News

Breaking Down the New Jersey Special Ruling on Limited Brewery Licenses and What Has Changed

Editor’s Note:  This is my take on the release of the Special Ruling.  These thoughts are mine, formed with help of speaking with 7 brewery owners and several other people in the industry today.  This is my initial take of what I believe the rules are, if there are errors it is due to the ambiguity of the ruling that, I and many others feel, needs some more clarification.  Enjoy the piece and let me know what you think!

 

Well it has happened.  David P. Rible, New Jersey Director of the Division of Alcoholic Beverage Control, has handed down his special ruling effective September 21st, 2018 that will change the landscape of how a brewery can operate it’s business.  While some of the language of the Special Ruling will need further clarification ( Editors Note: After speaking to many brewery owners there are still some grey areas), but we are going to break down the changes the way we see them.  As of this date, I have spoken to at least 7 brewery owners of various sizes and ages about the new rulings and will use that background when explaining the new rules, and how they feel they will be affected by them.

First of all, I find this statement very telling:

In passing the 2012 amendment, the Legislature intended to promote the craft beer industry and create a demand for these products by the consuming public. The expectation was that the increased demand for craft beers would generate greater retail sales of these products at licensed consumption and distribution premises. Accordingly, the law was enacted to require consumers to take a tour of the brewery, to sample the beers produced on-site, and then to purchase them as package goods for off-premises consumption or for on-premises consumption at a Class C licensed premises. 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.

Over the past year, I have visited numerous limited breweries, met with and spoken to various stakeholders, including the different tiers in the alcohol industry, and have analyzed the issues facing the growing craft beer industry. As a result of these visits, meetings with stakeholders, and discussions with the owners of the breweries, it has become apparent that there is significant confusion in the industry regarding what constitutes an appropriate tour and what constitutes permissible activities that may take place on a licensed premises, particularly in the tasting rooms of the limited breweries. Although it is clear that a tasting room at a limited brewery is not a new consumption venue with the same privileges as a Class C plenary retail consumption licensee, it is also evident that the brewery has limited retail privileges granted by the Legislature

I want to know where was this “evident”?  Let’s break it down.

Clearly, the 2012 Amendment has been met with several different interpretations.  The most maddening thing about the 2012 Amendment is that it really doesn’t tell you much more than this:

  • to brew any malt beverage, not in excess of 300,000 barrels (31-gallon barrels) per year
  • to sell to wholesalers and at festivals in the state
  • to sell and distribute out of state
  • as part of a tour, sell beer for on-site consumption
  • to offer samples to visitors
  • to sell up to 15.5 gallons of beer (i.e. a keg) for consumption off-premises
  • sale of food is absolutely prohibited
  • to maintain a warehouse

Initially the rules were followed without any interperetation.  You opened, you did tours, you sold beer.  As the number of breweries continued to grow and the popularity started to skyrocket, you started to see breweries holding events to bring people in to their establishment.  Music, TV, Quizzo, Yoga, Craft Classes, Painting Parties, etc started to pop up all over New Jersey Breweries.  These events were held in addition to following all of the above rules, and grew immensely popular.  Something else was happening, breweries started to become vital to the community.  Want to know what is going on in your town?  Visit the local brewery.  Want to know the skinny on the best restaurants?  Visit you local brewery.  Breweries were hot.  Towns were changing their laws to allow breweries to be built within city limits (Pitman and Haddonfield, both traditionally dry towns, both changed laws to do this) and they were prospering, changing downtowns and being key businesses in raising money for local charities, letting their space be used for events, and earning the town revenue.  People were starting to take notice.

Fast forward to 2016.  There are now around 70 Breweries in the state and they are making inroads on taps in bars, shelf space in liquor stores, and have spawned other businesses and blogs (like this one).  Craft beer was growing in leaps and bounds and we started to see some push back from bars and restaurants who felt that breweries were overstepping their bounds.  Mostly they were isolated incidents and the majority of the bar and restaurant owners embraced craft beer and had many of them on tap in their establishments.  As the breweries continued to grow, we started to hear more complaints from liquor liscense holders that were upset with the breweries that were, in the words of one owner I spoke to, “acting like sports bars”.  I had a pretty heated conversation with him, explaining that his license was worth something, that he could sell anything he wanted, and that he was himself selling craft beer at his bar.  When I mentioned that breweries had to make everything that they sold he still wouldn’t budge.  This is the moment that I saw all the rainbows and sunshine on craft breweries was starting to wane in the eyes of distributors, liquor license holders, and big beer. Oh yeah, big beer started to lose market share, don’t think for one second that their lobbyists are not involved in the new rules.  So here we are in 2018 with almost 100 breweries and nearly 20 more in development and the hammer has come down.

