Liquor License Wars

When I tell people about my blog, they usually ask me how wine and law are related. "How connected are they really?" "Aren't you limiting yourself?" "Will you have enough to write about?" One answer is that in a densely populated city like New York, alcohol laws are at work right under our noses—or, more likely, right under our apartments. Every New York establishment that sells alcoholic beverages, whether for consumption on the premises or elsewhere, must obtain a liquor license from the New York State Liquor Authority (NYSLA) pursuant to the Alcoholic Beverage Control Law ("ABC Law").

NYSLA was established in 1934, shortly after the 21st Amendment repealed Prohibition. Charged with issuing licenses for the production, distribution, and sale of alcoholic beverages, the agency has offices in Albany, Buffalo, and New York City. NYSLA’s Harlem office serves New York City as well as Nassau, Suffolk, and Westchester Counties. Final NYSLA decisions are made by a board of three commissioners, one of whom is the Chairperson. The Chairperson is also the agency’s administrative head.

Yesterday I attended a full board meeting at NYSLA’s Harlem office. The meeting included a disciplinary proceeding against the perennially popular Hudson Clearwater, a highly rated West Village restaurant with a clandestine feel. The long, contentious hearing resulted in a fine of $20,000 for the restaurant and a ten-day suspension of the use of the property’s famous side door and beloved back garden. Several neighborhood residents, the Chair of the Community Board 2 liquor licensing committee, and a member of the Bleecker Area Merchants' and Residents' Association (BAMRA) appeared to voice their ongoing opposition to the restaurant’s current “method of operation.”

As part of the licensing process, the restaurant operators and the community board agreed to a very specific method of operation (opening hours, use of outdoor space, etc.), which was incorporated into the initial license. That agreement did not contemplate use of the side door as a means of ingress or egress, and pursuant to the agreement, use of the garden was to cease altogether at 10:00 p.m. The operators quickly realized, however, that having patrons enter and leave through the side door gave the place an underground cachet. They left the storefront, which was under renovation, boarded up and began using the side door as the primary means of entry and exit. Patrons would knock the unmarked side door and be admitted directly to the garden. It’s not hard to see why the restaurant, which opened in late 2010, became known as a speakeasy.

After nineteen hearings and a lot of press, the roaring 2010s may soon be over for Hudson Clearwater and its devotees. Residential neighbors whose bedrooms face the establishment's garden have persistently and vociferously complained about the noise emanating from the establishment and about lost patrons mistakenly knocking on their doors. Their frustration was palpable during the hearing.

The Chairman of the Board described the $20,000 fine and suspension as a "warning shot." He admonished the operators that next time, the Board will consider revocation of Hudson Clearwater's liquor license. For now, at least, the operators will have to abide by the terms of their current license.

The takeaways from this long-running feud are:

  • Law and alcohol (not just wine) intersect in a very concrete way every day.
  • Starting a business that will sell alcoholic beverages requires a special kind of foresight. An initial feasibility study should take into account potential barriers or threats to obtaining or maintaining a liquor license.
  • An agreement with a community board is legally binding—even if ignoring the agreement becomes financially advantageous. Any change to the agreement must be effected through the Method of Operation Change application process.
  • No business is completely insulated from risk.