GOVERNOR PHIL MURPHY just VETOED THE NJ CRAFT BREWERY BILL…. WHY EVERY RESIDENT OF THIS STATE SHOULD CARE

On Monday, November 27th, 2023 Governor Phil Murphy put pen to paper and signed a CONDITIONAL VETO on S-3038/A-4630, a bill that was passed to give NJ craft breweries the very basic rights enjoyed by every other business in the state. The residents of this state should be very concerned about this action by this Governor.

A LITTLE HISTORY: S-3038/A-4630 was unanimously passed by through the legislature five months ago. It exists because big PAC money and special interests have unfairly lobbied this Governor’s administration and by extension the Division of Alcohol Beverage Control (ABC) for years to passing rules which very specifically harm breweries, which they considered a “threat”. In 2019, the ABC (under Murphy) sent a shockwave through the industry by illegally passing a “special ruling” full of protectionist restrictions that did irreparable harm to our craft beer industry- things like having a food truck outside, the ability to have TV and viewing sports on them, a person strumming a guitar, hosting a craft or yoga event, and the ability to have more than 25 events a year, including live music and trivia. In addition to ridiculous “brewery tour” requirements and red tape around food restrictions, these “rules” have made it very difficult to conduct our businesses like breweries do in every other state.

DOUBLING DOWN: After the pandemic started to subside in 2022, and to the shock of nearly everyone in the industry, the Governor and ABC actually doubled down on these ridiculous rules by issuing brewery licenses which codified for the first time, in print, 18 license conditions to every brewery’s license, which included the examples in the above paragraph and many more. Most breweries stopped having events, live music, trivia, and even promoting on social media, an event gag-order which is specifically mentioned in the 2022 license conditions. In response, my company, Death of the Fox Brewing Company located in Gloucester County, filed a lawsuit on this illegal and unconstitutional action in September 2022 - and it is currently pending judicial hearing at the appellate level. More on that lawsuit here: https://pacificlegal.org/case/nj-craft-beer-license/

TO THE RESCUE: During the same time period, the Brewers Guild of New Jersey worked closely with legislators to fix the problem, and guess what… THE LEGISLATURE ACTED! They took up our bill (sponsored by Senator Vin Gopal and Assemblyperson Clinton Calabrese) which very specifically provided protections against something like this ever happening again. Our basic argument to lawmakers is this: As business owners, it is challenging, if not impossible to conduct day-to-day business while NOT having long term stability in respect to the key regulations that govern your industry. When that baseline doesn’t exist, we live in a perpetual state of chaos. Arbitrary and capricious rules are pushed onto business owners with little or no notice, temporary “stopgap” actions imposed for months not years, and ambiguity abound around legal interpretation of temporary “rules”- which collectively make it feel you are operating a business in a void. This makes it damn near impossible to do things like long term strategic planning for one’s business, especially in this industry which is constantly and dynamically evolving.

However, it is a rare thing indeed to get 100% of the legislature, Democrats and Republicans, to agree unanimously on ANYTHING! Well, that happened on June 30th, 2023, and they passed it with a standing ovation. We have until December 31st to do something, or the bill will die. But even given that, the Governor is directly ignoring his legislature and the general public on this one. Why???

DEFENDING INACTION: The Governor is attempting the defend the veto of the craft brewery bill by saying he “supports the idea of the bill” but it “doesn’t go far enough”. One of the Governor’s top priorities is “comprehensive” liquor license reform, which aims to undo over 80 years of deeply rooted law where the number of liquor licenses are capped at the municipal level. This has driven up the cost of licenses to over a million dollars in some cases. It is widely agreed that this system needs a long-term fix, but as the saying goes, Rome wasn’t built in a day (breweries have actually waited for over five years to get this reform through the process!) However, the Governor expects to remove these caps, and therefore the value of a standard liquor license in New Jersey is diminished. Doing this is EXTREMELY unpopular because it means up to 6000 license owners would lose A LOT of money. The Governor just announced this in January. Unlike the popular craft brewery bill, Murphy’s liquor reform bill didn’t make it out of the starting gate by having a hearing in the legislature.

HOLDING AN INDUSTRY HOSTAGE: A hostage is defined as a person or entity who is seized by an abductor in order to compel another party. The hostage-taker places a high value on the liberty, well-being and safety of the entity being seized to “give in”, often under threat of harm after expiration of an ultimatum. The hostage taker is fully aware they are taking away the liberty of those abducted, in order to achieve an outcome where they receive something of great value to them. Just as a hostage who is a celebrity or a millionaire is more valuable to the hostage taker, the brewery reform bill is more valuable to Governor Murphy because it is so “popular”. Before he was elected in 2017, breweries did not face any of the rules or restrictions that they must now live with under The Murphy Administration. PLEASE REMEMBER: THE CRAZY BREWERY RULES WERE CREATED UNDER THE MURPHY ADMINISTRATION!

Why did he let the ABC enact these restrictions in the first place?? I guess we now know. Now, Murphy wants his liquor reform, and is willing to sacrifice the livelihoods of those owning craft breweries and the experience of our customers to achieve it. Because “his” version of liquor reform is so controversial and unpopular, he NEEDS the brewery reform to sweeten the deal so he can brag to the general public that he is doing the right thing and therefore get his “CREDIT”. But remember one thing… the hostage taker should never get credit for freeing the hostage. Taking the hostage in the first place is the problem.

AN EGO FOR AN EGO: But here’s the rub. Most lawmakers see through Governor Murphy’s intentions like a sheet of saran wrap. His “all or nothing” approach is seriously flawed. It is very unlikely he will receive any version of his bill, which now includes only things like activating pocket-licenses. After putting the brewing industry through all of this, if there is no action on his plan, Murphy’s back will be truly against the wall exactly one month from now. It is essentially a game of chicken. . Lawmakers have done their job and passed the bill they feel comfortable with. Will they override his veto? Not likely, because doing so may make life very uncomfortable for them in the next two years.

So the next the question is, what will Phil Murphy then do? Will he continue to play chicken? Does he truly care about the small business owners in this state? Does he care about small town Main Streets who have seen revitalization recently with the growth of the brewery industry? Or is this about Phil Murphy’s ego, and demanding to “get credit”. If so, he will likely continue the hostage tactics into next year, and allow the restrictions against breweries to go back into effect on January 1st 2024. After the legislature spoke with a single unanimous voice, his intentions will be even more suspect. We may expect more temporary “short term fixes” that expire and never provide the industry with any stability. Our lawsuit will eventually be heard, and we have a very strong case that the Governor’s actions regarding breweries over the last five years were not only illegal but unconstitutional. The result will be an embarrassment on a national level for this state. Does anybody remember Bridgegate? Ladies and Gentlemen, we give you Beergate! The Governor could have avoided that scenario by simply signing the bi-partisan brewery reform bill that was unanimously passed by the legislature. He chose otherwise.

THE BOTTOM LINE: Over a dozen craft breweries have gone out of business since Phil Murphy imposed license restrictions in July 2022, and many have suffered financially. We hold the Governor and his administration directly at fault for this mess. It goes without saying that if nothing is done, we can expect many more struggle and eventually go out of business. Dreams will be shattered. Why? Because “helping out the little guy” is something everybody else understands except for the primary resident of Drumthwacket, who aims to take that little guy hostage.

Chuck Garrity
President
Death of the Fox Brewing Company