In New Jersey, the manufacture, sales and distribution of alcoholic beverages is regulated by the State’s Division of Alcoholic Beverage Control. In addition to setting statutes pertaining to the commerce of alcoholic beverages, the Division of ABC enforces and investigates violations of the state and local ABC laws. Licensing guidelines are also set by the Division of ABC, which offers three main categories: manufacturer, retail and wholesale liquor licenses.
Class B, or wholesale liquor licenses are required for the selling and distribution of alcoholic beverages to retail outlets and wholesalers. Each license grants specific privileges, such as permitting the licensee to sell to out-of-state retailers, or to sell chilled malt beverages in kegs and barrels. The State Beverage Distributor’s License is the most limited, since no more than 72 can be issued for the entire State of New Jersey. Any deviation from the guidelines set forth under a license can be viewed as an ABC violation, which the State takes very seriously. The Division of ABC considers it “a privilege to operate a business in the liquor industry and that this privilege may be forfeited for violations of the alcoholic beverage law.”
In order to be in full compliance of the ABC guidelines, it is imperative to understand New Jersey’s complex system of alcohol control laws. With rare exceptions, New Jersey operates under a three-tier alcohol distribution system, in which alcoholic beverages are sold from the manufacturer to the wholesaler, who then sells to the retailer, who may then only sell directly to customers. One such exception exists for Atlantic City casinos, which must purchase alcoholic beverages directly from the wholesaler. In general, Atlantic City casinos operate under different rules from other liquor licensed establishments because their alcohol control laws are set forth by the Casino Control Commission and the Division of Gaming Enforcement. Exceptions from state and local ABC laws also exist for federal enclaves, such as military bases.
New Jersey also allows each municipality to pass ordinances to control alcoholic beverage sales within its own borders. Thus, a municipality can set specific requirements on State regulations, such as limiting the hours of alcohol sales, and the nature and condition under which a licensed premise may operate. Municipalities with 15,000 or more residents may also appoint their own Alcoholic Beverage Control Board to oversee ABC regulations and process license applications for premises within their own borders. It is essential that applicants check both the state and municipal laws before applying for a wholesale liquor license.
One frequently discussed issue among alcoholic beverage wholesalers is the direct shipping of wine to individual customers. In 2004, New Jersey passed a law that prohibited both in-state and out-of-state wineries from shipping directly to customers. This statute was declared unconstitutional by the Third Circuit Court of Appeals in 2010, since it violated the terms of the U.S. Constitution’s Interstate Commerce Clause. Further action was taken in 2012, when Governor Christie officially signed into law the bill that allowed in-state and out-of-state wineries to ship wine directly to customers in New Jersey. This is a rare exception to the state’s three-tier alcohol distribution system, in which a winery is normally required to sell to a retailer, who then sells to the customer. However, wineries cannot ship to anyone under the age of 21, nor can they ship more than 12 cases per year to a single customer. In addition, only wineries that produce less than 250,000 gallons per year are permitted to ship directly to New Jersey customers. The 250,000 gallon rule does not affect New Jersey wineries, which all produce less than that amount, but it does rule out 90% of all wineries outside of New Jersey. Proponents of the bill are concerned about the constitutionality of this rule, since a similar limitation in Massachusetts was struck down by the United States Supreme Court in 2008.
Directing shipping of alcoholic beverages has and continues to apply only to wineries, although beer and hard liquor can be shipped from a wholesaler to a licensed retailer. Otherwise, beer and hard liquor must be transported to the seller, which requires obtaining a Class D, or transportation license. A transportation license applies to manufacturers and wholesalers only; it does not apply to retail licensed businesses that deliver directly to the customer. Although rare, New Jersey liquor stores can deliver alcoholic beverages to a customer’s home or car. The delivery must be made in a car or van, and take place during the hours when alcohol sales are permitted by the municipality. Deliveries can only be made to customers 21 years of age or older, who have paid for the alcoholic beverages in advance. There is no licensing requirement at all specifically for this type of delivery, as long as the delivery is made by a retail liquor licensed establishment.
The complexity of New Jersey’s alcoholic beverage control laws become obvious to any business owner who attempts to apply for a liquor license. With constant changes in both the state and municipal statutes, most owners find it difficult to stay in full compliance with New Jersey’s ABC laws. If you are in the process of applying for a wholesale liquor license, please speak to the experienced ABC lawyers of Villani & DeLuca. A liquor license application is full of legal technicalities and complicated requirements, which you may not understand without help from a knowledgeable attorney.
We invite you to schedule a consultation with Jeffrey A. Warsh, Esq., former staff attorney for the NJ Division of Alcoholic Beverage Control. Mr. Warsh is a current member of the Alcoholic Beverage Control Advisory Counsel, and has been representing clients in both the private and public sector for over 20 years. Whether you have questions about what type of license your business needs, or require legal representation for an ABC disciplinary hearing, Villani & DeLuca ABC lawyers have the experience to help you resolve your legal issues. Call (732) 965-3350 today to schedule your consultation.