New Jersey Plenary Wineries License - updated October 2013

• I receive many inquiries about permitting for the local wineries in the state of New Jersey. 

• The industry is expanding and "growing" because of the new law passed by the legislature and Governor Christie which took effect on May 1st, 2012.

• Presently there are 50 wineries who produce 225 varieties. For an interesting article about NJ winery development visit www.UnCorkNJ.com

• Interesting article from FDU, follow the link: http://www.ahherald.com/newsbrief/monmouth-news/16337-new-jersey-willing-to-give-local-liquor-a-chance

Information about the NEW LAW....

Visit NJ Monthly at this link for more information:                                                                           http://www.nj.com/mercer/index.ssf/2012/05/new_jersey_wine_shipping_law_w.html                                   

The  law took effect that will allow New Jersey farmers and wineries to bypass the existing  wholesaler network established through the years and sell directly to retailers and consumers. The new law grants similar rights to out-of-state wineries and finally cleared the way for the Garden State to begin issuing new winery licenses to growers.

The new regulations work for the wine aficionados, growers and retailers.  

There are two new licenses which the law creates: 
(1) a Plenary Winery License, available for $938 and
(2) a Farm Winery License  (which limits production to “not more than 50,000 gallons per year”), available for between $63 and $375 on a sliding scale, depending on production volume. 
Either license limits growers production to less than 250,000 gallons per year.

The amount of the fee is a sliding scale based on the production amount of the wine each produces. The maximum fee is $1000. 

A retailer can only ship a maximum of 12 cases to any one customer in  or outside of New Jersey.

At an administrative cost of $250 each,  grower may open 15 remote shops around the state as additional retail outlets. These outlets can serve and sell individual glasses or sell bottles of the wine produced by the grower.  


As a result of the foresight of the Governor and legislature, wineries are opening and expanding around the state, providing new jobs and new ways to put resources to work.

Information about the industry........

For those of you wanting to visit the NJ winery industry, check out the web site of the New Jersey Winery Association:    http://www.newjerseywines.com/festivals.html

There is information on this site that was fascinating. 

Independent taste testing rated NJ wines right up there with some famous counterparts. 

VISIT THE SITE FOR more information.

http://www.funnewjersey.com/upload_user/Best_of_New_Jersey/NJ_WINERIES.HTM

Watch this blog for more on New Jersey's state owned and managed cottage wine industry.

Common misconceptions about New Jersey Liquor Licenses

1. Buying a New Jersey liquor license is a "good investment".

It can be, but the primary purpose of buying a license is to increase the value of the underlying business. One should not speculate or invest in buying a license unless his purpose is to use that license in creating value in either a package store or restaurant venture.

2. The value of New Jersey Liquor Licenses always goes up.....completely untrue.

In 2008, restaurant 33 plenary  retail consumptions licenses in one New Jersey community, sold for $450,000. Two years later the same license sold for $75,000. Now five years later, the NJ restaurant 33 license is selling for $275,000.

3. I can always sell my 33 restaurant license or plenary retail distribution 44 license.

Yes you can sell it.

The question is, who is going to buy it?

What is your exit strategy?

I have seen investors and owners sit for many years with a New Jersey liquor license before it trades. Before investing in the license, one must critically analyze the market in terms of license availability, competition, and population demographics.

REMEMBER, a NJ liquor license is an ill-liquid investment.

4. The New Jersey liquor license, once purchased, is good forever.

Yes, the 33, 32, 44 NJ liquor license can be renewed forever.

The caveat is that it must be in use in a location.

The New Jersey Alcoholic Beverage Commission, better know as the NJ ABC, has very specific rules on how long the liquor license can be renewed.

See my BLOG from January 2012 for more information on "pocketed" liquor licenses, or click on this link: 

http://newjerseyliquorlicensesareus.blogspot.com/2012/01/frequently-asked-questions.html

5. Transferring a NJ liquor license is a "quick" process.

Rubbish....allow 4 to 7 months to transfer a license through the approval system.

