N.J.’s local breweries are enjoying changes to once-confusing regulations on operations

Rules of orders

Leaders of brewery businesses are reveling in the end of what they believe was a stifling set of restrictions on their operations in New Jersey. They’re looking at the glass being half-full, and hoping it’s only the start of enjoying more flexibility in the Garden State.

Following a conditional veto last year for some late additions, Gov. Phil Murphy signed legislation into law this year that allows breweries and other businesses to serve food and host events such as trivia nights and concerts. They were once restricted to just 25 of those events annually. These businesses can also manufacture up to 300,000 barrels a year of their product, up from a 10,000 cap.

That undid some of the provisions in a 2018-introduced set of rules enforced — and then temporarily suspended, before being enforced again — by the New Jersey Division of Alcoholic Beverage Control. Brewery leaders refer to that era as a mess.

Scott Wells, director of sales at Carlstadt-based Bolero Snort Brewery, will let you decide if they’re right to think so, based on a few examples of rules explained to him at various points by regulators, investigators and peers in the sector over the past five years:

  • If someone showed up to a brewery, they had to get a tour. If they spent the night in a hotel down the road and showed up the next day, they’d have to take the exact same tour again to patronize the business.
  • Tours needed to be a material, educational interaction between brewery staff and customers. There were breweries that had tours of their entire beer-making process and physical equipment that didn’t qualify. There were breweries with just murals or posters stuck on the wall explaining things that did qualify.
  • If a food truck parked across the street from a brewery on public property, it could cost that brewery its license.

Wells recounts many more instances of perceived inconsistencies and seemingly conflicting guidance. The condensed version? They and other craft beer companies weren’t happy. And, ultimately, they felt confined to only growing to a certain point in the Garden State.

Their frustrations have been channeled over the years through the Brewers Guild of New Jersey, where Eric Orlando of the Zita Group sits as executive director. Orlando said that, for the first time since he started representing the interests of microbreweries (about 2009), there’s some level of predictability they can operate under.

“At least they know they’re not going to be breaking the law if they host certain activities, such as live music on a Friday night, or just having people show up for a sporting event,” Orlando said. “That has been a moving target for a long time, before it was an outright prohibition. Now, you can do those things — and not have an artificial cap on the amount of times you can do it.”

There’s no understating the bottom-line benefits in having more certainty, he added. If you can plan for events months in advance, you can market it. More people show up; more beer gets sold.

“Ultimately, it just makes their business more sustainable,” Orlando said. “And this is a bigger sector in New Jersey than it was even five or 10 years ago. The amount of breweries has gone up by 500% over the past decade.”

The argument for why that’s good for everyone else is this: More dollars end up in New Jersey. Orlando believes policymakers have generally been persuaded by the industry’s economic potential.

“They’ve embraced this industry because they see benefits in terms of it being small businesses with a manufacturing component that buy local and serve the hospitality and tourism sector,” he said. “These have also been anchor businesses in the revitalization efforts of local towns. It checks a lot of boxes.”

Chuck Aaron, owner of Jersey Girl Brewing, has been a longtime believer (and outspoken advocate) in the promise of breweries in communities. That’s a perspective he brings as a Mount Olive Township councilman.

“The thing is — these (recent changes) not only help breweries, it helps cideries, meaderies, distilleries and wineries,” he said. “It helps the image of New Jersey as a tourism destination. … When nonprofits, local sports teams or other organizations are looking to host events, we’re there for them. By being an ideal venue for musicians to perform at, we’re in our small way enhancing local arts scenes.”

Aaron, who also is president of Mount Olive’s chamber of commerce, adds that giving food trucks an attractive venue to sell their products and gain a following — without charging them or collecting any revenue from them — paves a way for more local investment, assuming some portion of those business will open a local brick-and-mortar retail space later.

Such are the arguments breweries have advanced to counteract pushback from some bars and restaurants. Those businesses haven’t appreciated breweries operating too similarly to them.

Wells implied that relations soured between the opposing factions throughout the Division of Alcoholic Beverage Control’s rulemaking process. Wells characterized the position of lobbying interests representing interests of traditional alcohol establishments that breweries flat-out shouldn’t exist in the way they have since a 2012 law first allowed them to serve products on-site.

For the time being, breweries have scored a victory. At what cost, Wells isn’t sure.

“The joke of the whole thing is that what this has done is take us from being the 48th-worst state in the country for breweries and upgraded us to about 37th,” he said. “It didn’t move the needle much. But it certainly made bars hate us more and buy less of our beer. There’s a lot of animosity, and bars boycotting us based on rumors we’re trying to devalue their licenses and gut their system. It’s brutal.”

Aaron’s view is that there’s a need for partnership with restaurants and bars. In the long run, he expects local breweries need to do more to compete with the many out-of-state alcohol brands in close proximity to New Jersey that feature heavily on the menus of bars and restaurants.

He’d also like to see some mechanism created for breweries to ship beer within New Jersey or even externally. The lack of distribution options available to these businesses made the heights of the pandemic a particularly hard business climate.

“It has been a tough run for some of the breweries,” Aaron said. “Between the restrictions and the hit of COVID, there’s a lot of reasons these businesses don’t succeed. We’ve seen during our eight years here at least 14 or 15 breweries close in New Jersey.”

The fact is, there are finite tap handles dispensing beer throughout the state. The hope is — recognizing the value of supporting local enterprises — policymakers consider doing more to incentivize that it’s New Jersey-made beer that ends up filling patrons’ cups, Aaron said.

That’s a perennial item of priority for the Brewers Guild of New Jersey, which is collectively reassessing its current focus after clearing away some disagreements with regulators.

“Now, we’re going back to the drawing board and saying, ‘Now that we’re growing past this — and we haven’t been able to work on other things — what do you want to do next?’” Orlando said. “There were items we set aside for the time being that we’re finally dusting off to figure out what we want to work on.”

Hopefully, Orlando added, there’s an appetite — or, in this case, a thirst — from the current administration and state Legislature for more adjustments.

“We’re hoping that (January’s new rules) introduced the idea that laws can actually change in this area, and that there’s a new willingness to help us out to change even more things,” he said.

Eyes open

Despite New Jersey’s new rules for breweries and other businesses going into effect several months ago, attorney Monica Vir said there’s a lot still to learn about how it will play out.

Vir, a partner and executive vice president with Lindabury, McCormick, Estabrook & Cooper P.C., said one of the changes that might not make itself immediately apparent is the way pocket licenses are handled, which are retail sale licenses purchased, but left inactive. Under the new rules, those licenses can’t be held onto indefinitely without being attached to a location.

Monica Vir. (Lindbury, McCormick, Estabrook & Cooper P.C.)

Vir noted it’s also worth watching how a new class of retail consumption licenses ends up utilized across the state. It would allow municipalities to issue licenses for food and beverage establishments in shopping malls of a certain size.

“And, in the future, I hope the Legislature at least considers the status of these smaller BYOB restaurants,” she said. “You can drive down the street and see seven different restaurants with different cuisines that might not have funds for a full liquor license, but could all benefit from a narrowly tailored license where they’re permitted to have special table service for beer or wine.”

There are valid concerns surrounding the devaluing of existing licenses, Vir said. But, she expects the suitability of New Jersey’s restaurants to an ultracompetitive market today could be enhanced with a few more tweaks to the state’s alcohol laws.

“There seems to be momentum in modernizing these laws, and a recognition of the benefits,” she said. “The hope is that it doesn’t take 100 years since Prohibition to do it again.”