Policy

In Detroit, You Can Buy a Liquor License on Craigslist for $20,000


Here’s something to add to the long list of stuff you can find on Craigslist, alongside apartments, old furniture, and drummers: the privilege to sell booze in the Motor City.

The New York Times reports today on the freewheeling entrepreneurial culture in Detroit, a city whose financial troubles have lowered the costs of starting a business. As examples, the Times cites a mechanic who opened a car repair shop out of an airplane hangar, entrepreneurs benefiting from cheap real estate—and a restaurateur who bought his liquor license on Craigslist for $18,000.

Back that Ford truck up—can you really buy a liquor license on Craigslist?

In Detroit, it turns out you can. By my count, there have been three postings in April offering liquor licenses in Wayne County, where Detroit is located, with prices ranging from $20,000 to $25,000. Other postings advertised liquor licenses for sale in suburban counties, albeit at slightly higher prices. (Bars and restaurants are also for sale on the website, as well as at least three Detroit-area golf courses.)

Steven Dornbos, a Traverse City (Mich.) license broker who answered at the phone number listed on one of the Craigslist posts, says the city’s troubled economy and ebbing population has created a flush secondary market. He says he knows of 192 pre-owned licenses available to Wayne County’s would-be bar and restaurant owners, with prices usually coming in around $20,000.

Some licenses are more portable than others, says John Carlin, a partner at Carlin Edwards Brown, which dubs itself the “largest law firm in Michigan primarily practicing in liquor law.” The state has issued so-called resort licenses, which can be moved anywhere within state lines, and also issues reduced-cost licenses that can’t be transferred from the original site.

Most licenses can be transferred between locations inside the same county, according to Carlin. That’s created a large supply—and low prices—in Detroit, whose decline has seen the city lose more than 1 million inhabitants since 1950.

The largest municipal bankruptcy in U.S. history has only lowered barriers to entry so far. You can’t find a liquor license on Craigslist today and open your watering hole tomorrow. “For someone who knows what they’re doing, it can take three or four months” to complete the government paperwork to transfer a license, Carlin says.

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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