Indiana Liquor Laws: Permits, Hours, and Violations

Indiana liquor laws are administered by the state’s Alcohol and Tobacco Commission (ATC), which decides who can sell alcohol, what they can sell, when they can sell it, and what happens when the rules are broken. A population-based quota caps retail liquor permits in every city and town, so in much of the state a new bar or restaurant has to buy a permit from an existing holder rather than get one issued fresh. A new permit application typically runs 10 to 12 weeks from filing to approval, and most retail violations carry fines of up to $1,000 per incident, with suspension or revocation available for serious or repeated conduct.¹

Which Permit Fits the Business

Indiana splits alcohol permits into two broad camps. Retailer permits cover on-premises consumption at places like restaurants, bars, and hotels. Dealer permits cover carry-out sales at grocery stores, convenience stores, and package liquor stores.²

On the retailer side, a one-way permit covers beer only, a two-way covers beer and wine, and a three-way covers all three categories including liquor. The three-way is actually three permits stacked together, and the ATC will only issue the liquor retailer’s piece to an applicant who also holds the beer and wine retailer’s permits, though all three can be applied for at once.³ Specialized retailer permits exist for historic districts, lakefront locations, gaming sites, catering, and economic redevelopment areas, each with its own fee and conditions.²

Dealer permits include beer dealer permits for grocery stores, beer and wine dealer permits, and liquor and wine dealer permits for package stores. Applying under the wrong category is one of the most common causes of delay.²

Applying for a New Permit

Applications go to the ATC with supporting documents and fees. For retail and dealer permits, the local county alcoholic beverage board holds a hearing, takes evidence, votes, and sends a recommendation to the ATC. That recommendation is not the final decision. The full commission reviews it and can uphold or reverse it.⁴

Before issuance or renewal, the applicant needs a tax clearance from the Indiana Department of Revenue confirming that all returns are filed and any delinquencies are paid in guaranteed funds. Marion County applicants have to submit a separate tax clearance form to the Department of Revenue.⁵ After the ATC approves the application, Indiana State Excise Police inspect the premises against the submitted floor plan before the permit goes active. Plan on 10 to 12 weeks for a new permit and 8 to 10 for a renewal.¹

The Quota Problem: Why You May Have to Buy a License

Indiana caps the number of retailer permits by population. In each incorporated city, town, or unincorporated town, the ATC may issue one three-way, one two-way, and one one-way permit for every 1,500 residents. Liquor retailer permits held by clubs other than fraternal clubs count toward the cap.⁶

Dealer permits use their own tiered quotas:

Towns under 15,001 people: one beer dealer permit and one liquor dealer permit per 2,000 residents, with a minimum of two of each.
Towns of 15,000 to 80,000: one of each per 3,500 residents, minimum of eight of each.
Cities of 80,000 or more: one of each per 6,000 residents, minimum of 23 of each.

In many Indiana communities the quota is already full. When that is the case, the only route to a three-way is buying one from a current holder on the secondary market. The ATC can supply a listing of individuals and firms that help locate available permits. Price is unregulated and can climb into the tens of thousands of dollars in high-demand areas.⁷

To complete a transfer, request the transfer of ownership application from the ATC and submit it with a consent to transfer form signed by the current holder, four signed and dated copies of the floor plan, articles of incorporation where applicable, a signed lease or proof of ownership for the premises, and a property tax clearance from the county treasurer. Moving the permit to a different location requires a separate transfer of location application. No transfer clears until the seller has paid all outstanding sales and property taxes and resolved any pending violations, and if the permit expires within four months, the current owner must file a renewal application alongside the transfer.⁷

Who Cannot Hold a Permit

Under Indiana Code 7.1-3-4-2, the ATC will not issue a permit to anyone convicted within the past ten years of a federal crime carrying a sentence of at least one year, an Indiana Level 1 through Level 5 felony, or an equivalent felony in another state. Expunged convictions under Indiana’s expungement statute do not count.⁸

The old requirement that applicants for retail and dealer permits be continuous Indiana residents for at least five years was repealed effective July 1, 2021. Residency is no longer a barrier.

Permit Fees

Retailer permit fees vary widely by category. Initial fees for many three-way permits fall between $1,000 and $40,000, with annual renewals typically at $1,000. A three-way permit in a historic district carries a $2,500 initial fee and $1,000 renewal, a lakefront three-way runs $40,000 initial with the same $1,000 renewal, and Hamilton and Boone County three-way permits start at $5,000 with $1,000 renewals.⁹ These are the state fees only. The secondary-market price of a permit is separate and often much larger.

