Murphy signs law to revive unused liquor licenses, ease restrictions on craft breweries – Real Estate NJ

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By Joshua Burd

Gov. Phil Murphy has signed into law a bill to update the state’s nearly century-old liquor license laws, seeking to activate nearly 1,400 dormant retail licenses and expand the supply of an asset that many see as critical to economic development.

The measure, which would also ease restrictions on New Jersey’s breweries and distilleries, aims to lower the costs and boost the supply of licenses by targeting those that are associated with a specific location but not in use or those that are privately owned but not attached to a specific location. Under the new law, the holder of a retail license must either sell or activate it within two years or face the prospect of losing the asset altogether.

If the owner does not sell or activate the license, it can be transferred to a contiguous municipality, according to the legislation. Additionally, the governing body of a municipality where an inactive consumption license has lapsed and not been renewed for the last eight years may issue a new consumption license at public sale for use at a licensed premises located within the town.

Murphy and lawmakers estimate the changes will inject as many as 1,356 licenses back into the market, a roughly 15 percent increase over the 8,905 active retail consumption licenses presently being used, citing data from the state’s Division of Alcoholic Beverage Control.

“For the first time in nearly a century, New Jersey has shown the fortitude to tackle an age-old problem that has stifled economic growth and hampered the dreams of countless small business owners,” Murphy said. “We knew this wasn’t going to be an easy lift — nothing that has been entrenched for nearly a century ever is. Together with our partners in the Legislature, we are laying new ground rules to help our breweries and distilleries flourish at the same time creating new opportunities for smaller and more diverse mom-and-pop establishments to set up shop or expand in New Jersey and help transform our downtowns.”

Both the Senate and Assembly voted unanimously last week to approve the measure, S4265 — which would also allow for special licenses for large shopping malls — under a compromise between Murphy and lawmakers. It’s a victory for a coalition of stakeholders that have long pushed for liquor license reform but stops short of the sweeping changes that they’ve envisioned, many of which were of a plan that Murphy outlined last year.

Commercial real estate leaders, citing the power of liquor licenses in downtowns and mixed-use development, have been among the staunchest advocates for updating the law and making the assets more affordable.

“NAIOP NJ is encouraged by the passage and signing of this compromise legislation,” said Dan Kennedy, CEO of the commercial real estate development association. “Easing restrictions on New Jersey’s craft breweries makes all the sense in the world, and the modest improvements are welcome and can be built upon. Still, there is much more work to be done on broader liquor license reform, especially if we want to use reform to drive redevelopment.”

The new law, whose prime sponsors include state Sen. Vin Gopal and Assemblyman Clinton Calabrese, also establishes a new class of retail consumption liquor license that will potentially create upwards of 100 new licenses throughout the state, Murphy’s office said. Specifically, the law will allow municipalities to issue:

Up to two new licenses for food and beverage establishments in shopping malls with a minimum of 750,000 square feet
Up to four new licenses for establishments in shopping malls with a minimum of 1.5 million square feet

Supporters say the steps could bolster the survival of malls, which have been struggling due to the pandemic and the proliferation of online shopping, and boost economic activity for towns statewide.

“Our outdated laws on liquor licenses are stifling development and our economy,” Calabrese said. “People want to be able to have a glass of wine while out to dinner, and good restaurants can be the cornerstone of development efforts on main streets across New Jersey.

“Pennsylvania and New York have thriving industries for craft beer and wine, but here in New Jersey we are blocking that growth. This bill is a step in the right direction to open opportunities for new development in our communities. I look forward to continuing to advocate for common sense reforms that will allow our downtowns to thrive.”

The updates to laws governing breweries, distilleries, cideries and meaderies include eliminating the longstanding requirement that the establishments provide tours of the premises to patrons. It also allows them to:

Offer snacks and other nonalcoholic beverages
Collaborate with outside vendors including food trucks
Host unlimited on-site events and private parties, including birthdays, weddings, anniversaries and civic and political functions
Host up to 25 off-site special events
Participate in up to 25 events hosted by the holder of a social affairs permit

Meantime, the bill increases the number of barrels that may be manufactured per year from 10,000 to 300,000 and allows license holders to directly sell and distribute 50 percent of the beer that is produced on premises each year to retailers, rather than having to rely solely on wholesalers. The bill also establishes a new farm-brewery license that would permit the licensee to produce malt alcoholic beverages for retail sale to consumers for consumption off the licensed premises.

“The New Jersey craft brewing and distilling industry is growing rapidly across New Jersey, becoming a mainstay for tourists and locals alike,” Gopal said. “It only makes sense to give this industry room to grow and prosper. Under this law, craft alcohol manufacturers will flourish and revitalize Main Street business districts across the state.”