So here are the changes:

  • In the case of on-site activities, such as trivia night, paint and sip, live music, live sporting events and yoga night, etc., a Limited Brewery licensee will be permitted to hold a total of twenty-five (25) events per license term on the licensed premises of a Limited Brewery..The e-notification shall be provided to the Division by the Limited brewery at least ten (10) days before the special event is scheduled to occur

 Goodbye unlimited music, Quizzo, painting, etc.  You now are limited to 25.

  • I have determined that a Limited Brewery is eligible to receive a total of twelve (12) special permits per license term for events held off of the licensed premises, as either an extension of the licensed premises (“Limited Brewery Extension of Premises Special Permit”) or completely off of the licensed premises (Limited Brewery Off-Premises Special Permit”)

This is actually something that is new.  You will be able to hold 12 off premise events as an extension of your licensed premises.  The owners I spoke with see this as a benefit, although it remains to be seen to what extent these permits will allow you to do.

A Limited Brewery Licensee may allow a maximum of 52 private parties to occur on the licensed premises, such as birthdays, weddings, anniversaries,civic/political functions, professional/trade association events, class reunion/alumni events, provided the following conditions are met:

a. No alcoholic beverages, except those malt alcoholic beverages produced by the  Limited brewery on-site, may be sold or served at a private party;

b. If the host of a private party  brings food onto the licensed premises of  the Brewery, she/he shall remove all food at the end of the party;

c. A private party may be held in an area on the licensed premises of a Limited Brewery, provided that such area is clearly separated from the tasting room by a permanent or temporary structure and is not accessible by or to the general public. Under no circumstances may a member of the general public enter the separate area of the private party, and the Limited Brewery licensee is responsible for ensuring that only private party guests are permitted in the area separated off for the private party;

d. Tickets shall not be sold to attend a private party, nor may the event be advertised to the general public;

e. The Division may request a copy of the contract between the host of the private party and the Limited Brewery licensee;

f. A Limited Brewery licensee shall provide to the Division a post-event accounting for every private party held on the licensed premises, which may include but not be limited to,the guest list and the amount of alcoholic beverages sold.

Is this even worth it?   I feel like the hassle that is involved in this will immediately make some breweries decide to just not have any of these events (this was also affirmed by a few of the owners we spoke to)

The holder of a Limited Brewery Off-Premises Special Permit or Limited Brewery Extension of Premises Special Permit shall not be permitted to:

  • Provide food, except as otherwise permitted in Section 6(c), operate a restaurant, or coordinate with any food vendors to sell food in the areas designated by the permit. However, nothing stated herein shall prohibit individuals attending the event from bringing food into the area designated by the permit;
  • Sell any other type of alcoholic beverage or sodas, except those produced on the licensed premises of the permittee
  • A Limited Brewery licensee may offer for sale or make gratuitous offering of de minimis types of food as an accommodation to patrons, such as water, pre-packaged crackers, chips, nuts and similar snacks.

So no food except small pre-packaged good like chips, peanuts or the like.  Also NO MENUS in the tasting room!  What does that accomplish?  It further distances the community from the brewery.  If you took a poll of everyone in NJ about this I bet that it would be a landslide in favor of allowing menus.  This is baffling!

  • Background music, radio and television may be provided on the licensed premises. However, no live music, DJs or television programs,movies or sporting events, pre- recorded or otherwise, may occur on the licensed premises unless the Limited Brewery licensee provides e-notification to the Division pursuant to Section 3(b),above, and does not exceed the 25 authorized on-premises special events per license.

Saw that one coming.

So these are the new rules.  No food or food trucks.  No Quizzo, TV, Live Music, Sporting Events, SODA (unless you make it), MENUS (REALLY?), Yoga, Adopt-A-Pet events, etc.  UNLESS IT IS ONE OF YOUR 25 PERMITS PER YEAR!