Employee Permits and Server Training

Anyone who serves or sells alcohol on licensed premises needs an employee permit from the ATC. It costs $45 and is valid for three years.⁹ Server training is mandatory for permit holders (or their designated managers) and all employee permit holders. New employees have 120 days from their start date to complete the training, and recertification is required every three years. The ATC offers a free online certified server training program and maintains a list of approved third-party trainers on its website.¹⁰

Some OWI history disqualifies applicants from an employee permit. The ATC will not issue one to someone currently on probation for an operating-while-intoxicated conviction. Applicants with two OWI convictions must wait two years after finishing the sentence for the second. Three or more OWI convictions in the past ten years make an applicant ineligible.¹¹ Unpaid child support can also cost an employee permit.

Server training does more than satisfy the requirement. When a violation occurs, the ATC weighs the permit holder’s compliance record in setting penalties, and documented training and ID-checking practices can produce more favorable treatment, particularly for something like an employee inadvertently serving an underage customer.¹⁰

Legal Hours to Sell

The general dispensing window in Indiana runs 7:00 a.m. to 3:00 a.m., seven days a week, for on-premises retailers.¹²

Carry-out is different on Sundays. Off-premises Sunday sales are limited to noon through 8:00 p.m. Monday through Saturday, carry-out follows the standard 7:00 a.m. to 3:00 a.m. window.

Where a Permitted Premises Cannot Be

Indiana bars the ATC from issuing a permit for premises whose wall sits within 200 feet of the wall of a school or church. The measurement runs building wall to building wall, not property line to property line.¹³

There is a church-specific exception. If the premises and the church are separated by at least 85 feet including a two-lane road at least 30 feet wide, the ATC may issue the permit. Establishments that have held permits continuously since 1933 are grandfathered regardless of proximity.¹³

Penalties for Violations

The ATC can hold hearings, subpoena witnesses, compel testimony, and take action against permit holders.¹⁴ Consequences range from fines to suspension to revocation.

Administrative code sets maximum fines by permit type. Most retail and dealer permits: up to $1,000 per violation. Wholesalers: up to $2,000. Brewers, distillers, and artisan distillers: up to $4,000.¹⁵

Selling to a minor uses an escalating civil penalty tied to the same location’s citations in the previous 180 days:

No prior citation in 180 days: up to $200.
One prior citation: up to $400.
Two priors: up to $700.
Three or more priors: up to $1,000.

These civil penalties apply on top of any administrative action the ATC takes against the permit itself.¹⁶

Suspension stops all alcohol sales for a set period. Revocation permanently ends the business’s ability to sell alcohol under that permit. Both follow a hearing where the permit holder can present evidence, and both are reserved for serious or repeated violations.

Appealing a Suspension or Revocation

A permit holder whose license is revoked or suspended for more than three days can seek judicial review. Retail permit holders appeal to the circuit or superior court in the county where the licensed premises sits. Manufacturers and wholesalers appeal to the circuit or superior court of Marion County. Written notice of appeal must be filed within ten days of receiving the ATC’s final action.¹⁷

The appellant posts a $1,000 bond with the commission, secured by an authorized surety company or by freehold sureties. The bond guarantees that the appeal will be pursued and that costs will be covered if the ATC’s decision is upheld. The commission then transmits the hearing record to the court within ten days.¹⁷

1
Indiana Alcohol and Tobacco Commission. Obtaining an Alcohol Permit
2
Indiana Alcohol and Tobacco Commission. License Types
3
Justia Law. Indiana Code 7.1-3-9 – Liquor Retailers Permits
4
Indiana Alcohol and Tobacco Commission. Local Board Handbook
5
Indiana Department of Revenue. Tax Clearance
6
Indiana General Assembly. Indiana Code Title 7.1 – 7.1-3-22-3
7
Indiana Alcohol and Tobacco Commission. Obtaining an Alcoholic Beverage Permit
8
Indiana General Assembly. Indiana Code Title 7.1 – 7.1-3-4-2
9
Indiana Alcohol and Tobacco Commission. Complete ATC Fee Schedule
10
Indiana Alcohol and Tobacco Commission. Certified Server Training
11
Indiana Alcohol and Tobacco Commission. Alcohol Permit Applications and Forms
12
Indiana Alcohol and Tobacco Commission. Rules and Laws
13
Indiana General Assembly. Indiana Code 7.1-3-21-11 – Premises Near Wall of School or Church
14
Indiana General Assembly. Indiana Code 7.1-2-3-4 – General Powers of Commission
15
Indiana General Assembly. Title 905, Article 2 – Fines and Penalties
16
Indiana General Assembly. Indiana Code 35-46-1-10.1 – Establishments Selling or Furnishing Alcoholic Beverages to Minors
17
Justia Law. Indiana Code 7.1-3-23 – Transfer and Revocation of Permits