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Beer with a Side of Bureaucracy? Not So Fast.

October 2, 2018

by Jennifer Tiedemann
October 2, 2018

New restrictions threatened to sink New Jersey’s independent craft breweries—but they may have been a bridge too far for state lawmakers.

In a special ruling issued in late September—one that was bad news for breweries and beer lovers alike—the New Jersey Division of Alcoholic Beverage Control (ABC) took several steps to tie the hands of the state’s 88 microbreweries. This ruling restricted these breweries to holding 25 “special events” on premises every year—things like trivia nights, concerts, and yoga sessions—and all of these events had to be reported to the state ABC at least 10 days in advance of the event. The breweries were also limited to 12 permits each year to sell their products at off-site events like beer festivals. Additionally, while brewery patrons still had the ability to bring in outside food, restaurant delivery menus could no longer be kept on brewery premises.

These new restrictions on independent craft breweries were a disappointing and illogical crackdown on a largely new and up-and-coming industry—and New Jersey lawmakers on both sides of the political aisle recognized the damage the new rules would do, speaking out against the special ruling. Yesterday, Democratic Governor Phil Murphy said yesterday that the special ruling might not be “the right, sensible step to take.” Senate Republican Leader Tom Kean, Jr. said last week that the ruling “sends a chilling effect to a burgeoning industry and I hope that [the ABC] would rethink their decision.”

Well, that’s exactly what the state ABC did: Today, it indefinitely suspended the new restrictions, with ABC Director David Rible saying that “we want to make sure that we get this right.”

The craft beer scene in New Jersey has exploded in the last five years; breweries in the state have only been allowed to sell beer for on-premises consumption since 2012, when legislation to ease restrictions on microbreweries passed with bipartisan support. Today, the Garden State is home to 88 limited breweries, many of which opened after the 2012 law was enacted. The law was passed to put New Jersey’s breweries on a more level playing field with surrounding states that have more relaxed laws regarding breweries. The new ABC restrictions put state breweries at a disadvantage again—now, the ABC will confer with stakeholders and with state lawmakers to determine whether the 2012 law should be updated.

According to the special ruling, these new limitations were meant to fix an unintended consequence of the 2012 amendment: that breweries became places where people actually wanted to sit down, drink a beer, and spend some time (horror of horrors!). The special ruling said, “The 2012 amendment was not intended to establish a new consumption venue at the brewery, with the same privileges as a sports bar or restaurant.” So the ABC restrictions aimed to turn the state’s breweries into places where beer lovers make a quick stop to get a beer sample, maybe buy some to take home, and then go on their way. These restrictions would have taken away reasons for patrons to stick around breweries and spend extra money to help these small businesses succeed.

So who would have this special ruling been good for? The state’s restaurant industry was for it, because it would have benefited restaurants with liquor licenses. Limited brewery licenses are a lot less expensive than a full liquor license; in New Jersey, a limited brewery license costs a few thousand dollars, while a full liquor license can cost hundreds of thousands, even exceeding $1 million in some locations. But punishing microbreweries because a liquor license for a restaurant or sports bar is astronomically high is patently unfair.

And it’s clear that this ruling would have fallen disproportionately hard on the state’s smallest breweries, the ones just trying to get off the ground, since it would have limited their ability to hold and take part in events that boost their name recognition and help them thrive in the growing craft beer universe. One New Jersey brewery owner said of the ruling last week, “I feel bad for the nano-brewery that relies on a nightly crowd to stay afloat. These people have been embraced by their communities and their customers have come to expect a certain experience like trivia night and live music.”

The new restrictions would have curbed those experiences significantly. And in a state already notorious for a less-than-friendly business climate, it would have been a definite step back for small business owners who already face an uphill battle. Through its Right to Earn a Living Act, the Goldwater Institute has worked to fight this type of protectionism. In New Jersey and in every other state, regulations should focus on protecting the public’s health and safety, not shutting down economic opportunity for entrepreneurs.

Fortunately, Garden State lawmakers recognized that the ABC special ruling would have been an opportunity-killer. While the jury’s still out on future microbrewery regulation, today’s a good day to drink a rare toast to bipartisan pushback against overregulation.

Jennifer Tiedemann is the Deputy Director of Communications at the Goldwater Institute.



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