Mailing Date: December 10, 2009
Mr. William R. Kolovani
Nikos Steaks & Martinis, Inc.
RE: Establishing a Tobacco Shop on Licensed Premises
Dear Mr. Kolovani:
ISSUE: Your e-mail of November 6, 2009, forwarded to this office an e-mail that you received from the Pennsylvania Department of Health (“DOH”). This e-mail was sent to you concerning the application to the DOH by Nikos Steaks & Martinis, Inc. for an exemption from the statewide smoking ban under the Clean Indoor Air Act (“CIAA”). The e-mail from the DOH indicates that it had refused the application for an exemption from the smoking ban because the amount of food sales at the licensed premises exceeded the threshold of the CIAA. The e-mail from the DOH does indicate that a “tobacco shop” exemption could be possible if the Pennsylvania Liquor Control Board (“Board”) would permit a “business within a business.”
Board records reflect that Nikos Steaks & Martinis, Inc. (“Licensee”), is the holder of Restaurant Liquor License No. R-12223 (LID 56298) for premises located in the Lebanon Farmers’ Market at 33 South 8th Street, Lebanon, Pennsylvania 17042. You have asked whether Licensee may establish a “tobacco shop” within its licensed premises to qualify for a “tobacco shop” exemption under the CIAA.
At your request, this office contacted the DOH and spoke with Mr. Jay Mast, the officer responsible for reviewing Licensee’s application for exemption under the CIAA. In conversation with Mr. Mast, this office was advised that Licensee could not qualify for a CIAA exemption because its volume of food sales was too great. It was questioned by Mr. Mast whether a “tobacco shop” could be established within licensee’s premises. Mr. Mast indicated that, if this was permissible to the Board, you may qualify for a different exemption under the CIAA that would allow smoking within the area identified as the “Silver Star Cigar Lounge” at your licensed premises.
This office also was contacted by the office of Senator Mike Folmer in respect to your application. In discussing this matter with Senator Folmer’s office and with you, it appears that your intent is for the Silver Star Cigar Lounge to remain part of the licensed premises so that Licensee’s patrons may consume alcoholic beverages in that area. You have indicated that the sale of alcoholic beverages is not planned to occur within the Silver Star Cigar Lounge.
The Board’s records indicate that the currently licensed premises includes three (3) licensed serving areas, one of which is twenty feet by seventeen feet (20’x 17’) in size. Based on renovation plans Licensee filed with the Board’s Bureau of Licensing (“Licensing”) on April 7, 2006, it is believed that this serving area is the one that is now identified as the Silver Star Cigar Lounge.
OPINION: The Board’s Regulations do not permit a licensee to conduct another business on the licensed premises unless this is approved in advance by the Board. [40 Pa. Code § 3.52(b), (c)].
A licensee may submit a request to the Board for permission to conduct a tobacco shop business on the licensed premises. If the Board approves this request, such approval may permit the DOH to issue a “tobacco shop” exemption from the statewide smoking ban for the “Silver Star Cigar Lounge.”
It is recommended that you send a letter to Ms. Jane Melchior, Director, Bureau of Licensing, Pennsylvania Liquor Control Board, P.O. Box 8940, Harrisburg, PA 17105-8940, requesting the Board’s permission to conduct a tobacco shop business in the previously-identified serving area. Your letter should explain that the tobacco shop business will have a separate cash register and that there will be no sales of alcoholic beverages within the tobacco shop. Your letter should also explain that you intend to allow alcoholic beverages purchased elsewhere within the licensed premises to be consumed in the tobacco shop.
The DOH has advised you in its earlier e-mail that you would have to receive a sales and use tax ID number from the Pennsylvania Department of Revenue (“Revenue”) and meet the reporting requirements of Revenue. You should also contact Revenue to determine if there are any other requirements with which you will have to comply.
While DOH has advised that the CIAA “tobacco shop” exemption only requires fifty percent (50%) of the gross annual sales to be comprised of cigars, pipe tobacco, tobacco and tobacco-related products and smoking accessories, please note that the Board must approve in advance the sale of any other products within the cigar lounge area. For example, if the cigar lounge were to sell books about cigars, this apparently would not present a problem for the CIAA “tobacco shop” exemption. However, from the Board’s standpoint, the sale of books would require the Board’s approval before books could be sold within the cigar lounge area. Therefore, your request to the Board for permission to conduct another business on the licensed premises should specify all the other items that are planned to be sold in the Silver Star Cigar Lounge.
THIS OPINION APPLIES ONLY TO THE FACTUAL SITUATION DESCRIBED HEREIN AND DOES NOT INSULATE THE LICENSEE OR OTHERS FROM CONSEQUENCES OF CONDUCT OCCURRING PRIOR TO ITS ISSUANCE. THE PROPRIETY OF THE PROPOSED CONDUCT HAS BEEN ADDRESSED ONLY UNDER THE LIQUOR CODE AND REGULATIONS. THE LAWS AND POLICIES ON WHICH THIS OPINION IS BASED ARE SUBJECT TO CHANGE BY THE LEGISLATURE OR THE PENNSYLVANIA LIQUOR CONTROL BOARD.
Very truly yours,
FAITH S. DIEHL
cc: Pennsylvania State Police
Bureau of Liquor Control Enforcement
Jerry W. Waters, Sr., Director, Office of Regulatory Affairs
Jane Melchior, Director, Bureau of Licensing
Tisha Albert, Assistant Director, Bureau of Licensing
LCB Advisory Opinion No. 09-466