There are a million reasons for this:

1. Background checks on the state, local, federal level

2. Searches for liens and encumbrances

3. Approval of local municipalities by their city administration

4. Notice in local newspapers

5. Under-staffing and budget cuts in municipalities, fewer workers to do the paperwork

All this add to the time frames.

Howard Goldstein, in the office

Visit my web site at www.newjerseyliquorlicensesareus.com

Call me at 908-403-2718

 

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Appraising the value of a New Jersey Liquor License

I was asked the following question:  How are  your appraisals validated?

This was my answer:

The REAL problem is that the NJ liquor license transactions are NOT recorded anywhere, so true validation in the sense of a real property is impossible. I would say truthfully that mine is NOT a validated appraisal but rather a snapshot of  the collection of data and information which I have on file and recent transactions in and around the town I am appraising.

In other words, take Livingston. A license has not traded there in  4 years. One has sold in Millburn for $750,000 last year. One has sold in East Hanover for $450,000, 18 months ago.

The last one in Livingston 5 years ago traded for $800,000. Currently two are on the market for $600,000.

My valuations would be based on the sales in adjacent towns, and the fact that there are two unsold licenses in Livingston.

It is more of an estimate than a "validated" transaction based on comps for adjacent real estate.

Unlike real estate transactions, the value of liquor license transactions is only known to the participants.

I can help identify the value of New Jersey liquor licenses.

Over the last 20 years, I have built a data base of transactions consummated in many of the 566 towns in New Jersey.

If you may need an value for a New Jersey liquor license, I can help.

Towns do not have sales data for any sales or, other times, the licenses were sold as part of a restaurant transaction. My data base is full of research which identifies comparable sales in neighboring towns with similar demographics and other critical data points to accurately establish New Jersey liquor license values.

Call me to discuss your specific needs

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Call me at 908-403-2718 or email me at hgoldstein@att.net

The New Jersey Liquor License Guru, Howard Goldstein

New Jersey Restaurant 33 Liquor Licenses - deal history

If opening a New Jersey Restaurant is your future,

I can sell you a New Jersey liquor license.

Call me at 908-403-2718 or email me at hgoldstein@att.net

Visit my web site at www.newjerseyliquorlicensesareus.com

See page 2 for pricing information

Why trust your deal to an internet site with no personality or track record.

Check out my 20 year record and compare it anyone in the state!

  Open a sports bar in NJ, call the NJ liquor license expert.

 BYOB wants a New Jersey liquor license, call the New Jersey liquor license expert.

North to South, I sell NJ restaurant liquor licenses from Mahwah to Wildwood.

East to West, Phillipsburg to Bayonne, call me for a NJ restaurant liquor license.

I have sold consumption liquor licenses in the following New Jersey towns:

• Bridgewater - multiple deals
• Edison - multiple deals
• Paramus -multiple deals
• Ramsey
• Wayne - multiple deals
• Roxbury Township
• Hampton Township
• Weehawken
• Ft. Lee
• Edgewater
• North Bergen
• Union City
• Jersey City - multiple deals
• Hoboken
• Bayonne - multiple deals
• Mahway
• Rochelle Park
• Secaucus - multiple deals
• North Plainfield
• Watchung
• Parsippany - multiple deals
• Clifton
• East Brunswick
• South Brunswick
• North Brunswick
• New Brunswick
• Clark
• Westfield
• Springfield
• Woodbridge - multiple deals
• Carteret
• Princeton/Plainsboro
• Wildwood
• Franklin Township/Somerset County
• Lakewood
• Brick - multiple deals
• Toms River - multiple deals
• Manchester
• Elizabeth - multiple deals
• Newark - multiple deals
• Cherry Hill
• Deptford
• East Windsor
• Winslow Township
• Atlantic City
• Trenton
• Paterson
• Howell
• Old Bridge
• Freehold
• Union
• Manalapan
• East Rutherford
• Neptune
• Asbury Park
• Lawrence Township
• Roxbury Township
• Franklin Township (Somerset County)
• Raritan
• Hamilton Township (Mercer County)
• Lakewood
• Pohatcong
• Piscataway

If you need a New Jersey Consumption 33 liquor license, call me for a price. I know the market.

