N.J. lawmakers consider bills expanding liquor sale rules

State lawmakers are considering a slew of bills that would dramatically overhaul regulations on how beer, wine and liquor are sold in New Jersey.

Mitsu Yasukawa/The Star-LedgerRon Squillace "Captain," owner of Castalia, a restaurant/bar located in Woodland Park. State lawmakers are considering a slew of bills this year that would dramatically overhaul decades-old regulations on how beer, wine and liquor are sold in New Jersey. The bills would expand the number of supermarkets that can sell liquor, allow towns to sell unused licenses to other municipalities and let BYOB restaurants buy a license to sell beer and wine.
TRENTON — Ron Squillace owned Castalia, a trattoria in Woodland Park, for five years before he was able to sell a glass of pinot grigio with his pollo campagnola.

He finally obtained a liquor license in October, paying $300,000 for the right to sell wine and beer at his restaurant on McBride Avenue, not far from the Passaic River.

A liquor license in New Jersey is a little like a taxi medallion — there are only so many of them — and demand is so high that some restaurants must be willing to open their wallets wide for the privilege of opening their own bottles.

State lawmakers are considering a slew of bills that would dramatically overhaul regulations on how beer, wine and liquor are sold in New Jersey, bringing about some of the most sweeping changes since the end of Prohibition. The legislation would expand the number of supermarkets that can sell liquor, allow towns to sell unused licenses to other municipalities, and allow restaurants now restricted to a bring-your-own policy to buy a restricted license that allows them to sell just beer and wine.

“Our legislation is antiquated, and nothing has been done with it for 60 years,” said state Sen. James Beach (D-Camden), who is among the lawmakers sponsoring the bills.

While the proposed changes are drawing fire from liquor store owners and existing-license holders, some business owners shut out from selling alcohol say they have appeal.

Peter Hajiyerou, the owner of Greek Taverna in Montclair, said he would be “more than happy” to sell wine and beer at his restaurant. But with licenses going for hundreds of thousands of dollars in upscale towns, he said, it’s just not possible.

“A license would make my business more attractive,” he said. “But how do I make enough money to support that kind of loan?”

The state’s liquor license laws are rooted in the post-Prohibition climate, as New Jersey towns decided whether to become “wet” or “dry” after the repeal of the 18th Amendment in 1933, according to Mark Lender, chairman of the history department at Kean University.

“There was a temperance movement that wanted to restrict liquor licenses,” Lender said. “It was supposed to restrict the disorderly behavior that you found at saloons.”

In New Jersey, each municipality is allowed to issue one tavern or bar license for every 3,000 residents, and one license for a packaged-goods store for every 7,500, according to the state Division of Alcoholic Beverage Control. The number of liquor licenses in the state has been declining since the 1980s, from more than 10,000 to about 9,300, as the licenses have expired, according to the ABC.

That has led to big prices when unused or inactive licenses are auctioned by municipalities or sold in private sales.

In many cases, national-chain restaurants with deep pockets have been willing to pay whatever it takes to be able to sell beer, wine and mixed drinks, driving up prices. Liquor licenses can cost from $50,000 to more than $1 million depending on the town, according to Jason Bundick, an attorney with Drinker Biddle & Reath in Princeton.

CHANGING THE FIELD
The proposed legislation would yield the most dramatic changes to alcohol sales since the 1980s, according to Bill Dressel, executive director of the New Jersey League of Municipalities.

“This is a very comprehensive revamp of the various laws and regulations,” he said.

The bills include measures to permit the sale of unused liquor licenses across municipal lines, and the creation of limited-use licenses by restaurants. One measure would allow more grocery stores to sell alcoholic beverages, by gradually expanding the number of retail licenses any one person or corporate entity could hold, from two to 10.

A limited “religious retail license” would allow the sale of beverages at food stores operated under religious supervision.

Some trade groups oppose the proposals, saying the measures would reduce the value of liquor licenses already owned by restaurants and would put mom-and-pop liquor stores out of business.

“This would create an unlimited number of new licenses,” says Deborah Dowdell, president of the New Jersey Restaurant Association. “We feel the entire liquor license system needs to be reviewed.”

Squillace worried that his recent investment in his restaurant would suddenly be devalued if the number of licenses expanded. “Everybody in the state has to play by the rules, and all of a sudden you are changing the playing field. It’s totally unfair,” he said.

Liquor store owners also worry they will be crushed by big supermarket chains, said Paul Santelle, president of the New Jersey Liquor Store Alliance.

“Nobody with one liquor store can compete with a grocery store that can sell alcohol as a loss leader just to bring people in,” he said.

Santelle said grocery store chains have been “buying up licenses in towns and sitting on them, waiting for the bills to become law.”

Santelle said the Wegman’s supermarket chain is a driving force behind the grocery store bill, which is sponsored by Assemblyman Louis Greenwald (D-Camden).

Wegman’s already owns two liquor licenses, but in recent years, family members have bought licenses in a number of towns where the chain has grocery stores, including Cherry Hill, Mount Laurel, Manalapan and Woodbridge, according to public records. Operating as separate corporations, they’ve so far opened liquor stores inside two of the Wegman’s locations.

A Wegman’s spokesman referred all questions to John Vassallo, the attorney representing the family members.

“Wegman’s wants to have a one-stop shopping base for the customers,” said Vassallo, the former director of the state’s Division of Alcoholic Beverage Control. “But they can’t, so they are having someone else handling them.”

Rich Levesque, head of the New Jersey Retailers for Responsible Liquor Licenses, said there’s no evidence that expanding the number of licenses would harm current license-holders.
“Whenever you have more people in the market, the price of existing licenses will increase,” said Levesque, whose group includes supermarkets.

COEXISTENCE
Expanding the number of liquor licenses would help supermarkets at a time when sales are flat, said Linda Doherty, president of the Food Council of New Jersey, which represents supermarkets. She noted that, besides Wegman’s, A&P, Whole Foods, Shop-Rite, Acme and King’s already sell liquor in New Jersey.

“There is an Acme in Cape May Court House that sells liquor right next to a liquor store, and
they coexist,” she said.

At the same time, Beach, the Camden County senator, said cities would be able to gain more revenue by selling unused licenses to growing towns. “It’s a nice opportunity for municipalities that are struggling with budget issues,” he said.

Some restaurant patrons, though, would rather bring their own instead of paying the mark-up typically charged at places that possess a liquor license.

Last Tuesday night, Bruce and Jennifer Miller took a bottle of chardonnay with them as they headed to dinner in Montclair.

If she were to purchase the wine at a restaurant, Jennifer said, “they would be charging you more for a bottle worth $15.”

By Joseph R. Perone and Sean Sposito/The Star-Ledger