Loosen Up: Reassessing NJ’s Strict Liquor Laws

The laws controlling liquor licenses for New Jersey restaurants, bars and package stores are among the most restrictive in the nation. The state limits restaurant liquor licenses (known as retail consumption licenses) in each municipality to one for every 3,000 people by federal census data. That keeps licenses scarce and drives the price for a license to anywhere from $50,000 to more than $2 million.

Some towns welcome the limit as a means to reduce the number of bars and accompanying nuisances. Others see restaurants and bars as a way to drive revenue and urban renewal. They cite places like Jersey City and Asbury Park, which have been rejuvenated to a large degree by vibrant dining and nightlife scenes.

New Jersey’s liquor-license rules were last updated in 1948. Assemblyman John Burzichelli, D-Paulsboro, thinks it’s high time for a change. He has introduced a bill (A4267) that would create two new classes of licenses—one for any kind of alcohol, and a less expensive one for beer and wine only. Both would allow restaurants to serve alcohol at tables to their lunch and dinner patrons. The restaurants would have to have a full-sized kitchen, but they would not be allowed to have a separate walk-up bar. The initial fee for the least expensive beer-and-wine license would start at $1,500, depending on the size of the establishment.

“Mayors from around the state, as well as real estate developers and the League of Municipalities, realize the benefits of this bill,” says Burzichelli. “I call it ‘unlocking an economy’—meaning, allowing restaurants to start up.”

Burzichelli sees the issue in human terms. “Imagine someone graduates from culinary school and wants to open a restaurant, but he can’t compete with Applebee’s down the street because he can’t serve a drink unless he raises $500,000 [to buy a license]. It’s hard enough to be in business, but for the state to add this barrier, the restaurant’s chances of survival are even less.”

Independent restaurants are essential to a town’s vitality and can help spur new commercial projects throughout New Jersey. While consumers appreciate BYO bargains, ordering a glass of wine from a carefully curated list or a cocktail from an expert mixologist can be a memorable part of the dining experience. What’s more, alcohol can be a significant moneymaker that helps a restaurant survive and potentially thrive.

It’s no surprise that resistance to Burzichelli’s bill comes from current holders of liquor licenses. Many paid exorbitant amounts to buy their licenses on the open market. These business owners are rightfully concerned that letting towns dole out new licenses will reduce the market value of their licenses. To soften the blow, Burzichelli’s bill provides a tax credit for existing licensees equal to the fair-market value of their license prior to the enactment of the bill.

Revising the licensing law makes sense in a state looking for new revenue streams. “The idea is to take away the commodity edge of the inflated values of liquor licenses,” says Burzichelli. “We have strict standards, and in my bill you will not have a bar in these restaurants; it is table service. So it won’t allow for the creation of nuisance bars. There will also be limited service time. But the license will be affordable.”

Burzichelli is hoping to move his bill out of committee this fall for a vote by the full Assembly in early 2016. Plans are in the works for a Senate version.