New Jersey Brewery Sues State Over Outrageous Restrictions
The restrictions are clearly intended to crush breweries in order to protect restaurants.
A New Jersey brewery has sued the state over an expansive set of egregious new rules it adopted in July that are intended to protect restaurants—along with bars, grocers, and liquor stores—from competition. The suit was filed last week in New Jersey state court by the nonprofit Pacific Legal Foundation on behalf of Death of the Fox Brewing Company, a New Jersey craft brewery.
The rules, which could put many of the state's craft brewers out of business, are as awful as they are baseless. New Jersey's alcohol beverage control (ABC) board has been clear that they are neither designed nor intended to protect consumers in any way but, instead, to protect powerful, entrenched alcohol interests in the state.
In 2019, I noted in a column on the then-proposed rules, the ABC claimed the special ruling was intended to "strike a balance between the craft brewing industry and restaurants." That so-called "balance," I noted, appears to be dictated by the state's restaurant industry. "The state's powerful restaurant lobby… opposes 'any legislation that would relax the state's uniquely restrictive [brewery] rules.'"
In another column this past July, after the rules took effect, I explained that what the ABC really means by "balance" is that it wants to help restaurateurs and others who sell alcohol by harming small brewers. "Call that what you may—bad policy, protectionism, crony capitalism, or just plain bullshit," I wrote.
In that July column, I both dug and ripped into the "outrageous and asinine" rules and detailed they now require that every brewery:
- must require patrons take a detailed tour of that brewery before purchasing any alcohol for consumption on or off site. The tour may not include sampling beer. ("A licensee must provide such a tour prior to allowing any on-premise consumption, including but not limited to consumer sampling.")
- may not sell or serve food beyond trivial quantities of "water and single-serve, pre-packaged crackers, chips, nuts and similar snacks." A brewer also may not partner with one or more food trucks to offer food for sale on the premises.
- may not sell mixed drinks containing beer on the premises.
- may not offer either free drinks "as a gesture of good will" or discounted drinks.
- may not brew and sell coffee or may not sell any soda that is not produced at the brewery.
- may not host "'pop up' shops, bazaars, or craft shows."
- may not host more than 25 special events per year. Special events include live music, trivia nights, a "live-televised championship sporting event," or the showing of any television program—news, sports, movie, etc.—that the brewery markets via social media.
- may not hire an outside marketing company to assist with any special event.
No wonder breweries are already suffering under the new rules.
"We have seen a serious impact on our business since the rules were put into effect on July 1st," says Chuck Garrity, president of Death of the Fox Brewing in Clarksboro, in an email to me last week. Garrity, whose brewery lies across the Delaware River from Philadelphia and other cities in Pennsylvania, where breweries don't have to deal with New Jersey's odious, killjoy rules, notes his sales are down since the ruling took effect.*
"The state of New Jersey ABC is regulating entertainment, not alcohol," Garrity tells me. "They are attempting to [ruin] our customer's experience, by first forcing them to do a tour, and if they are a repeat customer ask for their personal information. They are also limiting our ability to give customers a great experience by having live music and events. It is just plain wrong."
That it is. The origins of the problem, I've explained, lie in the fact New Jersey caps the same liquor licenses it requires. By creating artificial scarcity, restaurants and others that want a liquor license now must pay up to a million dollars for that license. As a result, they push to protect what's "theirs" against the competition, even if the relevant part of what's theirs (a license) has no inherent value beyond the paper on which it's printed.
"ABC's rules are a transparent attempt to kneecap New Jersey's growing craft brewery industry in favor of bars, restaurants, and liquor stores," PLF attorney Caleb Trotter told me last week. "If the inherently unfair picking of winners and losers by the government wasn't enough, ABC failed to even follow the proper procedures in creating its rules, which leaves them invalid under New Jersey's Administrative Procedure Act. Finally, arbitrarily capping the number of events that breweries may advertise each year at 25 plainly violates the free speech protections of the New Jersey and U.S. Constitutions. We look forward to the courts righting this egregious attempt to limit economic opportunity and happiness in New Jersey."
I'll raise a glass to that.
*CORRECTION: The original article misstated the extent of the drop in sales.
