New Jersey Gov. Phil Murphy is not only aiming to increase the number of liquor licenses available in the state, he also wants to ban existing liquor license holders from reselling their licenses — even though some are worth more than $1 million.
The governor announced his proposal at this week's State of the State address, but only in broad terms, saying a targeted tax credit would help compensate existing liquor license owners. On the "Ask Governor Murphy" call-in show Wednesday night, he wouldn't say how big those credits might be, or how that credit might work.
That's likely to be a sticking point for bar and restaurant owners who depend on being able to resell their licenses to protect their investments.
Joshua Rosenberg, owner of Rosie's Wine Bar in Garwood, called in to tell the governor he's worried about losing his investment.
"Who's determining the value of the liquor license?" Rosenberg asked. "And who's determining the value of that tax credit?
Rosenberg also said Murphy's proposal threatened to undermine the "intrinsic value" of a license he already paid for.
"So now ... you're taking away the competitive advantage that I paid a lot of money for, and giving me a ton of other competition," he said.
The state would offer a means-tested tax credit for existing license owners, but the governor's office hasn't discussed a formula.
“A lot of the details around this plan are still being hatched," Murphy told WNYC senior reporter Nancy Solomon, who hosts the show.
He said his "guess" was there would be "some metric assessment, but promised the state would take a "meaningful" role in compensating existing business owners.
“These are early days to work this out," Murphy said.
That's despite saying his administration had "modeled this out our ears." And the governor isn't as reluctant to discuss other figures: He says reforming liquor license laws could generate up to $10 billion in economic activity over 10 years, and more than 10,000 new jobs annually.
According to a one-sheet summary his office shared with Gothamist, the governor proposes phasing out a cap on licenses that dates back to Prohibition. Currently, a town can award one license for every 3,000 residents. That threshold would decrease by 10% each year for five years, before being eliminated entirely. Individual towns would retain their current authority to review applications and issue licenses.
After that, the state would bar the resales. Licenses typically sell for hundreds of thousands of dollars, but can go for more than $1 million in communities with high demand.
Shortly after the governor announced his proposal, Dana Lancellotti, president and CEO of the New Jersey Restaurant and Hospitality Association, said by email that adding more licenses to the marketplace would "have a negative impact on these small businesses that have contributed so much to their communities over the years." She instead encouraged policy to encourage the use of what she said were 1,000 existing, but unused, licenses.
"I'm not sure what the tax credit is, but it will be meaningful and the state's going to have to play a role here," Murphy told Rosenberg on the call-in show. "There's no other way around that."
Murphy has been suggesting for months that liquor license reform could be coming soon. During the April 2022 edition of "Ask Governor Murphy," he said that there had recently been a stakeholder meeting to explore the topic.
"The one thing I do know is other states that have done it," he said at the time. "It is a game-changer for main streets, for downtowns — an absolute game-changer."
No bill to advance the governor's proposal has yet been introduced in the Legislature.
Murphy has also proposed doing away with licensing and operating restrictions on craft breweries, distilleries and wineries that the state's Division of Alcoholic Beverage Control began enforcing over the summer. The restrictions limit how many events the businesses can hold, and prevent them from working with food trucks and similar vendors to offer food.
"Ask Governor Murphy” is a production of WBGO in Newark, in partnership with WNYC and WHYY.