New liquor license law aims to put 1,500 licenses back on market, increasing access while lowering costs

Gov. Phil Murphy signed legislation Tuesday that he feels will substantially boost the number of available liquor licenses statewide and ease a wide range of restrictions that have stifled breweries and distilleries.

Reforming the liquor license process has been a major initiative of the Murphy administration for some time — but the process is complicated and includes numerous stakeholders with a wide range of wants.

Officials in the Murphy administration said the new law attempts to reform the main cause for the scarcity of liquor licenses for decades — inactive and pocket licenses.

Inactive licenses are those that are associated with a specific location but are not in use, while pocket licenses are those that have been purchased but are not attached to a specific location. Both issues, which limited availability, are considered a key driver of costs of a license, which have been known to reach seven figures in some municipalities.

Under the new law, license holders will no longer be able to indefinitely retain a retail consumption license without using it. If a license has remained inactive for two consecutive license terms — a total of two years — the license holder will now be required to either use the license or sell it.  If neither option is exercised, the license can be transferred from one municipality to a contiguous municipality.

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.

Administration officials hope these changes will substantially boost accessibility by injecting as many as 1,356 licenses back into the market, a roughly 15% increase over the 8,905 active retail consumption licenses presently being used, according to the New Jersey Division of Alcoholic Beverage Control.

The bill also addresses other key issues, including:

Mall licenses: The law establishes a new class of retail consumption liquor license that will potentially create upwards of 100 new licenses throughout the state. 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; and
  • Up to four new licenses for establishments in shopping malls with a minimum of 1.5 million square feet.

With malls in nearly every county, plus qualifying strip malls, New Jersey could potentially see upwards of 100 new licenses created under this provision — bolstering the survival of malls, which have been struggling due to the pandemic and the proliferation of online shopping and boosting economic activity for towns statewide, Murphy administration officials said.

The new law also makes numerous changes to how breweries, cideries, meaderies and distilleries operate (see full story here).

Murphy applauded the bill, which was amended and returned after a conditional veto last month.

“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,” he 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.”

The bill’s main sponsors were Sen. Vin Gopal (D-Ocean Twp.) and Assemblyman Clinton Calabrese (D-Ridgefield).

“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.”

Calabrese agreed.

“Our outdated laws on liquor licenses are stifling development and our economy,” he 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.”

Sen. Paul Sarlo (D-Wood-Ridge), the chairman of the Senate Budget Committee, said the law effectively handles the key issues: Making more licenses available while not hurting the investment others already have made.

“We are making use of inactive pocket licenses that had gone unused and allowing for a reasonable number of new licenses, including those for shopping malls, which will be a financial boost for malls that are experiencing difficult times,” he said. “This is good for the economy, for local businesses and for the customers they serve.”