LIQUOR POLICY REVIEW
by Dennis P. Coates, Q.C.

New Liquor Primary (LP) licenses are being created to accommodate rules in some municipalities that require an LRS and an LP to be located together. Some locations are dealing with the minimum LP requirements in order to support the attached LRS. All should be reminded that the policy minimum is 20 seats and 28 hours of operation per week. The LCLB also wants the LP to be financially viable, although that is an uncertain test.

LRS Operating Agreements
Valuable LRSs are put at risk in relying on operations of the associated LP, especially when those operations are beyond the control of the LRS operator. Traditionally, pub operators have turned over use of their LRSs to a third party operator. Today, with the LRS being potentially more valuable than the LP, ownership structure must be considered. One option, to add protection to both the LP and the LRS operators from the potential frailty of third party use (TPU) arrangements, is to have those associated licenses held by a licensee company. That licensee company is then structured to reflect the interests of the LP and the LRS operators, with operating agreements in place for each such operator. Tax and other issues must also be examined and the advice of the parties’ accountants needs to be taken into consideration when structuring the licensee company. One of the relevant points to be addressed in the TPU agreement is the necessary landlord/licensee consents that may be required by the operator’s financial institution.

Due Diligence - Licensing and Enforcement Issues
In this day of potential host liability and increased enforcement by the LCLB, it would be beneficial, in my opinion, to have an outside audit done to either implement or improve licensee programs. Such auditors could be utilized as required to address a specific concern, or perhaps be consulted on a regular basis. The process would see the auditor come into a premise to assess staff training processes, such as your house policies, staff meetings and training materials. The auditor would also review local issues and potential enforcement matters such as dealing with minors, overcrowding, overservice, taxi policies, and after hours issues. 

New Smoking Regulations
Leading up to and once the new smoking regulations come into effect on March 31, 2008, the design of outdoor patios will become more relevant in insuring that the definition of a permitted smoking area is met, both with respect to LCLB as well as municipal criteria. Before constructing a new patio or renovating an existing one, it's worthwhile talking to your municipality.

Enforcement
The LCLB continues to be in crack-down mode regarding minors in LRSs. The new penalties as they relate to minors require that everybody be more diligent in assessing age. Simple tools, such as a scanning system for driver's licenses, are worthy of consideration.