Gov. Murphy pitches plan to overhaul liquor licensing laws

(The Center Square) — Gov. Phil Murphy is pitching a plan to overhaul the state’s liquor licensing system by easing prohibition-era restrictions and allowing more business to sell beer and wine.

The plan, unveiled during his annual State of the State address, calls for the state to “gradually relax” a cap on liquor licenses that limits local governments to one license per 3,000 residents, until it’s eventually eliminated.

“This won’t be easy, but it will be worth it,” Murphy said in his speech. “We project that overhauling our liquor license regime will create upwards of 10,000 jobs annually and, over the next 10 years, generate up to $10 billion in new economic activity and $1 billion in new state and local revenues.”

Murphy said the current licensing rules have “purposely created market scarcity and driven up costs to the point where a liquor license can draw seven figures.” He said that prevents cities and towns from redeveloping Main Streets and hurts the state’s overall competitiveness.

“We rely on a foundation of rules written in the days immediately after Prohibition to govern a 21st-century economy,” Murphy said. “That makes no sense.”

Adding more liquor licenses would generate “significant new state and local revenue” that could be “reinvested into new economic development efforts,” he added.

But the plan faces pushback from the state’s hospitality industry, which argues the move could negatively impact existing businesses.

Dana Lancellotti, president of the New Jersey Restaurant and Hospitality Association, points out that Murphy’s proposal could impact bars and restaurant owners who’ve made “tremendous financial investments” to get liquor licenses.

He said Murphy’s proposal would “greatly devalue” existing licenses and, as a result, create another devastating financial hit to restaurants.

“Under the laws that have been in place, many licensees acquired their license at an exorbitant cost, purchasing the license at market value as required,” Lancellotti said in a statement. “Adding more new licenses to the market will immediately diminish the value of existing licenses and devastate their asset.”

She said efforts to reform the state’s liquor licensing law should start with getting more than 1,000 “inactive licenses” back into the market.

These ‘pocket’ licenses should be publicly bid so that anyone can compete,” she said. “The transfer of the pocket license between municipalities should also be considered.”