TRENTON – A bill to remove onerous regulations on the state’s breweries passed with strong bipartisan support in the Legislature.
Gov. Phil Murphy has refused to sign it because he wants broad-based liquor license reform.
Instead, Murphy had the state Division of Alcoholic Beverage Control (ABC) issue a directive that suspends most of the regulations opposed by the breweries for six months.
“The ABC has given at least temporary relief on the questions the breweries had on this,” Murphy said, adding: “But I still want comprehensive, broad-based license reform.”
Murphy has committed himself to reforming the post-Prohibition Era laws that limit the number of plenary retail consumption licenses in the state. The statutes make it hard to get licenses. As a result the licenses have become a valuable commodity, with some selling for more than $1 million.
Therein lies the rub when it comes to reform.
How does one significantly increase the number of places where a customer can have a glass of wine, a beer or a cocktail without severely devaluing the existing licenses that represent huge financial assets to their owners?
Current license laws for on-site retail consumption of alcohol are based on local municipal population as stated in the previous census. Town governing bodies can issue one license per 3,000 residents. From the start that means that over 110 small municipalities in the state cannot issue a license because their populations are below 3,000. Towns may have a license that was historically grandfathered.
Murphy and those who support his effort at reform of the license laws are convinced that the present arrangement retards economic development. A coalition of 90 New Jersey mayors signed a letter supporting the reform efforts, saying that licenses need to be made “affordable, equitable and accessible.” Three Cape May County mayors were among the 90 who signed the letter: West Wildwood Mayor Matthew Ksiazek, Wildwood Crest Mayor Don Cabrera and Woodbine Mayor William Pikolycky.
Supporters of reform say the present system favors the affluent and hampers the growth of mom-and-pop businesses. They argue, for example, that a Thai restaurant should have the opportunity to serve a Thai beer with an authentic meal. Current regulations restrict profit margins in small businesses, hampering overall economic growth, they say.
The key stumbling block to reform is how to compensate current plenary license holders for the serious harm reform would do to a significant financial asset that they hold. Murphy’s answer so far has been a tax credit capped at $50,000, which license holders say is way too low.
Murphy’s push for reform would phase out the population cap over a five-year period. He would establish new licenses, including the ability to serve beer and wine only for on-site consumption, with prices for the new licenses set by the ABC.
The governor says he is committed to maintaining local control over the distribution of licenses and seeks to end the long-term holding of inactive licenses. The package would include lifting restrictions on breweries, distilleries and wineries, especially with regard to serving food and participation in events.
Sen. Michael Testa (R-1) sponsored legislation to remove the burden on breweries, which Murphy says he will not sign without broader reform. Testa says the governor is harming the state’s tourism industry.
“Governor Murphy’s liquor license reform is separate and apart from the business of breweries, and they should not be used as a bargaining chip,” he said.
Murphy shows no sign of altering his position on the issue of separate brewery legislation. The state’s roughly 150 breweries will have to wait for permanent changes to the laws that regulate them. Murphy appears all-in on broader license reform.
Contact the author, Vince Conti, at vconti@cmcherald.com.
