Mayors come out in support of Murphy’s proposed liquor license overhaul

A bipartisan coalition of 90 mayors across New Jersey say they are behind Gov. Phil Murphy’s plan to revamp the state’s decades-old liquor license system.

The Democratic governor announced the formation of the group – Mayors for Liquor License Reform – during his April 13 keynote speech at the New Jersey Conference of Mayors 58th Annual Spring Conference in Atlantic City, saying, “These mayors come from counties across the state. They represent more than 1 million residents of historic small towns, growing townships and mid-sized cities.”

“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,” Murphy said.

Since 1947, New Jersey has restricted the number of 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.

After identifying liquor license reform as a top legislative priority for his second term, Murphy has stressed the need to update the “antiquated and confusing” regulations in order to promote “a stronger and fairer economy” in the Garden State, unveiling a framework that he believes “has the potential to generate massive economic opportunities for small businesses and communities statewide.”

In March, much-anticipated legislation that would advance Murphy’s proposal was introduced into the state Legislature. That bill seeks to expand the number of plenary retail consumption licenses by gradually relaxing an existing cap as well as lowering the costs for restaurants and bars looking to obtain one.

It would also create a targeted tax credit for current license holders that would be affected by the increased number of licenses in the state in addition to removing recently implemented operating restrictions on craft breweries, distilleries and wineries. 

Under the proposal, licenses that have been purchased but not in use for more than two years can no longer be held in perpetuity by the license owner.

Additionally, licenses that have not been active for five years preceding enactment of the bill – or pocket licenses – will go to the municipality for reissuance at public sale. It would also designate the municipality as the entity to handle any future issues with inactive licenses, rather than the state Division of Alcoholic Beverage Control.

After the phase-out of the cap for plenary retail consumption licenses and seasonal retail consumption licenses is complete in January 2029, New Jersey’s 564 municipalities would be able to determine and regulate the number and types of licenses to be issued. The local review process would be the same as the one in place presently, which is done with supervision from the ABC.

Citing projections from the New Jersey Economic Development Authority, the governor’s office said reforming the system could generate up to $10 billion in new economic activity over a 10-year span and create upward of 10,000 jobs annually. It also has the potential to introduce “significant new state and local revenue” that could be reinvested “into new economic development efforts.”

However, after the initial bill was met with resistance in the Legislature – particularly over the number of pocket licenses in the state – one of the measure’s sponsors, Sen. Gordon Johnson, D-37th District, reportedly plans to split the proposal into three parts.

Activating economic development

In lending their support and urging lawmakers in Trenton to act on “comprehensive reform,” the mayors signed an open letter, saying, “Given the exorbitant costs for a license, coupled with the lack of availability and the existing population cap for municipalities, the present system favors the economically advantaged while hampering mom-and-pop businesses and towns with smaller populations.”

They went on to describe the reforms as “long overdue” and “all the more pressing in light of the devastating impact the COVID-19 pandemic has had on the hospitality industry in general and the distress it has caused for downtowns and Main Streets throughout New Jersey.”

Besides making liquor licenses more affordable and accessible – particularly for small, local and diverse business owners – modernizing the laws will “serve as a major catalyst to spur economic development,” the mayors said.

The current regulations – which the mayors believe are “cumbersome restrictions” – put New Jersey at a competitive disadvantage to neighboring states and do not position local breweries for success.

“Equally important, we wholeheartedly support two other key tenants of Gov. Murphy’s proposal – one of which will provide relief for current plenary retail consumption license holders impacted by the expanded supply of licenses and the other which will maintain local control over the liquor license issuing process so that communities across New Jersey will have the power to control what the future of their town will look like,” they said.

Over the years, there have been attempts to overhaul the restrictions, which are considered among the most restrictive in the country.

Advocates for change have said the regulations impede economic development of communities, particularly downtowns and Main Streets, and have called on lawmakers to lower the cost of licenses to allow for more restaurants to serve alcohol while also being mindful of any perceived loss of value to businesses that hold liquor licenses.

The Murphy administration said it continues to “engage stakeholders and advocate for equitable reforms” and “looks forward to working with lawmakers to finalize a comprehensive plan that will eliminate the existing roadblocks and unlock New Jersey’s economic development potential.”