State ABC Issues Special Ruling for Craft Brewery Licenses

TRENTON – Six months after suspending a Special Ruling that clarified the privileges of limited or “craft” brewery licenses in the state, the Division of Alcoholic Beverage Control (“the Division”) May 28 issued a new Special Ruling with changes that address industry concerns.
According to a release, the division drafted the new ruling after an extensive outreach effort to meet with industry leaders, individual craft brewery owners, members of the Legislature, and others whose objections led the division to suspend the previous Special Ruling last fall.
“We spent months meeting with stakeholders and listening to their concerns, especially the very few, very vocal licensees who felt their views were not adequately represented in the extensive stakeholder discussions we held prior to drafting and issuing the first Special Ruling,” stated James B.. Graziano, acting director of the Division of Alcoholic Beverage Control.
“The Special Ruling issued today includes important changes that address key issues raised in these recent discussions.  The changes made are intended to help craft breweries promote their products and build their business while continuing to balance the concerns of other licensees and ensuring compliance with state law,” he continued.
Under the new Special Ruling, craft breweries are still subject to a 25-per-year limit on “special events” that can be held on their premises, which was originally proposed in the previous Special Ruling.
However, new language defines “special events” as only those that are promoted through the media or that provide entertainment in the form of live championship sporting event broadcasts, live amplified music or DJ performances.
This means that many activities that were subject to the 25-per-year “special event” limit under the  previous Special Ruling – such as trivia/quizzo, craft making, animal adoption events, or yoga or other similar types of classes – will not be counted as  “special events” unless they are advertised or promoted in the media.
Among other notable changes the division believes will be of interest to the industry.
The new Special Ruling eliminates a ban on food deliveries to limited breweries and allows owners to provide patrons with menus from local restaurants
Private parties are capped at 52 events a year – as they were under the previous Special Ruling, but now party hosts are permitted to bring their own wine and beer to their events, if the establishment allows it.
This allows owners to market their facilities as party venues to individuals who may not want to be limited to serving craft beer.
Limited breweries are required under state law to give patrons tours of their facilities before serving them. However, under new language, a tour will be required only once a year for repeat customers as long as the brewery creates and maintains a record of customers’ previous participation in a tour.
The definition of “tour” is redefined from the previous Special Ruling to make interaction between Limited Brewery licensees and their patrons more substantive and meaningful.
The new Special Ruling confirms that Limited Breweries may allow up to 25 social affair events to be held on their licensed premises in accordance with existing law.
Limited Breweries may participate in 12 off-premises events with a permit issued by the division that would allow them to sell beer in open containers at civic or community events. Unchilled four- or six-packs of beer may be sold for consumption off of the event premises.
The statutory requirements of New Jersey liquor laws limiting sales of any product for on-premises consumption to only those individuals who have toured the brewery and prohibiting the Limited Brewery from operating a restaurant and selling food (other than de minimis types of food) will be enforced immediately by the division.
However, the remaining provisions set out in the Special Ruling should be considered guidelines and will not be strictly enforced by the division at this time, barring flagrant or repeated violations.
In the near future, the division intends to engage in a formal notice and
comment period pursuant to the state’s rulemaking process, and will propose these guidelines as regulations.
Upon adoption, the guidelines will be fully enforceable with respect to all Limited Brewery licensees.
Until such time as the regulatory process is completed and regulations are adopted, the division intends to treat the guidelines contained in the Special Ruling as special conditions on each Limited Brewery licensee, beginning with the 2020-2021 license term.
“We believe the activities permitted under this Special Ruling strike a fair and appropriate balance between the interests of full retail license holders, such as restaurants and bars, and the craft brewing industry,” said Director Graziano. “Will everyone be satisfied with them? Probably not. But at the end of the day, the Division’s job is to set limits on what licensees are entitled to do under existing laws and to level the playing field so that all limited breweries can compete fairly with each other. If there is a need for or interest in adjusting or further expanding the privileges available to limited brewery licensees, that would be a matter for consideration by the Legislature.”
By way of background, in 2012, the Legislature amended state liquor laws to promote the craft beer industry. The amendments created limited brewery licenses designed to help the growing industry, but they also restricted when and how breweries can serve alcohol on site.
The Legislature never intended the limited licenses to give craft breweries the same privileges of a consumption venue, such as a sports bar or restaurant.
In recent years, however, a growing number of craft breweries began serving alcohol well beyond what the limited licenses allowed or ever envisioned.
This resulted in complaints of unfair competition from bars and restaurant owners who hold licenses allowing full retail privileges.
In response, the division engaged a variety of stakeholders on these issues. Among others, it consulted with the New Jersey Brewers Association, the Brewers Guild of New Jersey, the New Jersey Licensed Beverage Association, and the New Jersey Restaurant Association.
Thereafter, on Sept. 21, 2018, the division issued a Special Ruling that clarified the privileges of limited brewery licenses, and attempted to strike a balance between the interests of full retail license holders, such as restaurants and bars, and the craft brewing industry.
The division suspended that Special Ruling on Oct. 2, following a backlash from the industry.
With the issuance of today’s Special Ruling, the previous one is officially rescinded.