On Tuesday, January 10, Governor Murphy delivered the annual State of the State Address, where he proposed, among other topics, that the state reform its antiquated Liquor License application and population cap process. The Governor mentioned that his administration would be tackling the daunting task of reforming New Jersey’s antiquated liquor license laws at the Delegate; s Luncheon at the League Conference in November but has not released any details until his State of the States Address.
Murphy noted that during the COVID - 19 pandemic, our downtowns suffered greatly but survived with the help of more than $1 billion in federal funding and $50 million in the Main Street Recovery Program. To help grow our downtowns, reform of New Jersey’s antiquated and confusing liquor license legislation is required.
The New Jersey Economic Development Authority estimates that reforming the liquor license laws could lead to $10 billion in new economic activity over 10 years, create upwards 10,000 jobs annually, and generate new state and local revenue that could be reinvested into new economic development efforts.
Governor Murphy’s Liquor License Modernization Proposal is a statewide strategy to modernize the liquor license industry by expanding liquor licenses. The Governor is recommending a gradual increase in Plenary Retail Consumption Licenses over five years, as well as:
Liquor License Modernization Proposal
Phase out the population cap: Reduce the existing population cap each year by 10% for
five years. is phase-out would increase the number of new licenses available in municipalities over time, and after the phase-out, licenses would be uncapped and issued as needed. At the end of the phase-out period, no resale of these licenses will be permitted.
Local Review: New licenses would follow the same local review process that they do today. New licenses would be issued by the local authority with supervision by the State Division of Alcohol Beverage Control (ABC) upon municipal application and approval.
Establish Administrative prices and fees for new licenses: new licenses would be issued at progressive prices and associated fees based upon business size. These prices would be set and reviewed by ABC annually. In addition, municipalities would be granted the right to assess local fees upon the issuance of a new license under this proposal.
Address Breweries, Distilleries, and Wineries: This proposal would also expand the rights of holders of brewery, distillery, and winery licenses, many of which are restricted from serving food and non-alcoholic beverages, limits on events, and tour requirements. It would establish a new consumption license for these categories with expanded privileges that would no longer be capped or restricted. Existing license holders could convert their current limited license into this new class of license for a fee.
Provide a Mechanism to Support Existing License Holders: The State would establish a means-tested tax credit for current license holders impacted by the expanded supply of licenses.
NJLM Liquor License Taskforce
The League’s Liquor License Taskforce believes economic development and revitalization, especially in downtown areas, has been a priority of municipalities all over New Jersey, but because of current New Jersey's liquor license policies, economic framework, and high cost of doing business, there are limited opportunities available for New Jersey residents, business, and business prospects to compete with neighboring states who have a more flexible statutory framework that favors economic development. Section 33:1-12.14 was last updated in 1999. The revision of the established licensing scheme is long overdue.
When New Jersey legalized cannabis in November 2020, it made it clear that the State was ready to move into the future with progressive regulatory reform. The State's decision to legalize cannabis, endorsed by a statewide ballot vote, many of the residents of New Jersey, shed light on New Jersey's antiquated liquor license laws, as well as the different approaches to licensing and regulation between the two regulated industries. This legislation, while only focused on license availability, is a step forward.