Private Business Counsel

The New Jersey Division of Alcoholic Beverage Control (“ABC”) announced Tuesday, October 2, 2018 that it will suspend enforcement of the Special Ruling, which was issued by the ABC less than two weeks earlier, on September 21, 2018, relating to limited brewery licenses. ABC’s Special Ruling was issued in an effort to clarify the privileges of limited brewery licenses, and attempted to strike a balance between the interests of full retail license holders, such as restaurants and bars, and the rising craft brewing industry.

By way of background, in 2012, the NJ Legislature amended state liquor laws to promote the craft beer industry (the “2012 Amendment”). See N.J.S.A. 33:1-10(l)(b). The statute provides that “[t]he holder of [a limited brewery] license shall be entitled to sell [its malt alcoholic beverages] product[s] at retail to consumers on the licensed premises of the brewery for consumption on the premises, but only in connection with a tour of the brewery, or for consumption off the premises in a quantity of not more than 15.5 fluid gallons per person, and to offer samples for sampling purposes only pursuant to an annual permit issued by the director. The holder of this license shall not sell food or operate a restaurant on the licensed premises.” Id.

The Special Ruling states that “[i]n passing the 2012 amendment, the Legislature intended to promote the craft beer industry and create a demand for these products by the consuming public. . . The 2012 amendment was not intended to establish a new consumption venue at the brewery, with the same privileges as a sports bar or restaurant.” In recent years, however, a growing number of craft breweries began serving alcohol well beyond what the ABC believed limited brewery licenses allowed. This resulted in unfair competition complaints from some bar and restaurant owners.

In its attempt to rectify the situation, the Special Ruling greatly restricted the number and type of activities and offerings permitted under a limited brewery license. Under the Special Ruling, limited breweries would only be able to hold up to 25 on-site events per year and up to 12 off-site events per year, all of which were to be subject to authorization by the ABC. It also restricted private parties on the premises of a limited brewery to a maximum of 52 per year. Further, in accordance with the law, the Special Ruling prohibited limited breweries from selling food on their premises. In doing so, the Special Ruling expressly excluded limited breweries from coordinating with other vendors in the community, such as food trucks and small restaurants, to provide menus, as many breweries have done in an attempt to get around the law’s restriction. The Special Ruling did, however, allow for consumers to bring their own food into the tasting room.

State legislative leaders from both parties reported that they began looking into a solution after receiving backlash from the craft brewing industry and its avid supporters, particularly a petition in support of limited brewery license holders that obtained over 28,000 signatures. But it’s not over for limited breweries yet – the ABC plans to work with state legislators to determine whether new legislation is needed to update the 2012 Amendment that gave rise to the Special Ruling.

An important lesson from this recent activity is that you may, perhaps even unknowingly, be operating your licensed premises in violation of your state’s liquor laws. If you have questions about your rights as a license-holder, or are in the process of becoming a license-holder, it is important to speak with an attorney who is familiar with the licensing laws in your jurisdiction.