You are here

Loosened Laws in New Jersey Result in Brewery Boom

Only a year after New Jersey Governor Chris Christie signed a bill into law that would allow breweries in the garden state to sell beer on their premises, the Garden State has experienced a growth spurt in its craft beer scene. Bills S-641 and A-1277, which were signed into law in September 2012, make a number of changes for both microbreweries and brewpubs that enthusiasts had hoped would put the state in a better position to compete with its neighbors. New Jersey is ranked as the 34th state in the nation for craft beer production, while Pennsylvania takes the number two spot, New York is sixth, and Delaware is 16th. Unsurprising for those of us who study of free market economics, the relaxed laws have spurred growth. At least 15 new beer-producing businesses are set to come online in New Jersey by next summer! This makes sense since starting up a production brewery or a brewpub is risky and has a large initial investment; the old rules made it difficult for a start-up brewer to make ends meet and limited existing breweries’ ability to grow. Up until the law changed, craft breweries -- those that produce less than six million barrels a year -- were only allowed to give away beer to visitors on a tour of the facility, and even then they were limited to no more than four two-ounce samples. Additionally, if those visitors wished to buy some brew to enjoy at home, they were limited to two six-pack’s worth. With the new law, breweries can now sell full pints at the brewery and customers can buy a keg’s worth of beer (15.5 gallons) for consumption off-premise. The bill also made some changes for brewpubs (restaurants with a breweries attached). Brewpubs can now produce up to 10,000 barrels of beer instead of being limited to just 3,000. The new law also raises the cap of how many brewpub licenses a business can hold -- it is now 10 instead of the previous two licenses. Finally, and perhaps best of all, the laws now allow brewpubs to sell their beer to wholesalers so that it can be distributed to stores around the state and restaurants beyond their own. These changes mean good things for both existing New Jersey beer producers and those hoping to get into the business. For those already operating, the new laws make expanding the business and revenue much easier. For would-be Jersey brewers, the new laws will help them to earn revenue in their early years, which is especially important in the Garden State, where obtaining a liquor license is particularly difficult and extraordinarily expensive.
The high cost and tight supply of liquor licenses is a barrier for would-be brewpubs. It was for that reason Peggy Zwerver and Tom Baker left New Jersey after developing a cult following for their Ocean Township-based Heavyweight Brewing. Looking to open a brewpub, they were stunned by the hundreds of thousands of dollars they’d need to pay for a liquor license in New Jersey. So they opted for Philadelphia instead, with its abundant and relatively cheap licenses, Zwerver said. After opening Earth Bread and Brewery in 2008, they haven’t looked back.
Hopefully, the obvious benefits of loosening these beer laws will demonstrate to more lawmakers that the best thing they can do for the economy and their constituents is to simply get out of the way.