Call me at 908-403-2718

Email me at hgoldstein@att.net

Financing New Jersey Liquor Licenses by John Newman, Esq.

The following was written by a New Jersey Liquor License attorney.
I receive many calls about how to finance a liquor license in New Jersey.
This article is specifically on point.
Should you have questions about New Jersey liquor license financing, I encourge you to contact Mr. Newman for specifics to your situation.


LIENS ON New Jersey LIQUOR LICENSES

By John Newman,
Newman and Simpson
32 Mercer Street
Hackensack, NJ 07601
Phone - 201-487-0200
Email at info@newmansimpson.com

For over seventy years New Jersey law has prohibited a borrower from granting a security interest in a liquor license. New Jersey’s Alcoholic Beverage Control statute specifically precludes a licensee from utilizing a liquor license as collateral for a loan. Courts have recognized that a liquor license is a privilege, not a right, and is analogous to a temporary permit. The rationale behind these decisions was to defer to the State’s regulatory authority in issuing and monitoring liquor licenses.

Of course lenders do give financing to bars and restaurants. In giving such financing it has been the practice to effectively obtain a lien on the license by taking a pledge of the stock in the licensee. This is done by obtaining a stock pledge agreement from all shareholders in the corporation. If there is a default, the lender can take control of the stock and the Board of Directors, and elect new officers who can then sell the license (and pay down the secured debt). Usually this procedure is sufficient to protect the lender, but not always.

If there is a federal or state tax lien, the holders of the lien can levy on the license and “prime” the lender. In addition, if there is a bankruptcy, the proceeds of a sale of the license by the bankruptcy trustee may be used by the trustee for administration expenses, and for the benefit of creditors generally, including unsecured creditors. Thus, it has always been incumbent upon a lender who is relying on its “lien” on a liquor license to be sure that its borrower is paying its taxes and is solvent.

A recent case has turned the long-settled principles set forth above on their head. This past summer the New Jersey Bankruptcy Court held that the 2001 amendments to the New Jersey Uniform Commercial Code overrode the seventy-year-old provisions of the Alcoholic Beverage Control Act, declaring that a lender with a lien on “general intangibles and the proceeds thereof” held a valid, perfected security interest in a liquor license. This is revolutionary development in the world of lending to bars and restaurants.

The case dealt with a bankruptcy where the trustee sold the liquor license. The court held that 100% of the proceeds went to the secured creditor due to its perfected security interest, priming a subsequent judgment by the State of New Jersey and, of course, unsecured creditors and administration expenses.

The court held that because of the Alcoholic Beverage Control Act and the State’s paramount interest in controlling liquor licenses, although the lender did have a valid perfected security interest in the liquor license, it could not foreclose on the license nor compel its sale. The lender’s only remedy was to wait for a sale by the borrower, a receiver or trustee, and then assert a lien on the proceeds of the sale.

For a lender, this position is far better than only having a lien derived through a stock pledge. The lender cannot be primed by a subsequent tax lien or by creditors in a bankruptcy. In addition, a lender is usually in a position to force appointment of a receiver or to force a bankruptcy once there is default.

There is one large caveat: the case is on appeal to the United States District Court and potentially from there to the Third Circuit Court of Appeals. We will keep you advised. In the interim, lenders to bars and restaurants are well advised to obtain their liens both ways: through the old stock pledge and through a security interest in general intangibles including, specifically, the liquor license.

This publication is intended for general information purposes only and does not constitute legal advice. The reader should consult legal counsel to determine how the law may apply to specific situations.

