After sitting on Gov. Phil Murphy’s desk since late June, legislation that would ease some of the state’s restrictions on breweries, cideries and distilleries was sent back to lawmakers this week.

In issuing a conditional veto Nov. 27 of Senate Bill 3038/Assembly Bill 4360, the Democratic governor said he believes the measure on its own “does not sufficiently enhance our antiquated liquor license laws” and that a “more modern approach” is needed to update the state’s Prohibition-era laws so that the regulations better reflect the current economy, as well as support business owners.

Murphy was expected to conditionally veto the legislation, as his administration has publicly said the governor wants to see the bill included in a larger reform effort of the state’s decades-old liquor license system.

In his veto statement, Murphy said, “One of my goals in calling for comprehensive liquor license reform was to ensure that our liquor laws are both modern and fair. Our craft alcohol industry continues to grow throughout the state, and our beer and wine manufacturers, distilleries and meaderies deserve our support to help them succeed.”

Among the proposed revisions made by Murphy include a fix for getting inactive liquor licenses – known as 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.

Currently, there are about 1,400 pocket licenses across New Jersey that are held by a business but not being used in a bar or restaurant, according to the New Jersey Division of Alcohol and Beverage Control.

The governor is also asking lawmakers to provide more opportunities for restaurants at shopping malls by creating a new class of liquor licenses. Under the 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.

Murphy said, “I believe that these revisions have the support of my partners in the Legislature at this time and I am hopeful that the changes will be adopted. While these changes are an important step forward in liquor license reform, I look forward to continuing to work with my colleagues in the Legislature to pass even broader and more comprehensive reform.”

Down to the wire

The veto came as the measure faced a procedural deadline that would have automatically made the bill law if the governor didn’t take action Monday.

During his call-in show on News 12 New Jersey, Murphy spoke about the conditional veto, saying “It’s not the entirety of the package I want,” but that he also wants “to be reasonable and take several big steps today and leave the door open more down the road to see what else we may do in the future.”

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.

As part of the framework Murphy unveiled earlier this year, New Jersey would expand the number of plenary retail consumption licenses by gradually relaxing an existing cap as well as lowering the costs for restaurants and bars seeking to obtain a permit. Citing projections from the New Jersey Economic Development Authority, the governor’s office has 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.”

Leaders in the Democratic-controlled Legislature are in the process of reviewing the conditional veto and its recommendations. A spokesperson for state Assembly Speaker Craig Coughlin’s, D-19th District, told NJ.com that the assemblyman “supports modernizing liquor laws to encourage job growth and economic development.”

State Sen. Vin Gopal, D-11th District, maintains that the legislation as passed was “a good bill” and believes the changes sought by Murphy should not have been tied to it, The New Jersey Monitor reported. 

As part of a ruling handed down four years ago by the state Division of Alcoholic Beverage Control, New Jersey’s growing craft brewing industry must comply with a series of regulations, including limits on the number of on-site events that can be held and a ban on offering food, serving coffee and coordinating with food vendors. The rules – which went into effect July 1, 2022 – also require breweries to give patrons a tour of the facility before they can consume alcohol.

In response to growing concerns from the industry that the regulations would put them out of business or force them across state lines, lawmakers began looking to roll back some of the restrictions.

Approved unanimously by the state Senate on June 26 and the state Assembly on June 30, the legislation in question would repeal limitations on how many special events a brewery can host, along with a rule that prevents establishments from working with vendors to serve food or providing packaged snacks. The measure also gives licensed alcoholic beverage manufacturers the option to hold an unlimited number of private parties on premises each year and the ability to host up to 25 off-premises special events and 25 social affairs events per year.

‘It’s a death sentence’

In a Nov. 28 statement, the Brewers Guild of New Jersey said, “While the Governor has called for the end of brewery restrictions, he, himself calls unfair and burdensome, he has elected to not sign a bill unanimously passed by the Legislature with broad industry and public support which aims to remove the very barriers he asked the Legislature to fix earlier this year. While disappointed in the Governor’s action, the Guild is not deterred and intends to continue to advocate for brewery law changes until they are accomplished.”

The trade association went on to say it believes “there is merit in changing aspects of the state’s alcohol retail system” but it “remains a question as to whether the Governor’s latest set of proposals have enough support from the Legislature to pass by the end of the current legislative session.”

“I understand the Governor is trying to fix a broader system which needs long, overdue changes but including common sense reforms for our industry alongside reforms impacting liquor licenses which are highly controversial could hurt any chances of New Jersey’s craft beer industry being unshackled from our needless restrictions and allowed to realize its full potential,” said Scott Wells, owner of Bolero Snort Brewery in Carlstadt and a board member of the Guild.

Under a July directive issued by the Division of Alcoholic Beverage Control, enforcement of the regulations is paused through Dec. 31, 2023 — the current legislative term.

The Guild noted that with restrictions set to restart Jan. 1, 2024, prior to the end of the lame-duck legislative session, the state’s breweries will once again be placed “in peril” until the laws are permanently changed.

Along with the return of rules, breweries are increasingly facing pushback from retailers, who, according the Guild, “are deciding not to support local products as retribution for what they perceive to be local craft breweries’ advocacy for wholesale changes to our state’s liquor license laws.”

“We’re finding more and more bars and liquor stores refusing to carry any local craft beers, even if we’ve worked with them for years. They’re viewing breweries as enemies, thinking that we’re to blame for legislation other than our own,” said Jason Goldstein, operations manager and founder of Icarus Brewing Co. in Lakewood, a Guild member. “Breweries face unfair laws and regulations that not only make it difficult for consumers to enjoy our products onsite, but also harder to find our beers at bars, restaurants, and liquor stores near them. Altogether, it’s a death sentence for many of our local breweries.”