Fathoming the tangle of liquor laws in New Jersey is a lot like navigating some of the trickiest circles and jughandles on the state’s roads. Frustrated operators in this industry segment often face challenging conditions and longer-than-expected time getting to their destinations. It can be more nerve-wracking than Route 22 at rush hour and far slower than the Parkway on a summer Saturday.
Overseeing this flow of traffic is the Division of Alcoholic Beverage Control (ABC), under the auspices of the Attorney General’s office, regulating not just the sale, but distribution, manufacturing, storage and transportation of all alcohol in the state. It is more than just one roadway, and all are multi-laned. The ABC is not only policing these major arteries, but also designing, maintaining and reengineering them. That’s one reason change does not happen fast, or not fast enough.
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Liquor laws in our state are, at best, antiquated and difficult to interpret. Many believe they hinder economic development. There have been repeated calls for change from restaurant owners, consumers and elected officials, and last year, the most significant reforms in decades were enacted. Was it enough, or a catalyst for more change, or can we expect a gridlock alert in Trenton for the foreseeable future? That remains to be seen.
The state oversees around 30 types of licenses and everyone’s attempts to acquire one. Factoring in the sentiments of the public and elected officials, one begins to see why reform is difficult.
How it started
Today, New Jersey has among the strictest liquor-license laws in the country. Putting this in historical perspective, liquor licenses are nothing new. The first were issued here as early as 1738. Regulation was largely in the hands of municipalities, but with the end of Prohibition in 1933, the federal government put regulation broadly into the hands of the states. New Jersey passed the Alcohol Beverage Control Law, establishing the ABC and its three-tiered system of distribution: alcoholic products can only be sold to distributors, who in turn can only sell to retail outlets, who can only sell to consumers.
The system was intended to create checks and balances. But things change in nine decades, and, as in other aspects of the economy, large entities have emerged and wield a lot of influence in Trenton through lobbying efforts. The smaller operations have a difficult time competing.
Some of these smaller entities are home-grown: the state’s wineries, breweries, distilleries and cideries. All but shuttered because of Prohibition, it took until 1981, when the state passed the New Jersey Farm Winery Act, the first major legislation aimed at turning around some restrictions still in place since Prohibition, for change to begin.
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Changes to the law
It wasn’t until the 2010s, when a series of major laws liberalizing the making and selling of alcohol in the state appeared, starting with craft beer in 2012, then the creation of a distillery license shortly after, and a specific cidery and meadery license in 2017. It’s no coincidence that all areas soon saw significant growth, along with job creation. Business owners have asked for more change, but many feel that not enough has been done, as the ABC and elected officials have moved cautiously—some might say, glacially.
Consumers have noticed, as well as those seeking licenses, calling for more to be issued to restaurants, clubs, bars and retail establishments. Currently, the state regulates the number of licenses by population (1 per 3,000 residents), with exceptions in some communities, like Hoboken, because of grandfathering for existing licenses when the law was enacted. Towns can petition to add new licenses based on population growth, but that typically doesn’t create a significant number of new licenses.
A plan to permit limited beer and wine licenses to otherwise BYO restaurants has been on the table for some time now, but it seems to be low priority.
The biggest impediment to increasing the number of liquor licenses has been the question of how to compensate existing holders for what will probably mean the devaluation of their licenses. Many cost hundreds of thousands of dollars (and up to a reported $1 million or more in some places like Montclair). Tax credits have been floated as a form of compensation, but those who may be adversely impacted prefer cash, especially in a retail and restaurant environment still not fully recovered from the impact of the pandemic and facing an uncertain future with the looming threat of increased business costs.
The Governor’s efforts
The Murphy administration has tried to push forward consumer-friendly changes that also support businesses. Two years ago, Murphy outlined his plan for overhauling licensing laws and expanding license access. His recommendations were supported by research from the New Jersey Economic Development Authority, which pointed to a potential economic boom of up to $10 billion in revenue and 10,000 new jobs over the next decade through license reform.
A year later, while substantive legislation was signed into law, there was no movement on what many had hoped would be the broadest path to reform: the creation of limited wine and beer licenses for restaurants. But restrictions were eased on breweries, cideries, distilleries and meaderies.
At the time of the signing, there were 8,900 active licenses in the state, and almost 1,400 inactive, or pocket, licenses. The new law placed a limit on how long they could remain dormant and allowed for their sale across town borders to adjacent communities.
How real was the reform?
Some saw the changes as a case of the Legislature doing what it needed to do rather than what needed to be done. While the ability to move a license to another town sounded positive, the red tape involved has made some municipalities feel the process is untenable.
Devon Perry, executive director of the Garden State Wine Growers Association, has been watching it all with keen interest, including the legislation that directly impacts wineries, because many see their growth tied to greater collaboration with the retail and restaurant sectors. “We believe the regulatory and elected officials in Trenton sincerely want what we all want—to safely grow this sector of the economy.” Perry says. “We need collective diplomacy and camaraderie, and the goal should be to sit at the table and make real progress.”
Hank Zona is a Maplewood wine and food writer, speaker and event planner.
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