Guild bill passes Assembly, 64-13

Tote board from Assembly vote

With a favorable Assembly vote in their pockets, New Jersey's craft brewers are now turning their attention to a Monday state Senate session and scheduled vote on companion legislation that would give those brewers more leeway in marketing their ales and lagers to Garden State beer enthusiasts.

Lawmakers in the Assembly on Thursday voted 64-13, with one abstention, to pass legislation to modernize New Jersey's craft brewing regulations, a long-sought change to the rules under which the state's combined two dozen production breweries and brewpubs do business.

Members of the Garden State Craft Brewers Guild, which developed the legislation with the help of lobbyists from the Kaufman Zita Group, are optimistic for passage in the upper chamber. (As many Jersey beer drinkers know, the guild is umbrella group that represents most, but not all, of the state's craft breweries.)

The Senate version of the bill has key bipartisan sponsorship from Republican Sen. Tom Kean Jr. of Union County (home to Trap Rock brewpub and Climax Brewing) and Democrat Sen. Donald Norcross of Camden County (home to Flying Fish Brewing and the planned Iron Hill Voorhees location). If passed by the Senate, the legislation would go to Governor Chris Christie for his consideration.

However, even with the tailwind that the legislation is now enjoying, the guild is renewing an action alert, again asking beer enthusiasts across the state to call or email their senators and urge them to vote yes on the bill. (The guild has posted a link to the state League of Municipalities so beer drinkers to find their legislators.) The state's restaurant association has been a staunch opponent to changing the brewery rules, complaining the proposed rewrite would erode the three-tier system under which alcoholic beverages are produced and sold.

Heading into Thursday's session, the guild had expected votes in both the Senate and Assembly. However, the legislation did not make it onto the Senate's list of bills to be considered for a vote.

And, when the bill came up for a vote in the Assembly, it wasn't without some surprises: Assemblyman Anthony M. Bucco, an early sponsor of the bill, was among a bloc of Republicans voting no that also included Assemblymen Alex DeCroce and Jay Webber, whose legislative district includes Butler, the host town of High Point Brewing.

(If you've ever been to a Ramstein beer open house, then you know that High Point Brewing enjoys a lot of support from local elected officials, including some who have swung the mallet during the ceremonial oak barrel tappings.)

Bucco and DeCroce were joined in dissent by  Republicans from the Shore area: Monmouth County Assembly members Sean Kean, David Rible, Amy Handlin, Caroline Casagrande, and Mary Pat Angelini; and Ocean County Assembly members Brian Rumpf and Diane Gove.

In fact, Republicans accounted for all of Thursday's 13 no votes and the lone abstention, from Assemblyman Ronald Dancer. (Despite opposition from that particular group of Republicans, the bill did pass the Assembly with bipartisan backing.)

And like DeCroce, Assemblywomen Angelini and Casagrande voted against craft breweries in their districts: Carton Brewing (Atlantic Highlands) and Kane Brewing (Ocean Township) and Basil T's in Red Bank; while Assemblywoman Donna Simon's dissent was a vote against newly licensed Flounder Brewing in Hillsborough.

Metaphorically speaking, the Assembly's vote, and recent affirmative Senate committee votes on the bill, represent a tectonic shift in Trenton's attitudes toward craft brewing, a small, but now-growing, industry the Legislature had largely ignored and even rebuffed when it came to the industry's prior pleas for a rule rewrite that would make the Garden State competitive with its neighbors Delaware, New York and Pennsylvania.

Until lately, the most craft brewing ever got from Trenton, after lawmakers authorized small-batch brewing back in the mid-1990s, was a millstone of a rule hung around the industry's neck: a regulatory change a few years ago that made it difficult for production brewers to cut loose distributors they had entered into agreements with.

But as craft beer and the craft brewing industry raised its profile nationally over the past few years, the legislative climate in New Jersey has grew more favorable. The measure just approved by the Assembly, and to be taken up by the Senate on Monday, would allow brewpub owners to operate up to 10 establishments and to sell their beers through wholesalers – essentially enabling beer drinkers to get those brews at places other than the pubs.

Right now, the only place you can get an Avenel Amber is at J.J. Bitting in Woodbridge; the same thing goes for Ironbound Ale (Iron Hill in Maple Shade) and Leatherneck Stout (Tun Tavern in Atlantic City). As many beer drinkers know, if you enjoy those brews, you must go to those brewpubs to get them.

For production brewers, meanwhile, the legislation would allow retail beer sales to tour patrons for consumption on and off premise, a change that means going beyond the sip-size samples and two-six pack/two growler limit that have been the customary practice in the Garden State for practically all of the 17 years that craft brewing has been going in New Jersey. (For instance, the legislation would allow people to buy a keg – 15.5 gallons – from the brewery.)

The legislation's sponsor, Assemblyman Craig J. Coughlin, a Middlesex County Democrat, sized up the proposed regulatory changes as some key help to small businesses, and as a way to bring New Jersey in line with the national craft beer trend – a $7 billion industry that finds craft beers enjoying unprecedented popularity. (For whatever it's worth, Middlesex County is home to three brewpubs – Harvest Moon in New Brunswick, J.J. Bitting, and Uno Chicago Grill in Metuchen.)

