2 min read April 2023— Gov. Phil Murphy’s plan to reform the state’s liquor license regulations, untouched since the 1960s, is now backed by a bipartisan 90-member mayor coalition. The group consists of mayors across the Garden State that look to benefit from economic activity generated by updated liquor license laws.
“These mayors come from counties across the state. They represent more than one million residents of historic small towns, growing townships, and mid-sized cities,” said Gov. Murphy in an official press release. “But most important, they represent hundreds of small restaurants whose owners are being left out – and whose investments in their establishments are being left at-risk – because they do not have access to the liquor license that can allow them to better compete and stay in business. They understand the patent unfairness of our current liquor law regime and the significant local economic benefits that our proposed reforms would bring.”
The current cap is one liquor license per 3,000 residents, and restaurant owners in New Jersey sometimes spend as much as $1 million to outbid other business owners to secure licenses made available. There is a five-year phaseout of the current system, starting in 2024, progressively loosening limits on a yearly basis before being completely scratched.
A provision in the reform plan would also target inactive liquor licenses — creating pathways to reissue those previously purchased licenses to the municipality for public sale after an extended period of years. Currently, the state’s Division of Alcoholic Beverage Control addresses issues with inactive licenses, but with the new provision the municipalities would become the handling entity.
The New Jersey Restaurant and Hospitality Association, which has expressed concern about the proposal, has estimated 1,400 dormant licenses that should be prioritized and redistributed before overhauling the whole system. The association’s pushback stems from the diminishing value of the license for current holders by adding more across the state’s 564 municipalities by 2029.
According to the NJEDA, a reform to the liquor license process could create upwards of $10 billion in economic activity over the next decade, and generate over 10,000 new jobs, as cited by NJBIZ.
To ease concerns expressed by wineries, breweries, distilleries and the New Jersey Restaurant and Hospitality Association, the proposal was modified to include a targeted tax credit for current license holders impacted by the expected increase in the number of licenses made available in the state. The tax credit works in three tiers depending on the amount of taxable sales in the three preceding calendar years once the bill is put into law.
In addition, the proposal would also aim to remove recently implemented operating restrictions on craft breweries, distilleries and wineries courtesy of the Division of Alcoholic Beverage Control in July 2022. For instance, the number of events that breweries could hold would increase is 25 per year. Breweries were also barred from offering meals on site, albeit allowed to offer token food items such as crackers and pretzels. Coordination with food trucks was also barred and prevented brewers from offering customers take-out options from nearby restaurants. The bill also does away with a requirement that breweries and distilleries give their customers full tours prior to selling alcoholic beverages from taproom consumption.
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