On Thursday, February 23, Governor Phil Murphy held a roundtable discussion with key stakeholders to gather input and recommendations for the legislative proposal aimed at modernizing the state's liquor license laws. The roundtable was held in Clinton Town, hosted by League Past President and Clinton Town Mayor Janice Kovach.
Governor Murphy's proposal aims to create a more equitable and affordable framework for obtaining liquor licenses, which has the potential to generate significant economic opportunities for small businesses and communities throughout the state. The current liquor license law in New Jersey is outdated and an obstacle to realizing the full potential of economic growth and job creation.
At the end of Prohibition, New Jersey crafted legislation that established a mechanism for the issuance of retail alcoholic beverage licenses delegating the authority for acting on license issuance to the municipalities. Initially, Title 33, Intoxicating Liquors, empowered municipalities to issue retail alcoholic beverage licenses in the exercise of their sound discretion. The licensing authority has remained unchanged since 1947.
Currently, local governments can issue one consumption liquor license for every 3,000 residents. This has limited the availability of licenses.
Governor Murphy's proposal would increase the availability of Plenary Retail Consumption Licenses and Seasonal Retail Consumption licenses gradually over five years through the following framework:
- Phase out the population cap: The existing population cap for plenary retail consumption licenses and seasonal retail consumption licenses would be reduced each year by 10% for five years until it is completely removed. After the phase-out, licenses will be issued as needed and without a cap, subject to local government control.
- Establish new licenses: The creation of two new licenses that would be available for purchase at a significantly lower cost than current licenses. One license would allow for sales of beer and wine for on-site consumption, and the other would allow for sales of all types of alcohol for on-site consumption. Prices would be annually reviewed and set by the Division of Alcoholic Beverage Control.
- Tax credits for existing license holders: A tax credit would be established to support existing license holders who may be impacted by the increased availability of licenses.
- Maintain local control: Local control over the licensing process would be maintained to ensure that municipalities have a say in the future of their towns. New licenses would be issued by the municipality with supervision by the Division of Alcoholic Beverage Control upon municipal application and approval.
- Pocket licenses: Existing licenses that have been purchased but not in use for more than two years will no longer be allowably held in perpetuity by the license owner. Existing licenses that have not been active for five years preceding the legislation will be given to the municipality for reissuance at public sale. Future issues with inactive licenses will be handled by the municipality rather than the Division of Alcoholic Beverage Control.
- Breweries, distilleries, and wineries: Expands the rights of certain holders of certain brewery,
cidery and meadery, distillery, and winery licenses by lifting restrictions of serving food and non-alcoholic beverages, participation in events and requiring the hosting of tours.
According to Governor’s office, the New Jersey Economic Development Authority found that reforming New Jersey's liquor license system could generate up to $10 billion in new economic activity over 10 years and create upwards of 10,000 jobs annually. The proposed reforms could bring in extra revenue to support restaurants in the aftermath of COVID-19.
The League supports retaining local discretion over the licensing process and recognizes the need for reforms that will provide municipalities with the ability to meet the changing needs of their community and to advance economic development and redevelopment.
Contact: Andrew LaFevre, Legislative Analyst, alafevre@njlm.org, 609-695-3481, x116.