FREQUENTLY ASKED QUESTIONS ABOUT NEW JERSEY LIQUOR LICENSES

THE INFORMATION CONTAINED HEREIN IS STRICTLY INFORMATIONAL.

PLEASE CONSULT YOUR ATTORNEY FOR UP TO DATE, CURRENT INFORMATION

To report any inaccuracies or errors, click here:  hgoldstein@att.net

1.  What role does Howard Goldstein play in my NJ liquor license transaction?
Call me to discuss the town in which you would like to locate. I identify the license and negotiate the price. Once fully negotiated, I create a Letter of Intent (LOI) with all pertinent business terms. Both buyer and seller sign the LOI. This document is NON-BINDING. It is meant to memorialize the business terms of both parties. This document is then turned over to an attorney, buyer's or seller's, to create the contract of sale.

Prices of licenses are subject to market conditions. Many factors affect the values of licenses, and since the number of license for sale varies at any point in time, the values can fluctuate both up and down by significant amounts. My transactional knowledge of the market can give you up to the moment pricing information.
I perform appraisals for Banks, values for Estates, and testify in Lawsuits as to values.


2.  What role does the ATTORNEY play in my NJ liquor license transaction?

The attorney plays the key role of closing the deal.

All deposit monies are kept in the attorney trust account.

He negotiates the contract, the buyer and seller executes the contract, the seller give the buyer a consent to transfer. Background checks are necessary for the buyers. The town approves the transfer. A closing will occur usually 4 to 6 months after contract execution.

3.  I want to open a New Jersey restaurant, which NJ liquor license do I need?
You will need a plenary retail consumption license, a/k/a "33" or a Broad C a/k/a "32".
See 2009 blog for definitions.

4.  I want to open a retail store selling package goods by the 6-pack or fifth of alcohol.
Which NJ liquor license can I use?

You can use all 3!

How is this possible?

The consumption 33 license allows the sale of full containers of alcohol from BEHIND the bar only. Displays and inventory must be placed behind the bar and sold from the bar area.

The Broad C 32 NJ liquor license allows the sale provided the store has a bar area.

The distribution 44 is the package store NJ liquor license. Beer, wine and hard liquor can only be sold by the container, not by the glass.

5. How long does the transfer of a New Jersey Liquor License take?
It truly depends on the town. As short as 4 months, sometimes one year.

6. Can I place a my New Jersey liquor license anywhere in town?
There are 566 towns in New Jersey. Each one has rules about where you can place a license. Some say, not within 500 feet of a school, church or other license holder. Another has a 1500 foot rule. Your attorney will help you with the radius restrictions. Make sure you understand the rules prior to buying the license.

7. Can I use my New Jersey Liquor License in any other New Jersey town?
NO

8. What is a pocketed or inactive New Jersey Liquor License?

Can it be used, sold, or otherwise transacted?

If a license has been inactive for two or more years it is considered pocketed or inactive and a special ruling from NJABC's Director is required before the municipality may renew the license for the next license year.  In order to apply for a special ruling, the licensee must file the renewal application with the municipality and pay all renewal fees. The municipality will then hold the license renewal in abeyance until the Director issues the special ruling.

In order to obtain a special ruling, the licensee must file a verified petition.  Among other items of information, the verified petition must set forth how long the license has been inactive; the reason for the inactivity; efforts made to activate the license; the prognosis for activation; and previous petitions made by the licensee.  It is within the Director's discretion whether to grant the relief sought. Although there is no limit to the number of special rulings that the Director may make with respect to any one license, the longer the license is inactive, the less the probability that the Director will grant the petition and issue a special order.

Typically, the Director will issue a special ruling for the first verified petition for a period of two years. Thereafter, special rulings will be granted on an annual basis. Usually, but not always, that the Director will usually grant the first and second petitions for relief. Thereafter, the Director's willingness to grant further special rulings for renewals will depend on the efforts being made to place the license and/or the reasons for the inability to place the license.

Howard at work

Call me at 908-403-2718 or

email me at hgoldstein@att.net