What can be done to modernize NJ’s liquor license laws?

BY Leah Mishkin, Correspondent |

Liquor licenses in New Jersey can cost hundreds of thousands of dollars. Assemblyman John Burzichelli says his bill would change an old system to make prices affordable for many restaurant owners.

“You’ll be able to get into this anywhere from $10,000 to $5,000, annually. So again the little guy who is opening a restaurant has a chance of making it,” Burzichelli said.

He says instead of issuing licenses based on population size, which is how it currently works, his bill, which is referred to as R1, creates new liquor licenses for certain restaurants based on number of tables, chairs and kitchen size.

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“It accomplishes what the mayors want; it helps the development of restaurants, which would drive downtown development. But it does not give them potential for a shot and beer troublesome bar, because it’s really not a bar, it’s just table service,” Burzichelli said.

The companion bill, referred to as R2, would create a cheaper subclass to sell beer and wine, which currently doesn’t exist.

“That bill in particular I think opens up a great deal of economic development opportunity in areas where that is really closed off now,” said League of Municipalities Assistant Executive Director Mike Cerra.

But the way liquor licenses have been issued is a process that dates back to prohibition, so current license holders say you can’t all of a sudden change the system without compensation.

“Now, whether that’s compensate everybody back for a fair market value of their liquor licenses and then start the system all over again, whether it’s a town by town basis based on need and then do compensation,” said Marilou Halverson, the president and CEO of the NJ Restaurant and Hospitality Association.There going to have to be a solution and it has to come pretty quickly because this is, as we say, a death by a thousand cuts and every time new licenses come into a market it does decrease their value. But there are areas, being very honest, that do need new liquor licenses.”

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“We have a provision if they can demonstrate their license has been devalued because of this secondary license, that they can make application through the ABC for a tax credit for the difference in the value of their license,” Burzichelli said. “We don’t think it’s going to affect their license because these new license or permits do less.”

Alcoholic beverage industry attorney Robert Skene says while he does think there should be licenses available, he says compensation has to be fair.

“The compensation mode is very, very convoluted about tax credits,” Skene said. “And from my discussions with some of the casual dining folks, it doesn’t nearly cover what they think the evaluations are going to be.”

He suggests only moving forward with the R2 portion of the bill, the beer and wine class.

“So if someone has a restaurant, 1,500 square feet or more, and they have no bar, allowing them to have a beer and wine license to me seems logical because BYOB is only for beer and wine as it stands,” Skene said.

It’s a complicated issue that doesn’t have a simple answer.

“There is always sensitivity about protecting someone’s investment and that’s why the R1 and R2 bill has a compensation measure factored into it, so that has to be taken into account. I think the willingness to take the risk is why there hasn’t been movement,” Burzichelli said.

The bill has passed one committee and Burzichelli says they are working on details with all stakeholders to take it to the next step.