New Jersey craft brewers are reeling after Gov. Phil Murphy’s conditional veto of a unanimously passed bill that would reform the Garden State’s restrictive conditions for sales and operations at craft brewery taprooms.
Murphy said he rejected the bill because it “does not sufficiently enhance our antiquated liquor license laws,” according to a statement. He has been open about wanting more comprehensive reform, categorizing the proposed bill as more of a “piecemeal” solution. Tension between licensed retailers and craft breweries has simmered for years because the state limits retail liquor licenses by population, making them rare and expensive to obtain.
Craft breweries can obtain a limited brewery license to operate a taproom under certain conditions; these licenses are not capped by population and breweries pay a graduated annual fee based on production.
In an attempt to strike a balance between the investment retailers made in their licenses and the craft brewing industry’s turn toward own-premise taprooms, the New Jersey Division of Alcoholic Beverage Control (NJABC) developed a stringent set of restrictions in 2018 that prohibited craft breweries from selling food of any kind in their taprooms or collaborating with food trucks or food vendors, and limited taprooms to 25 special events annually, which included activities considered weekly staples at breweries in other states, such as weekly trivia nights, yoga classes and televised sporting events. The restrictions were largely unenforced until July 2022, due to the COVID-19 pandemic.
Pitting breweries against license holders has created an uncomfortable situation for New Jersey brewers.
“The political nature of the way this drama has played out is [that] significantly less bars and liquor stores are supporting New Jersey breweries and thus are supporting our competitors from out of state,” Scott Wells, director of sales at Carlstadt-based Bolero Snort and a Brewers Guild of New Jersey (BGNJ) board member, told Brewbound.
“Competitors from out of state are able to make more money in their own tasting rooms by nature of having more favorable laws,” he continued. “They’re then able to use that additional capital to market against us in our very densely populated home state.”
Breweries are about one month away from the end of the NJABC’s six-month reprieve from the special conditions, which went into effect over the summer with the expectation that Murphy would have signed the bill into law.
“We haven’t been able to take any steps to reinvest in the tasting room portion of our business because we don’t know what next year looks like,” Wells said. “Right now, we are 32 days away from 2024, and I have no clue what I am and I’m not going to be allowed to do in my case. We don’t know if the food trucks are going to be allowed outside, and we don’t know if we could serve snacks. We have absolutely no clue.”
Reform of the NJABC special conditions for craft breweries is overwhelmingly popular. In a poll conducted by Rutgers University’s Eagleton Center for Public Interest Polling last spring, nearly all (92%) respondents supported allowing breweries to serve food, and 63% supported lifting the special events cap.
Because New Jersey is geographically small, its residents often visit other states and see how different craft breweries elsewhere can operate.
“They travel across the country, they go to Delaware, they go into Pennsylvania, or New York; They know how a brewery operates,” BGNJ executive director Eric Orlando told Brewbound. “Somebody who is a novice to this who just likes to visit breweries coming back to New Jersey, and being asked about the tour requirement, or the fact that the game on Sundays isn’t on TV – that those folks notice and they see and they feel the difference there. They’re not getting the max experience they can, particularly if they’re used to something someplace else.”
Consumers are willing to understand the regulatory aspects of a beer-centric place to an extent, but the NJABC conditions go far beyond the sale of alcohol, he said.
“If you actually explain it to a person that it’s not our choice to do this, this is what we have to do to keep the lights on and keep our license – that doesn’t sound right to people, particularly since the restrictions dealt with things other than alcohol,” Orlando said.
As it stands now, the NJABC special conditions will go back into effect on January 1 if steps are not taken to amend the bill to Murphy’s specifications, which will leave nearly all parties involved in an undesirable situation.
“I don’t think the administration wants everything to go back the way it was previously, and to hear from the breweries and consumers and, honestly, a lot of legislators upset that breweries have to follow the restrictions,” Orlando said.
During an interview with News 12 New Jersey on Monday, Murphy suggested the Legislature could adjust the bill for his approval before January 1 and spare breweries. But brewery leaders who News 12 spoke with said they felt Murphy had abandoned them.
“The governor obviously does not want breweries to survive,” Will Grundmann, CEO of Tinton Falls-based Twin Lights Brewing, told the outlet. “What sense does it make to tell me that I can’t have live music in my tasting room more than 24 times a year, but I can’t have more than two TVs? It just doesn’t make any sense at all.”