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Reversal of Course on Controversial Brewery Regulations

A contentious directive, meant to severely limit the activities of craft breweries in New Jersey, has been suspended after a large outcry

Beer: Cape May tasting room
Credit: Cape May Brewing Co.

A controversial new rule limiting the operation of craft breweries was rescinded by the state Tuesday, causing many to celebrate what they see as new support for a growing industry in the Garden State.

After a week of hearing from irate brewery owners as well as suppliers of beer ingredients and equipment, mom-and-pop food vendors, philanthropic and arts organizations as well as government officials, New Jersey’s director of Alcoholic Beverage Control (ABC) has suspended restrictions he placed on independent breweries late last month to allow for further study.

Though the ABC’s ruling had been in the works for a while, Gov. Phil Murphy was joined by state Senate President Steve Sweeney (D-Gloucester), Assembly Speaker Craig Coughlin (D-Woodbridge) and Rep. Donald Norcross (D-1) among others in condemning the regulations as stifling to the development of small businesses. The governor expressed concern over the ruling’s “unintended consequences” and pledged to research options to make it less onerous for craft breweries to operate.

In response, the ABC issued a notice yesterday suspending the ruling to give itself “the opportunity to engage in further conversations with stakeholders.” Additionally, ABC will work with lawmakers to determine whether new legislation is needed.

ABC director David Rible had attempted to erase the ambiguities in the state’s craft-brewery laws by setting limits on the number of events, off-site festivals and site rentals breweries could conduct. But after a groundswell of opposition, Rible agreed to suspend the restrictions, saying the issue needed further study.

Brewery events would have been limited

“We want to make sure that we get this right,” wrote Rible, a Christie appointee and former Republican state Assemblyman who’s held the job since July 2017. “We are committed to supporting the state’s growing craft beer industry, while also balancing the concerns of other stakeholders and ensuring compliance with state law.”

Notably, the special ruling capped the number of on-site events (think paint-a-pint parties or dog-adoption nights) to an annual 25 per year and off-site festivals with beer sales (such as community fairs) to 12 — provided the brewery obtained an ABC permit well in advance. The brewery could rent out space for 52 private parties a year, provided the brewery owner took copious notes on attendees, food served, etc., and didn’t allow in outside alcohol or anyone not on the guest list. Food trucks and pop-ups like craft fairs were expressly forbidden, as was the sale of soda not made at the brewery. Though patrons could still bring in their own food and buy small packaged snacks like peanuts, they would no longer be able to peruse delivery menus from local eateries at the brewery.

Rible has spent the past year studying a 2012 law that significantly lowered the price of state licenses to run a craft brewery or brew pub and relaxed the rules governing acceptable activities in brewery tasting rooms. In doing so, he sought to clarify the law that left crucial matters in doubt, such as whether breweries can allow food trucks on their property and if it’s legal to host events like public trivia nights and private birthday parties. Though he spoke with many stakeholders, including New Jersey’s two brewery associations and critics from the bar/restaurant, beer wholesaler and liquor store industries, his final decisions were widely condemned.

Does ‘somebody’ want to shut down the industry?

“You can’t have an open mic? Alcohol is regulated more than the opiate distribution system in New Jersey. Time has long since passed when (the ABC) is relevant. It’s as if they’re looking for a reason to continue,” says Norcross, who served as architect of the initial bill as chair of the state Senate’s law and public safety committee. “And it seems somebody wants to shut down the (craft beer) industry.”

That “somebody” might be interpreted as the New Jersey Restaurant & Hospitality Association (NJRHA) and its allies in the fight against letting tasting rooms run more like bars, as they do in many other states. Though the objections vary, the loudest of them concerns whether liquor license holders are losing business to tasting rooms, which enjoy unfair advantages because they can produce, distribute and sell beer directly to consumers without paying the often-exorbitant price publicans and restaurateurs have to spend for a liquor license.

Marilou Halvorsen, executive director of the NJRHA, responding to the suspension by email, said, “The new regulations have been portrayed as a crackdown and that isn't true. The new regs actually give the breweries the legal authority to host or attend 72 events a year. Since 2012 they haven't had regulations and many were operating outside the intent of the original legislation by hosting weddings, banquets, allowing outside alcohol, etc.”

In his statements both issuing and suspending the special ruling, Rible mentioned his desire to honor that intent, which was to allow breweries to sell glasses of beer over the bar so that visitors could sample the offerings after a tour without the ability to buy food on-site or engage in any entertainment that might compel them to stay at the brewery instead of spending their dollars at a licensed establishment.

It's growing and ‘needs to be nurtured’

But much was left to interpretation in the contentious law, and while it’s opened the door to an influx of very small breweries — 88 currently operate in the state — that wouldn’t have been able to afford to operate without pint sales, it’s caused handwringing over the missing details ever since. Rible’s ruling meant to put an end to the infighting. But brewery owners — who support charities, artists and vendors by fundraising, donating space, hosting live bands and yoga classes and supplying food-truck and pizza-shop owners with a steady stream of customers — argue that the restrictions could put them all out of business.

Camden County Freeholder Director Louis Cappelli, who put out a statement in opposition immediately after Rible issued the September 21 ruling, followed up with one of support for the suspension of the ruling Tuesday. “The craft brewing industry is growing and needs to be nurtured to bring new entrepreneurs into our community, not neutered to undermine its ongoing growth,” he wrote.

Coughlin echoed the sentiment in his own statement: “Since the ruling took place, I have strongly believed it … had the very real potential of hurting small business owners. As a state, we must continue to attract businesses, create new jobs and foster economic growth.

Pro-brewery officialdom weighs in

Sweeney and Senate Minority Leader Tom Kean (R-Westfield) both offered to seek legislative ways to encourage the industry. Though the law updated Prohibition-era brewing regulations for the first time, New Jersey remains one of the most restrictive in the nation. All 50 states have now passed their own measures striking down laws adopted in the early 1930s and many allow breweries to run full-scale restaurants and unlimited off-site taprooms; serve outside beer, wine and spirits; and host as many events as they choose.

Rible’s regulations would have outright banned food trucks, sales or freebies of any food more extensive than a small bag of snacks and even delivery menus from local eateries, as well as limiting on-property public events (like yoga or live music or art lessons) to 25 per year and private events to 52. Meanwhile, New Jersey’s wineries face no such limitations and in some cases boast restaurants and host large-scale private celebrations in facilities built specifically for the purpose.

But thanks to the influence of pro-brewery officials, things could work out better for craft beer producers and drinkers. When brewers and their lobbyists were pushing the brewery modernization act through Trenton earlier this decade, they resisted asking for too much at once, for fear their opponents — who also serve as their wholesalers and outside retailers — would refuse to compromise. Now, with the capital’s top leaders calling for additional laws to further the interests of the craft-beer community, it seems they may soon get to toast their foresight in playing the long game.

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