This is really going to hurt folks!  People have poured their life savings into a business that has changed it’s rules mid-stream.  I fear that we will see people going out of business or severely limiting their hours. I see people who are employed by these breweries losing their jobs because ownership will not be able to support them.  I see a state that has succumbed to the wishes of Big Beer and the Bar and Restaurant Lobby.  I see a division of the state that is trying to slow down progress for political reasons.  Prove me wrong!

What can you do?  Keep supporting your local brewery and the businesses that support it.  Make your voice heard by your legislator, it is the only way that you will be able to change this ruling.  It is clear that the ABC has shown where their loyalties lie.

Of course this is just my opinion, but I don’t think that I am that far off.

For the full document please follow the link here:

IN THE MATTER OF LIMITED BREWERY LICENSEES

Do you want to help?  Contact your local legislator!  Follow the link below!

New Jersey Legislature

 

 

 

 

You Might Also Like

16 Comments

  • Reply
    Jack Hammer
    September 25, 2018 at 8:36 am

    I feel this is conciliatory and a token to restaurant owners in the face of the states mandated 15$ per hour minimum wage pay increase and the hit restaurants are taking on Obama Care that the Governor has reinstated. Restaurants are giving blood and the State wants more. This is a throw back to restaurants as a consolation prize. Again NJ remains the worst state to live in and to work in.

    • Reply
      Rev T
      September 25, 2018 at 4:11 pm

      yeah, nah mate.

      • Reply
        Christopher Vanette
        September 26, 2018 at 1:54 pm

        If a business cannot afford to pay its employees a (barely) livable wage, then it is likely not a viable business, and it should shut down. I am not worried about about the restaurant industry in New Jersey, however; there is a different eatery seemingly every 200 feet.

  • Reply
    abc | Jersey Shore Vacations
    September 25, 2018 at 12:26 pm

    […] folks at South Jersey Beer Scene did a very good breakdown of what this means for NJ breweries. It’s all meant to seriously limit tasting room activities. It limits […]

  • Reply
    NJ Craft Breweries Hit Back at New ABC Restrictions | Jersey Shore Vacations
    September 25, 2018 at 12:29 pm

    […] folks at South Jersey Beer Scene did a very good breakdown of what this means for NJ breweries. It’s all meant to seriously limit tasting room activities. It limits […]

  • Reply
    Scott Scott
    September 25, 2018 at 1:17 pm

    John, what laws did PItman change and Haddonfield change?

    • Reply
      John
      September 25, 2018 at 2:15 pm

      Hi Scott-I am not sure whether they were “laws”, but both towns were dry and they changed that provision to allow breweries. So each town has now allowed a brewery in once was a completly dry town

  • Reply
    Scott Scott
    September 25, 2018 at 2:52 pm

    I don’t think the towns had to change anything. They realized that since it is a license issued by the state the couldn’t say really do anything. Thanks for the reply John, best regards.

    • Reply
      John
      September 25, 2018 at 3:14 pm

      Pitman was a vote-
      Haddonfield was through the zoning board it was ruled an allowable retail use because the business would sell products made on site, much like a coffee shop.

      After your reply I felt like I had to know! Thanks for checking out the site!

  • Reply
    Christopher Vanette
    September 26, 2018 at 1:50 pm

    I don’t see anything you quoted specifically saying no menus. Are you basing that on an interpretation of “[shall not] coordinate with any food vendors to sell food…”, or was it explicitly stated elsewhere?

    In any event, I disagree with this move by the ABC, although I feel it could pass muster as a reasonable interpretation of the 2012 law (where these hard limits of “25 times per year” and “52 times per year” is a bit baffling, however). The legislature needs to act to pass a better law.

    Thanks for the write up.

    • Reply
      John
      September 26, 2018 at 2:04 pm

      (b) No restaurant menus of any kind shall be placed or maintained on the licensed premises of a Limited Brewery.

      If you click the link at the bottom of the article it outlines everything in detail! Thanks!

  • Reply
    JR
    September 26, 2018 at 2:50 pm

    Regs were always there and haven’t changed all that much. Everyone has access to menus on their phone. You can still bring in food and soda right? Brewery just can’t sell it. You can still drink what you want at the local brewery. You can still support them. Go drink their product, bring your food in from a menu you find on your phone, and ask your friends trivia questions all while you continue to support your local brewery. I don’t see the Armageddon narrative here really.

