC is the Arizona State Liquor Board (Liquor Board), whose

members are appointed by the Governor, subject to Senate

confirmation. The Liquor Board hears appeals on some of the

Director of the DLLC’s (Director) disciplinary decisions; and when

cities, towns or counties disapprove or make no recommendation on a

new liquor license, the Director is required to refer the final decision

to the Liquor Board.

LIQUOR LICENSES

In order to regulate the production, distribution and sale of

alcoholic beverages, the DLLC issues 19 license types, commonly

referred to by a series number. For example, a microbrewery license

is known as a Series 03 license. An application is required for any of

the 19 licenses along with payment of the required fee and

Note to Reader:

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legislative research, policy

analysis and related assistance

to the members of the Arizona

State Senate. The Research

Briefs series is intended to

introduce a reader to various

legislatively related issues and

provide useful resources to

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more on a given topic. Because

of frequent legislative and

executive activity, topics may

undergo frequent changes.

Nothing in the Brief should be

used to draw conclusions on

the legality of an issue.

Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

Arizona Liquor Licenses

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surcharges, when applicable. Each license expires

annually, except that a license may be renewed

for a two-year period if no compliance penalties

have been issued to the licensed location during

the year before renewal (A.R.S. §§ 4-201 and 4-

209). A license is issued only after satisfactory

showing of the capability, qualifications and

reliability of the applicant and, with the exception

of wholesaler, producer, government or club

licensees, that the public convenience requires

and that the best interest of the community will

be substantially served by the issuance of the

license. A separate license is required for each

specific type of business (A.R.S. § 4-203).

Additionally, all on-sale licenses must be

displayed in a conspicuous public area of the

premises that is readily accessible for inspection

by any peace officer, distributor, wholesaler or

member of the public (A.R.S. § 4-261.01).

In-State Producer – Series 01

An in-state producer license is available for

the manufacturing or production of spirituous

liquor in Arizona (A.R.S. § 4-209). A person who

holds a Series 01 license may sell beer produced

by the producer if the producer also holds an on-

sale retail license and the retail sale of the beer is

on or adjacent to the premises of the producer.

Additionally, a producer may sell wine produced

by the producer at the producer’s licensed

premises (A.R.S. § 4-243.02).

Out-of-State Producer – Series 02

An out-of-state producer license allows an

out-of-state producer, exporter, importer or

rectifier to ship spirituous liquor into Arizona to a

licensed wholesaler (A.R.S. § 4-209). The out-of-

state producer is required to comply with the

alcoholic beverage statutes as if it were an in-

state licensee (A.R.S. § 4-250.01). An out-of-

state producer is prohibited from selling its

products to an Arizona wholesaler at a cost

higher than the lowest price at which the item

was sold by the producer or supplier, or any other

person, to any wholesaler anywhere in any other

state or to any other state (A.R.S. § 4-250).

Microbrewery – Series 03

A microbrewery licensee produces or

manufactures at least 5,000 gallons, but less than

6,200,000 gallons of beer annually and may sell

its beer produced or manufactured on the

premises for consumption on or off the premises.

A microbrewery may conduct retail operations,

including the sale of alcohol not manufactured by

the licensee, through an associated retail license.

The holder of a microbrewery license who

manufactures less than 1,240,000 gallons of beer

per year may apply for and hold up to a total of

seven bar, beer and wine bar, or restaurant

licenses. A Microbrewery under this limit is

permitted to make sales and deliveries of its beer

directly to retail licensees that are under common

ownership with the microbrewery in any amount

and may also sell and deliver up to 93,000 gallons

of its beer directly to other licensed retailers

annually.

A licensed microbrewery that produces more

than 1,240,000 gallons of beer in a single year

may not apply for or receive any retail licenses,

but is permitted to maintain any such licenses that

it had acquired previously. Additionally, such a

microbrewery may not make deliveries of beer it

has produced directly to any retail licensee except

for those that are on or adjacent to the production

premises. (A.R.S. § 4-205.08).

