Largely due to the decline in the economy, liquor licenses in New Jersey are becoming more available and affordable than years past. New Jersey municipalities can offer one plenary retail consumption liquor license (used for a bar, tavern or restaurant) for every 3,000 residents and one plenary retail distribution liquor license (used for a liquor store) for every 7,500 residents. (N.J.S. 33:1-12.14). Fifteen years ago, that worked out to be approximately 15,000 licenses statewide. Today, there are 9,321 licenses that currently exist. Of that current number, 1,211 are inactive or as they are commonly called, “pocket licenses”.
Municipalities in New Jersey have the ability to issue new licenses as the population grows. Liquor licenses are sold through “person-to-person” license transfers; much like the sale of real estate. Some municipalities in New Jersey record these transfers while others do not. One can speculate that the 1,211 “pocket licenses” might be up for grabs and the high availability or supply of these licenses can lead to sharp reductions in price. In Union County, the prices have declined by an average of 35 percent over the past 5 years. In Cherry Hill, a previously valued $1.6 Million liquor license was auctioned off for $500,000; a devaluation of 68.75%. This seems to be the common story statewide. However, there are some municipalities that seem to be immune to the economic downturn. These municipalities include: Brick, Toms River, Freehold, Eatontown, East Brunswick, Edison, Woodbridge, Bridgewater, South Plainfield, and Piscataway.
Although the sale and consumption of alcoholic beverages are up in New Jersey, the small businesses that have the potential to capitalize are not in a position to buy the liquor licenses in order to capitalize on the trend. This only increases the likelihood that the “pocket licenses” are still available at a deep discount. Anyone in a position to capitalize on the market will undoubtedly have to navigate a highly controlled market riddled with regulations, procedures, red tape, and in some cases, complex negotiations. Prospective buyers and sellers of inactive pocket licenses are urged to contact a New Jersey ABC attorney experienced in handling liquor license negotiations and the liquor license transfer process.
If you are considering the purchase of a liquor license or are selling a liquor license in New Jersey, consult the experienced New Jersey ABC attorneys of Villani & DeLuca, P.C. for a consultation. Of Counsel, Jeffrey A. Warsh, Esq. is a former Staff Attorney at the NJ Division of Alcoholic Beverage Control (ABC) and can help you navigate the complex legal field of New Jersey ABC laws. Call (732) 540-1233 today!