On January 16, 2024, Governor Murphy signed legislation (S-4265/A-5912) into law. This law will boost the number of available liquor licenses and ease a range of restrictions that have hindered breweries and distilleries throughout the State. The following is a summary of the changes that come with the new law.

Inactive/Pocket Licenses

There are currently more than 1,300 inactive or pocket licenses held throughout the state. Inactive licenses are associated with a specific location but are not in use. Pocket licenses are those that have been purchased but are not currently attached to any specific location. The inactive and pocket licenses are one of the leading causes of the low supply of available licenses, as well as the high price of the licenses. The Division of Alcoholic Beverage Control estimates a 15% increase in available licenses with the implementation of the new law.

Under the new law, if a license has remained inactive for two consecutive license terms (a total of two years) the license holder will be obligated to either sell it or use it. If the license holder does not exercise either option, the license may be transferred to neighboring municipalities. Additionally, a municipality where an inactive consumption license has lapsed and has not been renewed for eight years before the law takes effect, may issue a new consumption license at a public sale for use at a licensed premises located within the town.

Mall Licenses

The new law creates a new class of retail consumption licenses which the Governor hopes can create many new licenses throughout the State. The law allows 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 the large number of malls in the state, and the struggles malls have seen since the pandemic and the rise of online shopping, this law can bolster the survival of malls throughout the state.

Breweries and Other Similar Establishments

The new law eases restrictions that have hindered breweries and other similar businesses disturbing their ability to compete against industries in neighboring states. It takes away the requirement to provide tours of the premises to patrons and allows them to hire servers and wait staff. The law will also allow them to sell certain food items (i.e. chips, nuts, and packaged snacks) and non-alcoholic beverages. Additionally, the law allows them to collaborate with outside vendors, host unlimited onsite event and private parties, host a maximum of 25 off-site special events, and participate in up to 25 events hosted by a holder of a special affairs permit. The law also increases the number barrels permitted to be manufactured per year from 100,000 to 300,000 and allows the license holders to sell and distribute 50% of the beer produced on premises each year directly to retailers, rather than having to sell solely to wholesalers. Finally, the law creates a new farm-brewery license that allows the holders to produce malt alcoholic beverages, up to 2,500 barrels per year, for retail sale to consumers for consumption off the licensed premises.

The new law will give these establishments more opportunities, will allow them to compete against businesses in neighboring states with laxer laws and will allow them to thrive in the industry.

Registration for the Succession or Sale: Generational Considerations for Closely Held Companies (Or “No Need to Be a Logan Roy”) Event on Wednesday 11/01/23