Legal Memorandum: Liquor Licensing Regulations in MN

Issue: According to state law in Minnesota, can the existence of an unsatisfied judgment result in the suspension/nonrenewal of an establishment’s liquor license?

Minn. Stat. ch. 340A and Minn. Admin. R. ch. 7515 regulate liquor licensing in the state of Minnesota.  Minn. Stat. § 340A.402(3) provides generally that a retail liquor license may not be issued to “a person not of good moral character and repute.”  Minn. Stat. § 340A.402(3) (2010).  The regulations similarly provide that the applicant must be of “good moral character and reputation.”  Minn. Admin. R. 7515.0410(B).  An applicant does not have good moral character and reputation if, based on past activities, the applicant “creates or enhances the dangers of unsuitable, unfair, or illegal practices, methods and activities in the . .  . carrying on of the business and financial arrangements incidental to the . . . sale. . . of alcohol.”  Id.  It may be a stretch, but it is possible that the requirement of good moral character and reputation is not met by an entity that fails to satisfy a civil judgment against it, given the possibility that such failure creates or enhances the dangers of unsuitable or unfair practices or methods in carrying on the business and financial arrangements incidental to the sale of alcohol.  Note that no suspension or revocation will take effect until the license holder has been given an opportunity for a hearing.  Minn. Stat. § 340A.402.    

The state regulations more specifically provide that retail*FN1 liquor dealers are “responsible for . . . any indebtedness incurred by the licensees or their delegated employees.”  Id. at R. 7515.0530.  Violation of this regulation—such as by failure to satisfy a civil judgment against […]