Op-Ed: NJ’s Liquor Laws Protect Small and Local Businesses

Mike Halfacre | April 24, 2019 | Opinion
No one can own more than two liquor licenses in New Jersey. Big-box stores and corporate supermarket chains don’t like that provision

Mike Halfacre
As predictable as the return of summer fun at the Jersey Shore, big-box retailers from out of state and massive corporate supermarket chains have returned to the State House arguing that New Jersey’s liquor laws are archaic and unfair. Unfortunately, the changes they seek would only enrich themselves at the expense of New Jersey-based small businesses and the communities they support.

Alcoholic beverages are not bread or toilet paper and should not be sold as if they were. In fact, alcohol and its regulation are a part of our nation’s history. George Washington was a distiller. Thomas Jefferson collected wine. The American Revolution was born in taverns across the colonies. Alcohol excise taxes were the primary source of funding for the federal government until Prohibition, when they were replaced with the income tax. Alcohol is the only subject with two constitutional amendments dedicated to it. It is neither bread nor toilet paper.

The passage of the 21st Amendment to end Prohibition gave each state the primary role in regulating alcohol. The result was 51 different regulatory schemes, each with its own idiosyncrasies. It is easy to cherry-pick portions of a state’s alcohol laws to ridicule, and compare unfavorably to another state’s laws, but all states have alcohol laws that are unique to their circumstances. Just as each state may have different social or cultural values, so does each state have different alcohol laws. Under current New Jersey law, no individual or corporation can own more than two liquor licenses in the state.

Unfortunately, huge corporations would have you believe that New Jersey’s two-license limit and the population cap on licenses are silly and archaic. Yet 18 other states have one or both provisions. These are not random. They are intended to keep a regulated product in the hands of small, local, businesses, who will be responsive to concerns of the community in a way that the large, out-of-state corporations won’t.

Legitimate public-policy goals

The population cap is intended to limit the density of alcohol outlets for the purpose of public safety. The Centers for Disease Control and Prevention and Johns Hopkins School of Public Health reviewed multiple studies in “Regulating Alcohol Outlet Density: An Action Guide,” finding that increased number and density of outlets leads to increased consumption and increased risks to society.

These so-called antiquated liquor-license laws serve valid and legitimate public-policy goals. They should not be discounted and attacked simply because out-of-state big-box retailers want to use the margins on alcohol sales to offset their losses on food sales and avoid New Jersey corporate taxes at the expense of our small businesses and consumer choice.

Big-box retailers would have you believe that Massachusetts increased the limits on liquor-license ownership to great economic success. The facts show otherwise. In the six years since Massachusetts increased its ownership limits, the alcoholic-beverage retail sector lost nearly 2,000 jobs and combined state and federal tax revenues fell by over $138 million.

In 2011, Costco spent $22 million to change liquor laws in Washington and deregulate the state’s liquor laws. Deregulation led to an increase in liquor stores from 328 to over 1,700, resulted in prices increasing by more than 15 percent and led to fewer brands available to consumers. More importantly, homegrown small liquor stores began failing, while shoplifting and underage drinking increased.

New Jersey’s alcoholic-beverage law is anything but static and archaic. It has been amended hundreds of times since its original enactment at the end of Prohibition. It is a living, breathing economic engine that needs to be carefully maintained with thoughtful and deliberate action.