"Like much of the rest of the country, New Jersey is experiencing a craft beer brewing renaissance," Assemblyman Coughlin says. "The appeal of these regional beers is making microbreweries and brewpubs tourist destinations. To help these small businesses capitalize on their newfound popularity, we need to update the state's antiquated laws regarding microbrewing."

Said co-sponsor Patrick J. Diegnan, another Middlesex County Democrat: "By making these changes to our brewing laws, we can help better promote New Jersey's existing breweries and attract new brewers looking to make their mark on the world of craft beer. This is good for economic development, job creation and our state's tourist industry."

Assembly panel to hear guild measure*

The call list

Legislation put forth by the Garden State Craft Brewers Guild that the organization says would level the playing field under which New Jersey's small-batch breweries operate continues to wend its way through Trenton.

And as summer nears, the prospects for Jersey-brewed craft beer are growing sunnier: Some of the opposition to the legislation has softened or gone away.

Despite that, the path isn't completely clear for New Jersey's craft brewers.

State lawmakers on Thursday are expected to take up the measure, A-1277, that would enable the state's beer drinkers to buy their favorite brewpub beers at packaged goods stores and buy beer directly from production brewers for on- and off-premise consumption. The Assembly's Law and Public Safety Committee is scheduled to meet at 2 p.m.

Essentially, the legislation would put New Jersey on par with its neighbors Delaware, New York and Pennsylvania, where brewers enjoy a freer hand as far as dealing directly with consumers and operating brewpubs.

For example, those states allow brewpubs to also be production breweries and sell beer through distributors. Think Sly Fox and Victory Brewing in Pennsylvania and Dogfish Head in Delaware. Production breweries in those states can also sell their tour guests full pints of beer.

New Jersey, however, restricts brewpubs to selling their beer only at their locations, and limits brewpub owners to owning only two establishments. Production brewers are now limited to giving guests who tour their brewery small samples; the current rules also restrict production breweries to selling up to two six-packs or two growlers to the public. Additionally, brewpubs cannot hold production licenses, and production brewers cannot also own brewpubs.

That's why, backers of the legislation say, New Jersey's behind-the-times regulatory climate could continue to cost the state business, tax revenues and jobs: If the rules are friendlier across the Delaware and Hudson, why open up in the Garden State?

As it did successfully back in March, when the legislation was heard by a Senate committee, the Craft Brewers Guild issued an action alert, calling on craft beer enthusiasts to reach out to members of Assembly committee and urge them to vote in favor of the bill. (See the accompanying chart of the committee members. Note the email addresses are not clickable.)

“By Wednesday, June 6th, please contact members of the Assembly Law and Public Safety Committee to let them know you support the legislation as a craft beer consumer and ask them to vote yes on the bill,” the guild's action alert says.

If the committee approves the measure, it would advance to the full Assembly. (The Assembly speaker would decide if and when to post the measure for a full vote. The same thing applies in the Senate; the Senate president decides on when a full vote would be held.) If the measure is approved by both houses of the Legislature, it would then go to Gov. Chris Christie for his consideration.

Christie has shown some support for craft beer and the state's craft brewing industry, issuing a proclamation last year to acknowledge American Craft Beer Week, and this year signing a bill that freed homebrewers from an obligation to get a permit to make beer in their backyard.

The guild's action alert doesn't come without some concerns.

The Senate version of the measure cleared that chamber's Law and Public committee with a unanimous vote on March 5, but not before a parade of opponents – lobbyists for alcoholic beverage retailers, restaurants and the state's beer wholesaler organization – appealed to the panel to vote it down.

The wholesaler organization has since been appeased by some craft brewer give-backs (i.e. no self-distribution for brewpubs) and is no longer standing in the way. Meanwhile the industry group that represents alcoholic beverage retailers in New Jersey has also softened its opposition, forgoing objections it made in March.

However, the state's restaurant association continues to oppose the legislation, specifically allowing production breweries to sell pints to people who stop by for tours. It's quite likely the restaurant group will renew its opposition before the Assembly committee. But it's unlikely the guild is going to give up that part of the legislation.

During the March 5 Senate committee hearing, opponents complained the measure would further what they call an erosion of the three-tier system, the regulatory system for alcoholic beverages that inserts a layer – i.e. wholesalers – between brewers (distillers and vintners, too) and consumers as a way to prevent producers from directly marketing to consumers and controlling markets.

Guild members pointed out that the three-tier system was designed to prevent large producers from muscling out smaller ones, thereby lessening competition. 

In the decades since the 1933 demise of Prohibition – the three-tier system was born out of repeal of the 18th Amendment to the US Constitution – the wholesale network has come to favor the big producers (think of the mega brewers) at the expense of smaller ones.

In the era of craft brewing, guild members say, that circumstance has translated into unfairly choking off small producers' access to markets.

Additionally, the guild argued that exceptions to the three-tier system have been made throughout the country as a way to restore some kind of a balance in the marketplace.

*Edits made to update original post.