BUSINESS & ECONOMY

How do the state’s liquor license laws work?

BY Leah Mishkin, Correspondent |

It’s a system that’s been in place since prohibition, and the liquor license laws in New Jersey haven’t changed much since.

“Of all the states that have license quotas, I’ll call them beverage license quotas, New Jersey is by far the most restrictive,” said Robert Skene, senior partner at Skene Law Firm.

That’s because a municipality can only receive one liquor license for every 3,000 residents, and the license has to be used by a bar or restaurant in that same municipality.

As for packaged store licenses, it’s one for every 7,500 residents.

“A lot of times there are licenses available where there is no demand, and where there is demand there’s no licenses,” said Assemblyman John Burzichelli.

The division of alcoholic beverage control, otherwise known as ABC, at the Office of the Attorney General, says many towns do see the cap because the licenses were issued before the enactment of the population limitation law. Still, it brings the total to close to 9,000 liquor licenses in circulation in the state.

To put that into perspective, Pennsylvania, who has similar laws, has over 16,000 licenses at play. A state like New York, where’s these less restrictions, has over 51,000 active licenses.

“There are caps in areas where there is growth and potential for redevelopment,” said Mike Cerra, assistant executive director of the New Jersey League of Municipalities.

And of the roughly 9,000 licenses in New Jersey, 1,277 are in pocket, meaning someone owns it but isn’t using it.

“In New Jersey, if you’re not using a license, you have as a right two years to keep it in an inactive status, which is called pocket. The New Jersey ABC will then, with permission, allow you to renew that license, and New Jersey ABC is not inclined to take away someone’s license so you can usually renew up to, I’ve seen it to 10 years. Everyone thinks they have a liquor license is just going to go up and up and up, and in the last 10 years it has,” Skene said.

So if you’re a bar or restaurant, it’s going to cost you because you can’t borrow a license and there’s no subclass of license, meaning a restaurant or bar can’t just apply to buy a cheaper version and only sell beer and wine. It’s all or nothing.

“So the ability for the little guy to go into the restaurant business is hampered by the inability to get a liquor license,” Burzichelli said.

Skene says if you think it’s expensive to buy a license that’s in pocket and not in use, it’s even more.

“Their only recourse is to start knocking on doors and buy somebody’s active license, which can be very, very costly,” he said.