By Donald Gilpin

New Jersey Gov. Phil Murphy’s proposal in his January 10 State of the State address that the state ease restrictions on liquor licenses was welcome news for many Princeton residents, members of the business community, and public officials, but whether that proposal will result in more accessible licenses for local restaurants remains to be seen.

“It’s good to say, ‘Hey, let’s start to talk about this. That’s a huge step forward,” said Princeton Mayor Mark Freda. “But the devil’s really going to be in the details here.”

With municipal licenses for public consumption limited to one for every 3,000 residents, according to the current law that dates back to 1948, the resale value for licenses in Princeton is over $1 million. 

“The system is so archaic,” said Councilwoman Michelle Pirone Lambros. “We’re probably the only state in the nation that is this archaic in terms of our liquor licenses.”

Freda went on to explain the difficulty of accommodating both current license holders and potential new applicants. “They have to come up with a process,” he said. “There’s value to that license for current license holders, and depending what town you’re in the value could vary widely. There has to be something to protect your investment. They’re going to have to find a way to balance it out, but it’s a good step that we’re at a point where we’re going to try to figure this out and find a way to move forward.”

He continued, “We’ve had many cases in town where people have said, ‘Boy, I could really get a successful restaurant going here. Having that liquor license would really make a difference.’ Obviously margins on alcohol are different than the margins on food, and I think a lot of people like to go to a restaurant and have a drink served to them.”

For many years the liquor license issue has been on the agenda at the annual gathering of elected officials of the New Jersey State League of Municipalities, Freda said. “This is something that many, many elected officials have been debating with the state for a long time, stressing that we need to do something. There are not enough liquor licenses. It would be an economic boost for many restaurants to be able to serve liquor.”

Lambros said that the governor’s announcement was “really exciting and very important,” but she noted that there has been a lot of pushback from local license holders and also from the New Jersey Restaurant and Hospitality Association, as well as some liquor distributors. 

“The license holders, I feel for them, but I also think that they’ve had the ability to hold onto a competitive advantage in the marketplace,” she said. “They’ve had a bit of a monopoly. From a human equity standpoint and an economic development standpoint, it’s really important to open up the accessibility of liquor licenses.”

Lambros suggested that one solution might be to follow the model of other states where there are two types of licenses issued for consumption on the premises, one at a more accessible price for beer and wine and another at a higher price for liquor.

“That would enable a lot of restaurants out there to increase their profitability,” she said. “You also have to think about the equity issue for servers. They would make more tips, more money because the tabs would be higher and tips are a percentage of the total tab. It would be a great economic driver and great for employees as well.”

Lambros pointed out that in addition to the governor’s proposal, the Senate and Assembly are considering bills to open up about 1,400 inactive liquor licenses in the state.

“A lot of restaurants, including existing restaurants, could benefit from the profitability of expanded access to liquor licenses,” Lambros said. “I know people would be interested in filling vacancies in some of our available spots. Look at the Princeton Shopping Center. They would love to fill the vacancies, but they can’t make the numbers work without the liquor.”

In his speech Murphy suggested that an easing of liquor license restrictions would create more than 10,000 jobs annually and generate billions of dollars in new economic activity and $1 billion in state and local revenues over the next 10 years. He also proposed a targeted tax credit to fairly compensate current license holders.

Isaac Kremer, executive director of Experience Princeton, applauded Murphy’s plan. “Gov. Murphy’s proposal to ease liquor license restrictions has the potential to give a major boost to economic developments in Princeton,” he said. “New revenue streams could help existing businesses expand and grow, while also creating an environment in which new businesses can and will locate here because it is now viable to do so.”

He continued, “We also know how businesses do best when there is a cluster of similar uses in close proximity, allowing them to attract customers from further distances. Some of these reforms would put New Jersey on a fairer footing with neighboring states in our region.”