After winning approval from the state Legislature, a bill that would ease controversial food and event restrictions on breweries in New Jersey is heading to Gov. Phil Murphy’s desk.

Unanimously supported by both chambers Jan. 8, the final day of the lame duck legislative session, the measure proposes several changes to the state’s craft brewery and retail license laws, including steps to get inactive liquor licenses back into circulation and the creation of a special license for establishments at shopping malls.

Sponsored by Democratic state Sens. Vin Gopal, 11th District; Paul Sarlo, 36th District; and Troy Singleton, 7th District, the bill would:

• Allow breweries, wineries and distilleries to hold unlimited events and private parties onsite, but no more than 25 special events off site;
• Permit them to sell food, like chips, nuts and other packaged snacks, as well as coordinate with outside vendors, such as food trucks and restaurants, to serve food;
• Eliminate a requirement that breweries give patrons a tour of the facility before they can consume alcohol.

The measure would also activate some of the 1,400 inactive liquor licenses – known as pocket licenses – that have not been used by a restaurant or bar for at least eight years. If a license remains dormant for two years, it will expire and a municipality can auction it off to a new business or opt to extend it for another year.

Additionally, communities would be able to issue special licenses at shopping malls, allowing two additional licenses for towns with malls larger than 750,000 square feet and four in towns that have malls larger than 1.5 million square feet.

Towns would also be able to transfer one dormant license per year, and two every five years, to a bordering municipality in need of more.

The legislation would establish a farm brewery license, allowing operators who engage in farming to brew any malt alcoholic beverages of no more than 2,500 barrels of 31 fluid gallons a year and sell them on their premises.

Murphy is expected to sign the measure, which represents a scaled-down version of broader changes the Democratic governor has pushed for over the last year to the state’s Prohibition-era liquor license laws.

Balancing concerns

The bill, introduced Jan. 2, incorporates aspects of a measure previously passed by both chambers as well as some of the concerns expressed in Murphy’s conditional veto in late November.

Since 1947, New Jersey has restricted the number of liquor licenses a municipality can grant based on population. Under the law, which was most recently amended in the late 1960s, towns can issue one consumption license for every 3,000 residents. As a result, the ability to sell alcohol is a highly coveted right in New Jersey and business owners often spend as much as $1 million to secure one of the limited number of licenses via the private market.

The proposed revisions from Murphy include a fix for getting some pocket licenses back on the market by forcing businesses to give them up if they haven’t been in use for at least eight years from the time of the bill’s enactment.

The governor also asked lawmakers to provide more opportunities for restaurants at shopping malls by creating a new class of liquor licenses. Under his proposal, the license would be open to businesses attached to a mall larger than 500,000 square feet and towns could issue up to four mall licenses that would not be subject to any population caps.

However, the Democratic-controlled state Legislature has not moved forward with a sweeping revamp, citing concerns from the industry that eliminating caps would cause the value of liquor licenses to tumble.

In June 2023, the state Senate and Assembly approved only part of the governor’s proposal – a measure that would repeal limitations on how many special events a brewery can host, along with a rule that prevents them from working with vendors to serve food or provide packaged snacks.

In issuing a conditional veto of that bill, Murphy said he believed that the legislation on its own “does not sufficiently enhance our antiquated liquor license laws” and that a “more modern approach” is necessary.

‘A step in the right direction’

Following the bill’s Jan. 8 approval in the Legislature, Gopal commented, “The New Jersey craft brewing and distilling industry is growing rapidly across New Jersey, becoming a mainstay for tourists and locals alike. It only makes sense to give this industry room to grow and prosper.”

Assemblyman Clinton Calabrese, D-36th District, who sponsored a companion bill, called its passage “a step in the right direction to open opportunities for new development in our communities.”

“Our outdated laws on liquor licenses are stifling development and our economy. People want to be able to have a glass of wine while out to dinner, and good restaurants can be the cornerstone of development efforts on main streets across New Jersey. Pennsylvania and New York have thriving industries for craft beer and wine, but here in New Jersey we are blocking that growth,” said Calabrese, adding, “I look forward to continuing to advocate for common sense reforms that will allow our downtowns to thrive.”

Singleton stated, “For nearly a year, I pushed for liquor license reforms that focused on the transfer of inactive licenses, rather than the creation of new, additional licenses. This new law modernizes the process and provides a fair, efficient way to streamline the transfer of inactive licenses. And, most importantly, it moves our state one step closer to modernizing our archaic liquor license laws, without devaluing existing owners’ investments.”

The bill’s passage comes as the state Division of Alcoholic Beverage Control was poised to resume enforcement of certain restrictions against breweries, cideries and distilleries.

After going into effect June 30, 2023, the waiver was initially set to expire Dec. 31, 2023. However, ABC Director James Graziano recently announced it will be extended through Jan. 16, 2024 — the final day that Murphy can sign bills from the current legislative session.

Mixed reaction

In a Jan. 8 statement, Brewers Guild of New Jersey Executive Director Eric Orlando said the newly approved measure “supports the creativity and spontaneity which is hallmark to these small businesses, allowing these qualities to show through in not only the beers they produce, but the atmosphere and culture they wish to create within their breweries and throughout their communities.”

“Since the fall of 2018 when the state’s initial special ruling limiting craft brewery activities was issued, culminating in license conditions in July 2022, the industry has put its collective voice and energy towards ending these restrictions to not only stabilize and grow the industry, but provide consumers nationwide the best possible experiences and products we know all New Jersey craft breweries can consistently provide. Today’s passage of legislation comes at a time when not only breweries, but the state’s entire craft beverage industry as whole, needs a regulatory system which some would say reflects a dichotomy typically not representative of the laws in our state: guidelines that provide both predictability and flexibility,” said Orlando.

He went on to say, “We want to thank our legislative sponsors on both sides of the aisle for their tireless work to achieve today’s results, and hope that this repeated support for legislation to end brewery restrictions is quickly signed by Gov. Murphy this time around hopefully with a toast of some great New Jersey craft beer.”

While the New Jersey League of Municipalities said it was supportive of efforts to reform the state’s “antiquated liquor license laws,” the group is questioning restrictions placed on transferring inactive licenses.

In a statement, NJLM Deputy Executive Director Lori Buckelew said, “The League is concerned that the bill’s language will not allow inactive licenses to fill the void that currently exists with available liquor licenses in some towns. As written, the bill will only permit the transfer of inactive licenses to contiguous municipalities, not municipalities that may need additional licenses.”

Downtown New Jersey – an organization that has called for an overhaul of the state’s liquor license laws – said it expects the results of the compromise bill to be “marginal at best” because it “does nothing to address the affordability issue that makes New Jersey’s current system so inequitable and puts us at a competitive disadvantage to our neighboring states.”

“We hope the bill’s imminent and eventual adoption isn’t checked off as a victory that closes the discussion on liquor license reform for another 10 to 20 years,” the group also said. “During the next legislative cycle and the final years of Gov. Murphy’s administration, Downtown New Jersey and the NJ Liquor License Reform Alliance will keep pushing for more progressive reform to address our equity and access concerns for small and minority-owned businesses.”

“We hope the Legislature will consider a special license for downtowns and diverse entrepreneurs, and/or reconsider a beer and wine table service-only permit. We think there could also be interesting opportunities to link small business eateries with NJ’s burgeoning craft production industry in a way that is a win-win for both,” Downtown New Jersey continued. “We look forward to pushing the needle a bit further in the next legislative session.”