Wholesaler – Series 04

A wholesaler may warehouse and distribute

spirituous liquor for sale to licensed retailers

(A.R.S. § 4-209). A wholesaler must purchase the

spirituous liquor from the primary source of

supply (A.R.S. § 4-243.01).

Government – Series 05

A government license may be issued to any

county, city, town, state university, community

Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

Arizona Liquor Licenses

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college, state agency, state board, state

commission, National Guard or the Arizona

Exposition and State Fair Board upon

application. The license allows the holder to sell

and serve spirituous liquor solely for

consumption on the premises for which the

license is issued. A separate license is required

for each premises upon which spirituous liquors

are served (A.R.S. §§ 4-209 and 4-205.03).

Bar – Series 06

A bar license is a retailer’s license to sell all

spirituous liquors primarily by individual

portions to be consumed on the premises and in

the original container for consumption on or off

the premises (A.R.S. §§ 4-101 and 4-209). The

associated off-sale use, by total retail spirituous

liquor sales, may not exceed 30 percent of the

sales price of on-sale spirituous liquor.

Beer and Wine Bar – Series 07

A beer and wine bar license is a retailer’s

license to sell beer and wine primarily by

individual portions, to be consumed on the

premises and in the original containers for

consumption on or off the premises (A.R.S. §§ 4-

101 and 4-209). The associated off-sale use, by

total retail spirituous liquor sales, may not exceed

30 percent of the sales price of on-sale spirituous

liquor.

Conveyance – Series 08

A conveyance license allows: an operating

railroad company to sell all spirituous liquors in

individual portions or in the original containers

on its passenger trains; an operating airline

company to sell or serve spirituous liquors solely

in individual portions on its passenger planes; or

a boat operating in the waters of this state to sell

all spirituous liquors in individual portions or in

the original containers for consumption on the

boat. Boat operators must designate a dock as the

home port for the boat, have a capacity of 80 or

more persons and have a current coast guard

certification (A.R.S. §§ 4-205.07 and 4-209).

Liquor Store – Series 09

A liquor store license allows a licensee to sell

all spirituous liquors, only in the original

unbroken package, to be taken away from the

premises of the retailer and consumed off the

premises (A.R.S. §§ 4-101 and 4-209). An

applicant or licensee of a liquor store license may

also apply for sampling privileges.

Beer and Wine Store – Series 10

A beer and wine store license allows the

licensee to sell beer and wine (no other spirituous

liquor), only in the original unbroken package, to

be taken away from the premises of the retailer

and consumed off of the premises (A.R.S. §§ 4-

101 and 4-209). An applicant or licensee of a beer

and wine store license may also apply for

sampling privileges.

Hotel-Motel – Series 11

A hotel-motel license allows any Arizona

hotel or motel to sell and serve spirituous liquor

solely for consumption on the premises if the

hotel or motel has a restaurant where food is

served on the premises (A.R.S. §§ 4-205.01 and 4

-209).

Restaurant – Series 12

A restaurant license may be issued to any

restaurant in this state that is regularly open for

the serving of food to guests for compensation,

has suitable kitchen facilities connected with the

restaurant for keeping, cooking and preparing

foods required for ordinary meals, and derives at

least 40 percent of its gross revenue from the sale

of food. The restaurant licensee may sell and

serve spirituous liquor for consumption on the

licensed premises. The licensee may also sell beer

“growlers” (up to one gallon) provided sales do

Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

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not exceed 10 percent of total liquor sales (A.R.S.

§§ 4-205.02 and 4-209).

Farm Winery – Series 13

A farm winery licensee produces at least 200

gallons of wine but not more than 40,000 gallons

of wine annually. If the farm winery produces

between 200 and 20,000 gallons of wine

annually, the winery may sell and deliver its wine

directly to consumers and retailers. Farm

wineries may also sell wine for consumption on

or off the premises to a consumer who is

physically present at the winery. Additionally,

farm wineries may hold a beer and wine bar (07),

beer and wine store (10), restaurant (12) and craft

distillery (18) liquor license, under specified

circumstances (A.R.S. § 4-205.04). A

microbrewery license (03) may be issued to the

same parcel of land as a farm winery if certain

conditions are met.

Club – Series 14

A club licensee may sell all spirituous liquors

for consumption on the licensed premises to bona

fide members and guests of the club. Clubs

include veteran and fraternal organizations and

golf, social and airline clubs (A.R.S. §§ 4-101

and 4-205).

Special Event – Series 15

A special event license is a temporary license

that may be issued to a political party, a

campaign committee supporting a candidate for

public office or a ballot measure, an organization

formed for a specific charitable or civic purpose,

a fraternal organization in existence for over five

years with a regular membership or a religious

organization.

The issuance of the license is subject to the

approval of the local governing body where the

event is to be held, unless the license is for a

physical location that is fully within already

licensed premises (A.R.S. § 4-203.02).

According to DLLC rule, a special event license

may not be granted to a qualifying organization

for more than 30 days in a calendar year.

Wine Festival and Wine Fair, Craft Distillery

Festival and Craft Distillery Fair – Series 16

A wine or craft distillery festival license

allows a farm winery or craft distillery to provide

sampling of products on festival premises, to sell

its products for consumption on the premises and

to sell its products in the original containers for

consumption off of the premises. The issuance of

the festival license is subject to the approval of

the local governing body where the event is held.

Each farm winery may be issued up to 50 festival

licenses annually, for up to a total of 150 calendar

days per winery. Each craft distillery may be

issued licenses for up to 150 calendar days of

festival participation a year.

With permission of county or state fair

organizers, a wine or craft distillery fair license

allows a farm winery or craft distillery to provide

samples of products on the fair premises, sell its

products for consumption on the fair premises

and sell its products in original containers for

consumption off of the fair premises (A.R.S. §§ 4

-203.03 and 4-205.11).

Direct Shipment License – Series 17

A direct shipment license allows an out-of-

state distiller, vintner, brewer, rectifier, blender or

other producer of spirituous liquor to take orders

from retail customers by telephone, mail, catalog

or the Internet. The orders must be shipped into

the state to a licensed Arizona wholesaler. The

wholesaler must sell the product to a licensed

retailer. The retailer will deliver the spirituous

liquor to the customer. The direct shipment

license is valid for three years (A.R.S. § 4-

203.04)

Craft Distillery – Series 18

Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

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A craft distillery licensee produces or

manufactures no more than 20,000 gallons of

distilled spirits per calendar year. A licensee may

sell and deliver its product directly to retailers

and consumers. Craft distilleries may also sell

spirits for consumption on or off the premises to

a consumer who is physically present at the

distillery. Additionally, craft distillers may hold

one bar (06) or restaurant (12) license on or

adjacent to the licensed premises, under specified

circumstances (A.R.S. § 4-205.10)

Remote Tasting Room – Series 19

A remote tasting room license may only be

acquired as an attachment to a currently held

farm winery (13) or craft distillery (18) license,

including out of state farm winery and craft

distillery licenses (02). Farm wineries and craft

distillers may have two remote tasting room

licenses linked to their master license. Licensees

applying for a remote tasting room license must

first obtain approval by the local governing body

of the remote tasting and retail premises (A.R.S.

§§ 4-205.04 and 4-205.10).

On-Sale v. Off-Sale

Some liquor licensees are categorized as

having off-sale and on-sale privileges.

An off-sale retailer is any person selling

spirituous liquor in an established retail liquor

store or any established retail store selling other

commodities. The spirituous liquor must be sold

in the original unbroken package and be taken for

consumption off-premises.

An on-sale retailer is any person selling

spirituous liquor in the original container for

consumption on or off the premises or in

individual portions for consumption on the

premises (A.R.S. §4-101).

Transferable Licenses

The bar (06), beer and wine bar (07) and

liquor store (09) licenses are the only licenses

that are transferable. These licenses may be

transferred from one person to another, and from

one location to another within the same county,

provided such transfer meets the requirements on

the original application. Any change in ownership

of the business of a licensee, directly or

indirectly, as defined by rule is deemed a transfer

(A.R.S. §4-203). Sampling privileges associated

with a liquor store (09) license are not

transferable.

