Posted by: Dec 02, 2019

This article is Part 3 of a three-part series addressing a common, thorny issue in Florida alcoholic beverage licensing: Who can have a financial or controlling interest in beverage company? Part 1 focuses on the Three Tier System and how it is enforced through the licensing process. Part 2 focuses on identifying the Related Parties of a beverage license applicant. Part 3 focuses on the qualities of a Related Party that can disqualify the applicant from getting a Florida alcoholic beverage license.

What are the Qualification Requirements?

To be granted an alcoholic beverage license in Florida, the license applicant and each of the Related Parties of the applicant must satisfy each of the following qualifications:

  1. Must be older than 21 years, if an individual;
  2. Must have no convictions in Florida or any other state, within the last 5 years, of certain vice crimes: soliciting for prostitution, pandering, letting premises for prostitution, keeping a disorderly place, or criminal violation of state or federal controlled substance laws;
  3. Must have no convictions in Florida or any other state within the last 15 years; and
  4. Must have no interest or connection to a business operating in Florida or in any other state in a different tier of the Three Tier System.

Before applying for a alcoholic beverage license in Florida, an applicant must be sure that the applicant and all of its Related Parties meet each of these qualifications. Particular attention is sometime required to determine whether a Related Party has an “interest or connection” to another beverage industry member that operates within a different tier of the Three Tier System.

When Does a Related Party have an “Interest or Connection” in a Beverage Industry Member?

Florida Statute Section 561.22 describes the ways in which an individual, corporation, or partnership might be “interested or connected” with respect to a beverage industry member. In addition, a 2012 regulatory opinion involving Burger King Corporation confirmed that LLCs are treated in the same way as corporations for this purpose, and also provided clarification about the application of the statute.

An individual is “interested or connected” with respect to a beverage industry member in each of the following situations:

  1. The individual directly owns more than 0.5% of the stock of a corporation or LLC that is engaged, directly or indirectly, in a licensed activity.
  2. The individual has a 0.5% interest in a blind or revocable trust that owns a corporation or LLC that is engaged, directly or indirectly, in a licensed activity.

A  corporation or LLC is “interested or connected” with respect to a beverage industry member in each of the following situations:

  1. The corporation or LLC is “affiliated” with another corporation or LLC that is engaged, directly or indirectly, in a licensed activity in Florida or any other state of the United States. For this purpose, “affiliated” means controlled by means other than direct stock ownership. For instance, if the Board of Directors of VendCo, Inc. includes John Smith, and John Smith is also an executive officer of ManuCo, Inc., then VendCo, Inc. and ManuCo, Inc. would be considered affiliates and they each are “interested or connected” with respect to the other company (this is essentially the situation that existed in the Burger King case).
  2.  The corporation or LLC is controlled by another corporation or LLC (the Parent Company) which owns or controls the majority stock or controlling interest in a third corporation or LLC (the Brother/Sister Company) that is engaged, directly or indirectly, in a licensed activity in Florida or any other state of the United States. For example, if the voting units of VendCo, LLC are owned by ParentCo, LLC, which also owns the voting units of ManuCo, LLC, then VendCo, LLC and ManuCo, LLC are “interested or connected” within respect to one another.
  3. The majority stock of such corporation or LLC is owned by another corporation (the Parent Company)–whether or not the Parent Company has control of the applicant–which owns or controls the majority stock or controlling interest in a third corporation or LLC (the Brother/Sister Company( that is engaged, directly or indirectly, in a licensed activity in Florida or any other state of the United States. For example, if a majority of all of the stock of VendCo, Inc. (considering both voting shares and non-voting shares) is owned by ParentCo, LLC, which also owns a majority of all of the voting and non-voting units of ManuCo, LLC, then VendCo, Inc. and ManuCo, LLC are “interested or connected” within respect to one another.

A partnership is considered to have an interest in or connection with respect to another beverage industry member if any partner of the partnership–whether an individual, corporation, or LLC–is “interested or connected” with respect to the beverage industry member.

Do you have questions about the qualification of applicants and their Related Parties for purposes of Florida alcoholic beverage licensing. Contact us at contact@brewerlong.com to schedule a 15-minute introductory call at no charge.

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