NJ: Legislation aims to strengthen relationship between breweries, local businesses
By Marshall T. Kizner, Esq.
November 24, 2015
In 2012, the New Jersey legislature passed groundbreaking legislation that allowed craft breweries the opportunity to operate in the State of New Jersey by creating a limited brewery license (the “Craft Brewery License”). The Craft Brewery License was revolutionary within the state because it finally allowed brewers an affordable option for small-scale production that had been long missing from the state. It also provided brewers the ability to provide samples to customers, and sell a limited quantity of their product at retail to consumers at the brewery. The statute made it clear that a Craft Brewery License holder could not sell food or operate a restaurant at the brewery.
However, if a brewery wants to sell food on site, it must own a plenary retail consumption license; run a restaurant on site; and receive a restricted brewery license (“Brew Pub License”). As a note, the Brew Pub License is more limited regarding the quantity of beer that can be produced and the means of selling the beer. Brew pubs are limited to the sale of 10,000 barrels of beer a year, opposed to 300,000 barrels a year under the Craft Brewery License. The Brew Pub License also restricts the sale of beer off site. Under the current legislation, there are no direct sales to retailers permitted by brew pubs.
It is clear that both craft breweries and brew pubs are limited in their ability to operate and sell their beer due to restrictions inherent in the governing law. In an effort to further loosen the reigns of the existing law and forge greater community ties between breweries, farmers, and local businesses, three new bills were introduced by Sen. Thomas Kean in May of 2015:
- Direct Sale at Farmers Markets
In an effort to strengthen the relationship of small businesses in New Jersey communities and home grown New Jersey products, S-2910 was introduced. The proposed legislation will permit both craft breweries and brew pubs to sell beer at community farm markets. Sampling is allowed at the farm market; however, the beer sold is intended for consumption outside of the farm market and therefore not legal. Under this bill, the brewery or brew pub would be able to sell beer produced by the brewery at farm markets by obtaining an annual permit. The cost of the annual permit is capped at $75. However, a separate permit would be needed for each individual farm market where the brewery intended to sell beer.
The proposed legislation contains two exclusions: (a) a permit cannot be obtained in a “dry” municipality; and (b) and a permit cannot be issued to a location owned by a single farmer who sells his own products directly to consumers. The latter exclusion is intended to make it clear that sales by two or more farmers are needed to constitute a “community farm market.”
The passage of this law will allow craft breweries and brew pubs additional exposure within local communities and also should help promote attendance at community farm markets. This should help farmers, local merchants and breweries continue to grow in their communities.
- Consumption of Food at Craft Breweries
S-2911 addresses an open issue in the 2012 legislation concerning the consumption of food at craft breweries. The proposed legislation makes it clear that, while a craft brewery cannot sell food or operate a restaurant at the brewery, consumption of food purchased by consumers outside of the premises is permitted at the brewery. Although purchasing food from a vendor or restaurant located outside of the brewery was never proscribed by law, the legislature believed it was enough of a gray area to warrant clarification.
The passage of this bill will hopefully strengthen the relationship between breweries and neighboring restaurants, food trucks, and other vendors. The passage of this law also should ease the concerns that breweries and food vendors have regarding potential alliances.
- Brew Pub Sales to Retailers
The last bill, S-2912, allows brew pubs to sell and distribute up to 1,000 barrels of beer per year to licensed retailers within and outside of the State of New Jersey. The passage of this law should help brew pubs gain exposure by allowing limited retail sales within and outside of the state. This also should promote stronger ties between liquor stores and brew pubs in local communities.
Although it is no secret that New Jersey is behind the national curve regarding the restrictions imposed on craft breweries and brew pubs, the legislature is trying to chip away at these limitations and further promote New Jersey’s $750 million-a-year beer industry. The pending legislation should help farmers and small businesses within the state, and further spur economic growth.