Quota Licenses

Bar (06), beer and wine bar (07) and liquor

store (09) licenses have traditionally been known

as quota licenses. This means that no “new”

Series 06, 07 or 09 licenses were available. The

license must be purchased privately and the price

is based on availability in the county where the

license is sought. Once a quota license has been

purchased, the buyer must apply for a transfer to

have the license put in his or her name, at the

same or another location.

License issuance is based on population of

each county. The DLLC must issue one of each

license series for each additional 10,000 persons

in a county each year. County populations are

based on Office of Economic Opportunity

estimates as of July 1 each year. From 2017 to

2022, the DLLC must issue a new beer and wine

bar license (Series 07) for each population

increase of 5,000 persons in a county. The

Director may waive the issuance of any series of

new licenses in a county for one year if no request

has been made to the DLLC for the issuance of a

new license of that series.

300-

Foot Rule

Retail liquor licenses are prohibited from

being issued if, at the time of the original

application, the retail premises is within 300

horizontal feet of a church, school or a fenced

recreational area adjacent to a school. This

prohibition does not apply to a restaurant license,

special event license, hotel-motel license,

Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

Arizona Liquor Licenses

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government license or the playing area of a golf

course. The 300-foot rule also does not apply to a

beer and wine license at a

not-for-profit

performing arts theater with a permanent seating

capacity of at least 250 persons (A.R.S. § 4-207).

If a liquor license is validly issued for a

premises and, on the date an application is filed

for a transfer for the premises, it is within 300

feet of a school, church or fenced recreational

area, the license may be transferred person to

person (A.R.S. § 4-207). A person may also be

issued a license of the same class for a premises

that has a nontransferable license if, on the date

of application for a license on the same premises,

it is within 300 feet of a church, school or fenced

recreational area (A.R.S. § 4-207). If a beer and

wine store license is validly issued for a premises

and, on the date an application is filed for a liquor

store license for the premises, it is within 300 feet

of a school, church or fenced recreational area,

the liquor store license may be issued (A.R.S. § 4

-207).

LIQUOR LICENSES CHART

The accompanying chart illustrates each of

the 19-different series of Arizona liquor licenses,

whether the license has on-sale or off-sale

privileges and whether the license is transferable.

Arizona Senate Research Staff, 1700 W. Washington Street, Phoenix, AZ 85007

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ADDITIONAL RESOURCES

• Arizona Department of Liquor Licenses and

Control (Phoenix Office)

800 W. Washington, 5

th

Floor

Phoenix, AZ 85007

www.azliquor.gov

• Arizona Department of Liquor Licenses and

Control Statutes: Arizona Revised Statutes,

Title 4

• “Arizona Department of Liquor Licenses

and Control,” Office of the Auditor General,

August 2009, Report No. 09-08

602-542-5141

Series Type Retail Sales Transferable

01

In-State

Producer

Requires

Retail

License

No

02

Out-of-State

Producer

N/A No

03 Microbrewery

On and Off-

Sale

No

04 Wholesaler N/A No

05 Government On-Sale No

06 Bar

On and Off

Sale

Yes

07

Beer and

Wine Bar

On and Off-

Sale

Yes

08 Conveyance On-Sale No

09 Liquor Store Off-Sale Yes

10

Beer and

Wine Store

Off-Sale No

11 Hotel-Motel On-Sale No

12 Restaurant On-Sale No

13 Farm Winery

On and Off-

Sale

No

14 Club On-Sale No

15 Special Event

On and Off-

Sale

No

16

Wine or Craft

Distillery

Festival/

Wine or Craft

Distillery Fair

On and Off-

Sale

No

17

Direct

Shipment

N/A No

18

Craft

Distillery

On and Off-

Sale

No

19

Remote

Tasting Room

On and Off-

Sale

No