    • Reply
      John
      September 26, 2018 at 2:56 pm

      JR I agree this is what is going to happen, but it still affects small businesses in a way that will cause them to lose revenue. People adapt to regs and life goes on. I think the question of timing and how the ruling came down is more of an issue. We have talked about the stuff that was floated around by the state that would have immediately put people out of business (production caps and minimum distro requirements) but it is still an “attack” of sorts on entrepreneurship and small business.

  • Reply
    Dean
    September 26, 2018 at 4:50 pm

    It’s time to speak with your wallets, NJ. Support your local craft brewery at every event they hold, and stop patronizing the local sports bars. NJ craft brewers need to boycott the local sports bars by not offering their beers for sale in that bar. Or if you want to go to the bar to see the game or the fight, ask for water and the cheapest item on the menu so you can keep your table or spot at the bar. Better yet, wouldn’t it be great to see an entire huge party of people go into the bar and do nothing but drink water and eat peanuts for the entire fight, taking up valuable space where others real-money-spending people might sit, if they could only find an open seat? Now there’s a protest worth doing!

  • Reply
    Mark G
    September 27, 2018 at 8:30 am

    “I want to know where was this “evident”? Let’s break it down.”

    Here’s where it’s evident: When the state provides a license to do specific things that would otherwise be illegal (i.e.: sell alcohol), then everything NOT specifically listed as permissible is NOT permissible. It’s pretty straightforward logic, especially when a higher tier of licensure (i.e. a full liquor license) is available.

    To wit: My NJ state driver’s license permits me to drive a passenger vehicle, but not a tractor-trailer; I need a Class A CDL to do that.

    To be clear, I’m a supporter of local NJ business, as well as independent breweries – but these updates to the regulations are neither draconian nor unfair. What is unfair is the competition these upstarts provide to law-abiding, liquor-license-holding bars, taverns, and restaurants who pay MULTITUDES more for the specific privileges that breweries feel they should be able to have for $8-15k a year.

    It’s easy to get emotional – we all want small craft breweries to succeed. But they are breweries, NOT pubs – and they have overstepped the line a bit. The new regs more clearly define the boundaries. That’s really what you’re asking for in the beginning of your blog post, no?

    • Reply
      John
      September 27, 2018 at 10:39 am

      HI Mark Thanks for your reply, just a few things. The state does provide a license to bars, taverns, and restaurants but it is different than a brewery license. A liquor license is an actual commodity that can be bought and sold for profit, and the amount that you pay for it is irrelevant to the argument. Those licenses have become so valuable because the the state/municipality has dictated how many can be made available. There is currently a bill in the state house to help fix this so people who already have restaurants can have the ability to serve alcohol, you can find some info on that here The brewery license is a fee paid yearly that has no cash value, and you have to make everything you sell and pay tax accordingly. As for the law, I agree that just because it doesn’t say you can’t do it that you can, but we can use that argument in a different way as well- Nowhere on any license does it say that, a liquor license does not give you the right to have music, tv, etc either. The local ordinances dictate what you can do (I believe it is in your zoning, but I may be wrong). That being said, I do believe that the best practices that were being followed for years were all of a sudden gone and the way a brewery operated changed (I think this was from direction from their guild) and people with those high priced licenses started to take notice. I agree that there needs to be some sort of regualation, but these rules are an overreaction of sorts (no menus?) and does hurt more than brewery owners (wineries, meaderies, and distilleries do the same events but have a different set of rules, I would imagine as distilleries start to get more prevalent we will be going through the same thing there) it has also targeted local businesses that are able to survive because of the life breweries have given them. As with any issue there are people that have pushed the envelope and caused this issue to escalate, but the majority of the breweries that are out there have done things within the rules that were given them.

      All of that being said, I do firmly believe that the industry did need a clear cut set of rules to govern the industry, but I think that they should be legislated and not made as an edict from the ABC. The current director was a Republican Assemblyman and it is public record that he did get a great amount of his donations and support from the Liquor, wine, and beer industry () and the industry is percieving him as a biased arbiter

      Thanks so much for your comment, and just in our 2 comments you can see how complex this issue is.

    Leave a Reply

    %d bloggers like this: