PDFWAC 314-07-035
What persons or entities have to qualify for a liquor license?
Per RCW 66.24.010(1), a liquor license must be issued in the name(s) of the true party(ies) of interest.
(1) True parties of interest - For purposes of this title, "true party of interest" means:
True party of interest | Persons to be qualified | |
Sole proprietorship | Sole proprietor and spouse. | |
General partnership | All partners and spouses. | |
Limited partnership, limited liability partnership, or limited liability limited partnership | • | All general partners and spouses; |
• | All limited partners that have more than 10 percent interest in the partnership and their spouses. | |
Limited liability company | • | All members (or persons with equivalent title) with more than 10 percent interest in the LLC and spouses. (Note: In order for the liquor and cannabis board to identify the persons to be qualified, we will need to know all parties that have an interest in the limited liability company or have a pending interest.) |
• | All managers (or persons with equivalent title) and their spouses. | |
Privately held corporation | • | All corporate officers (or persons with equivalent title) and their spouses. |
• | All stockholders (or persons with equivalent title) and their spouses who hold more than 10 percent of the issued or outstanding stock. (Note: In order for the liquor and cannabis board to identify the persons to be qualified, we will need to know all parties who have been issued or will be issued corporate stock.) | |
Publicly held corporation | All corporate officers (or persons with equivalent title). | |
Multi-level ownership structures | The liquor and cannabis board will review each entity to determine which individuals are to qualify according to the guidelines in this rule. | |
Any entity | Any person who is in receipt of, or has the right to receive, more than 10 percent of the gross or net sales from the licensed business during any full or partial calendar or fiscal year. For the purposes of this chapter: | |
• | "Gross sales" includes the entire gross receipts from all sales and services made in, upon, or from the licensed business. | |
• | "Net sales" means gross sales minus cost of goods sold. | |
(2) For purposes of this section, "true party of interest" does not mean:
(a) A person or entity receiving reasonable payment for rent (as determined by the board) on a fixed or percentage basis under a bona fide lease or rental obligation, unless the lessor or property manager exercises control over or participates in the management of the business.
(b) A person who receives a bonus as an employee, if: The employee is on a fixed wage or salary and the bonus is not more than 25 percent of the employee's prebonus annual compensation; or the bonus is based on a written incentive/bonus program that is not out of the ordinary for the services rendered.
(c) A person or entity contracting with the applicant(s) to sell the property, unless the contract holder exercises control over or participates in the management of the licensed business.
(d) A person or entity receiving payment of franchise fees on a fixed or percentage basis under a bona fide franchise agreement, unless the person or entity receiving payment of franchise fees exercises control over or participates in the management of the licensed business.
(e) A 401K, IRA, or nonfamilial trust.
(3) Financiers - The board may conduct a financial investigation of financiers.
(4) Persons who exercise control of business - The board may conduct an investigation of any person or entity who exercises any control over the applicant's business operations.
In cases where there is an entity who is in control of the day-to-day business operation (other than the owner) because of an agreement between the owner and the operator, the operating party becomes a true party of interest. The operator must meet all the qualifications of any other true party of interest and if approved, must be the licensee. The owner may be required to be named on the license as a party of interest based on the terms of the agreement, but will not normally be required to meet all the qualifications of a true party of interest.
(5) The board reserves the right to investigate any person or entity in a liquor license application or current liquor license where hidden ownership or misrepresentation of fact is suspected.
(6) For purposes of this section, a person or entity who takes more than 10 percent of the profits and/or exercises control over the licensed business in a given agreement may be named on the license as a party of interest per this rule. Examples of this are lease, operating plan, concession or management agreement.
[Statutory Authority: RCW 66.08.030 and 2015 c 70. WSR 24-16-064, § 314-07-035, filed 7/31/24, effective 8/31/24. Statutory Authority: RCW 66.08.030. WSR 17-12-030, § 314-07-035, filed 5/31/17, effective 7/1/17. Statutory Authority: RCW 66.08.030 and 66.24.010. WSR 15-11-106, § 314-07-035, filed 5/20/15, effective 6/20/15; WSR 10-10-126, § 314-07-035, filed 5/5/10, effective 6/5/10. Statutory Authority: RCW 66.08.030, 66.24.010, 66.24.015, and 66.24.025. WSR 05-07-012, § 314-07-035, filed 3/4/05, effective 4/4/05.]