Why does a liquor license cost $600,000 in Boston and $2,500 across the river in Cambridge? State Auditor Diana DiZoglio’s office says the answer is a population formula written in 1933, and on October 15, 2026, it recommended getting rid of it. The 181-page report, License to Pour: Access and Equity in Massachusetts Liquor Licensing, calls for ending the state quota on licenses to serve alcohol and letting cities and towns decide for themselves.
Here is how the quota works under Massachusetts law, what the report found, and what it would take to change it.
The quota: G.L. c. 138, § 17
Restaurants, bars, hotels and clubs that serve drinks need an on-premises license under G.L. c. 138, § 12. Section 17, which we read at malegislature.gov, caps how many of those a city or town may have in force at one time. For every community except Boston, the formula for all-alcohol on-premises licenses is:
- one license “for each population unit of one thousand or additional fraction thereof”;
- plus one more “for each population unit of ten thousand or fraction thereof, over the first twenty-five thousand”;
- with a floor: every community may grant “at least fourteen licenses,” regardless of population.
So a city of 40,000 could have 40 licenses for its first 40 units of 1,000, plus 2 for the 15,000 residents over 25,000, for 42 in all. Separate, smaller allotments cover wine and malt beverage licenses and package stores under § 15. Boston’s numbers are written into the statute separately and have been raised over the years by the Legislature, including licenses restricted to specific neighborhoods that cannot be transferred.
The statute does have a seasonal exception. Outside Boston, local boards may grant seasonal on-premises licenses “in addition to and irrespective of any limitation of the number of licenses contained in this section,” good from April 1 to January 15 or part of that period.
How businesses get a license when the cap is full
When a community has used its allotment, there are two routes, both described in the report:
- Buy one. An existing license can be transferred, with local and state approval, which creates a private resale market. Business owners told the auditor they paid $600,000 in Boston, $175,000 in Somerville and $100,000 in Beverly.
- Ask the Legislature. A city or town can file a home rule petition for a special act granting extra licenses. The report says that process “has no written criteria and no complete, readily accessible public record,” and that wealthier communities secure more licenses that way.
The 26 communities with no quota
Between 1978 and 1984, there was a limited window for municipalities to opt out of the state quota. Twenty-six did, and they control their own licensing, according to the report. Cambridge is one, which is why a license there costs about $2,500. The report found local-control communities have issued twice as many licenses per capita as communities under the cap, WBUR reported, and calls the result “an inequitable two-tier system.”
What else the report found
- About 2.5 million residents live in communities facing licensing constraints because of the quota.
- The wealthiest municipalities issue 58% more licenses per resident than the least wealthy.
- Massachusetts has fewer full-service restaurants per resident than neighboring states. Matching the regional average, the auditor estimates, could mean 490 more restaurants, 9,500 jobs, $311 million in annual wages and $56 million a year in state and local meals taxes.
- The office surveyed 260 municipal officials and business owners and analyzed municipal licensing data.
The report was produced by the auditor’s Division of Local Mandates. “You shouldn’t need to have unlimited access to money and all of the right political connections to obtain a liquor license,” DiZoglio said in a statement.
The recommendations
- Eliminate the state-imposed, population-based quota and establish local control for on-premises licensing.
- Address the equity and wealth-access barriers created by the secondary market.
- Create a statewide, public licensing data platform.
A local-control system would not mean no rules. Licenses would still be issued by local boards and subject to the Alcoholic Beverages Control Commission and the rest of chapter 138. What would change is who decides how many.
The catch: licenses people already paid for
The hardest part is the existing market. Steve Clark, head of the Massachusetts Restaurant Association, told WBUR that many owners count their licenses as assets. “Because this system has existed for so long, you can’t just turn the switch off and change the rules,” he said, suggesting a license buyback program as one option. A license that sold for $600,000 under a cap could be worth far less if a city can issue new ones freely.
Where it stands on Beacon Hill
The report is a recommendation. Only the Legislature can change § 17. Language to eliminate the population quotas was in the Senate version of an economic development bill still being negotiated in conference, WBUR reported. Governor Healey has supported getting rid of the caps, while some House leaders have raised concerns about handing full control to local officials. State Rep. Joseph McKenna, a Sutton Republican, called the effort “bipartisan and bicameral” in a statement released by the auditor.
Frequently asked questions
How many liquor licenses can a Massachusetts town have?
Outside Boston, G.L. c. 138, section 17 allows one all-alcohol on-premises license per 1,000 residents or fraction, plus one per 10,000 or fraction over the first 25,000, with a minimum of 14. Seasonal licenses are allowed in addition to the cap, and the Legislature can grant more by special act.
Why are liquor licenses so expensive in Boston?
Because the number is capped, new businesses often have to buy an existing license on the private market. The auditor’s report cites prices of up to $600,000 in Boston, compared with about $2,500 in Cambridge, one of 26 communities that opted out of the quota between 1978 and 1984.
What did the state auditor recommend?
Eliminating the state population-based quota for on-premises licenses and giving cities and towns local control, addressing the secondary resale market, and creating a public statewide licensing database.
Has the liquor license cap been repealed?
No. Repeal requires legislation. A Senate economic development bill that included it is still in negotiations with the House.
Sources: Office of the State Auditor, “State Auditor’s Report Identifies Barriers in Massachusetts Liquor License Process,” and License to Pour: Access and Equity in Massachusetts Liquor Licensing, October 2026; WBUR, October 15, 2026. G.L. c. 138, section 17, read at malegislature.gov; the posted text may not reflect every special act affecting individual communities. General information about Massachusetts law, not legal advice.