State considers liquor license reform
With many N.J. citizens seeking a cure for the ill condition of the state's budget, some say reforming the current liquor license system is a good place to start.
On the 101.5 radio program "Ask the Governor," Gov. Chris Christie said he is in discussions regarding reform for liquor license regulations, responding to a caller who said the "archaic" system is holding chain restaurants from investing in the state.
"It's certainly something that I'm willing to consider as we look for ways to expand our economy in the state," he said. "We need to do it in a fair way so that we don't diminish the investment others have already made in the liquor licenses."
Kevin Roberts, a spokesman for Christie, said the governor has yet to put anything forth.
"The governor expressed to take a look at it, and that's where we stand," Roberts said.
Although the governor has yet to draft legislation, Sen. Jim Beach, D-Camden, was quick to create a five-bill legislative package to reform the state's liquor license regulations, which he said is long overdue.
"We haven't looked at our liquor laws in New Jersey in 50 years," he said. "So maybe it is time to take a look at them and see if we can update them."
Of the five bills the package contains, two allow for supermarkets to sell religious wines and for liquor licenses to be sold across or adjacent to city lines, which Beach said is beneficial for the dwindling state economy.
"It all started when I was speaking with some mayors in the 6th District and looked at what would help balance their budget with the severe cuts," he said. "If a town would be able to sell a liquor license that they acquired, both towns could benefit."
Liquor licenses can be sold anywhere from $400,000 to $1.5 million, with the most recent sale of liquor licenses in Cherry Hill, N.J., Beach said, adding that this value is a catalyst to improve the economy.
Some small business owners are critical of the bills, saying the legislative package will only hurt rather than help. This is the last thing the package is supposed to do, Beach said.
"You don't want to take some of these small mom and pops out of business. That is not the intent of the legislation," he said. "[So] in certain conversations that I've had, you get to learn about the pros and cons."
Richard Levesque, executive director for New Jersey Retailers for Responsible Liquor Licensing, said the legislation is not trying to create more liquor licenses but is expanding the ability to obtain more, which he said is needed for the economy.
"When a supermarket opens, it generates between roughly 200 and 600 jobs … and generates about $25 million in economic growth for the community and the surrounding area," he said. "It will spark economic growth and development and create much-needed jobs in the state."
The ability to distribute liquor, beer and wine in a supermarket also provides consumers with the convenience of "one-stop shopping," which Levesque said is an element missing from many grocery stores in New Jersey.
"Currently, Acme has two liquor licenses down in Cape May Court House. When you walk into the store, you are able to shop for milk and eggs as well as beer and wine," he said. "It is a natural benefit for the consumer."
With revenue numbers steadily decreasing with every passing quarter, Beach's legislative package is a necessary step in promoting economic development while actually increasing the value of existing licenses, Levesque said.
"When you have more people willing to purchase liquor licenses, and especially in attractive areas that don't have licenses available, the individual that does own a license has a very valuable asset," he said. "Competition and capitalism is what this country was built on."
But Paul Santelle, president of the New Jersey Liquor Store Alliance, said this is not the case and allowing grocery chains like Wegmans to purchase liquor licenses from small businesses will actually decrease the value of others.
"The problem is once they bought that license, the value of everyone elses actually goes down," said Santelle, part of the state's alcohol industry for more than 30 years. "Now there is a different type of competition that has come in, and if it is a grocery store, it isn't on a level playing field."
When referring to the factor of convenience, Santelle said the addition of a liquor store at the end of a grocery store like ShopRite is actually great for business. But he added this changed when Wegmans entered the scene and wanted all of this under one roof.
"Wegmans comes to town and builds a store saying ‘one size fits all.' They say there is a problem with the policies in the state," he said. "They are taking things to a whole other level, and they want to go back to where we were in the 1960s."
New Jersey set a two liquor license limitation in 1962 because the grocery chains were illegally acquiring a great majority of licenses and created a monopoly, Santelle said. This is considered to be the "dark ages" of the alcohol industry in New Jersey.
"There was collusion, price-fixing and manipulation of licenses that were being hoarded by grocery chains. Certain entities had up to 100 licenses," he said. "[The state] found the grocery stores went too far with their power. In the end, they had to clean it up."
Santelle added that problems did not truly start for small business owners until Wegmans began building in New Jersey, saying in-state chains like ShopRite and A&P never pushed for liquor license reform.
"They are all out-of-state chains that have national policies on how they want to do things, including the sale of alcohol," he said. "They look at how healthy the New Jersey alcohol industry is in terms of broad sales, [and] they want a piece of the pie."
New Jersey is ranked fifth in the nation for alcohol sales and is successful in keeping DWI's and underage purchasing of alcohol at a low rate, Santelle said. This would all change because supermarkets like Wegmans would increase the accessibility of alcohol to underage teenagers.
"Half of the employees that work in supermarkets are teenagers, and they are the ones working the night shifts and the weekends shifts," he said. "It is basically opening Pandora's box, where you have to be careful and look at the unintended consequences."
With the Alcohol Industry of New Jersey — a coalition representing alcohol retailers, wholesalers and small business owners — Santelle met with Beach to discuss these concerns.
"Within in minutes of sitting down there, [Beach] realized he had jumped into something he didn't know anything about and knew nothing about the alcohol industry," he said.
Although the legislation is still in the works, Beach said he is focused on pushing the bill to allow the sale of religious wine while he talks further with other alcohol-industry veterans like Santelle to work out the kinks.
"I've had the opportunity to investigate more. The Restaurant Owner's Association is doing research for me, and they are going to [tell] me what the impact would be by Thanksgiving," he said. "Until I get their report, I told them I wouldn't do anything until then."