If you are considering venturing into the distillery business, in New Jersey, Pennsylvania, or any other state, it is important to know what the Federal Government’s rules, regulated through the Alcohol and Tobacco Tax and Trade Bureau (“TTB”), provide for the location, use of plants and production of distilled spirits. The following article highlight’s the TTB’s rules and regulations:
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New NJ Bill Aims to End Craft Brewery Tours & Add Food Vendors
A new bill in New Jersey was introduced last week which would amend the 2012 law that established microbreweries in the state and governs their operations and restrictions.
This is the first attempt so far to legislatively address the craft brewing industry after a special ruling was issued by the New Jersey Division of Alcoholic Beverage Control (ABC) which implemented restrictions on events and other brewery operations. The ruling was suspended indefinitely only a week later after significant public backlash from both brewers and state government officials.
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Special Ruling Aimed at Restricting NJ Craft Breweries Indefinitely Suspended
On September 24, 2018, a special ruling issued by New Jersey Division of Alcohol Beverage Control (ABC) limited the type of activities that New Jersey craft breweries were allowed to conduct. Only a week later, the ruling has been indefinitely suspended due to public outcry.
The ruling affected the 88 limited breweries already in existence as well as 23 operations that have applications pending. However, the ruling was met with significant criticism and backlash from brewers as well as state government officials, and just a week later the ABC announced that it would be suspending the ruling. The suspension will remain in effect until ABC meets with craft breweries, alcoholic beverage license holders, and lawmakers to iron out new regulations, whether they come through the division itself or new legislation.
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Newark Airport Bars May Soon Be Open After Hours
Travelers at the Newark Liberty International Airport may soon be able to imbibe in adult beverages after hours. Legislation expanding the hours the airport is allowed to serve alcohol was unanimously approved by an Assembly panel. Bill A-2419 would allow bars and restaurants operating within an international airport to sell alcoholic beverages between the hours of 8 am and 4 am.
Usually, local municipalities establish by ordinance the hours when alcoholic beverages may be sold for consumption on the premises.
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Craft Beer Wholesaler to Pay $2 M Fine to Settle Trade Practice Violations
Attorney General Christopher S. Porrino and the Division of Alcoholic Beverage Control announced a settlement with a Hunterdon county craft beer wholesaler, resulting in a record $2 million fine for alleged trade practice violations.
The Division alleged that Hunterdon Brewing Company LLC sold draft beer tap systems below fair market prices and mislabeled the charges as “miscellaneous” on invoices to conceal them. The Division alleged that the company also ignored credit regulations for at least 700 retail customers. In addition to reviewing thousands of documents, the Division compiled sworn statements from more than two dozen retail licensees.
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Legislation to Expand Lending for NJ Vineyards and Wineries
Legislation geared towards establishing a loan program for vineyard and winery capital expenses was released by the Assembly Commerce and Economic Development last month. The bill (A-4274) would direct the New Jersey Economic Development Authority (“EDA”), in consultation with the Department of Agriculture (“Department”), to create a loan program and application process for the purpose of supplying loans to certain eligible vineyards or wineries to pay for qualified capital expenses.
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Court May Consider Environmental Contamination of Property in Assessing True Market Value Even When Property Generates Income and is Used by Tax Payer
In a recent New Jersey Tax Court decision, ACP Partnership v. Garwood Borough, the court ruled that it will permit consideration of a property’s environmental contamination in deciding its true market value even though the property possesses a “value in use” to the tax payer. The case is significant because it rebuts the notion that a commercial property “in use” by the tax payer may only be assessed using “normal assessment techniques,” with no consideration given to environmental contamination in establishing its true market value. The subject property in ACP Partnership is a multi-tenanted and multi-structured industrial and warehouse complex containing approximately 230,000 square feet of improvements. The tax payer leases the property to tenants for warehouse and industrial uses. The tax payer also occupies a small portion of the property for self-storage.
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Radio Shack Preference Lawsuit – Ordinary Course Defense
During the last week of October, the liquidating trustee of the Radio Shack liquidating trust filed lawsuits in the United States Bankruptcy Court for the District of Delaware. The lawsuits were seeking to avoid “preferential” payments made by Radio Shack to its creditors within 90 days of the filing of its bankruptcy petition (the “Preference Period”), which took place on February 15, 2015.
There were approximately 200 creditors sued for allegedly being “preferred” by Radio Shack, including commercial landlords, utility providers, banks, logistics companies and providers of electronic goods, among other trade creditors. It is important that the creditors receiving these complaints understand that there are defenses to these actions.
One of the strongest defenses for a creditor being sued is the ordinary course of business defense. To prove this defense, evidence of business custom and practice is considered. Under 11 U.S.C. 547(c)(2), the obligation being paid must be incurred in the ordinary course of business or financial affairs of the debtor, and the payment must have been made in the ordinary course of business of both the debtor and creditor (subjective test) or the payment was made under “ordinary business terms” (objective test). Thus, there are two standards that can be proved by a creditor to successfully defend a preference action under this defense. Providing either one will allow the creditor to prevail in its defense.
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Tax Liability of Environmentally Contaminated Industrial Property – 2015 Update
In a recent New Jersey Tax Court decision, Methode Electronics, Inc. v. Twp. Of Willingboro, the court ruled that the assessment of a contaminated piece of property, which was not developable and could not be developed in the foreseeable future, should be reduced to a nominal valuation.
Methode involved an industrial property where printed circuit boards and airbag components were manufactured for nearly twenty years. As a result of this activity, the property became contaminated with volatile organic compounds and metals. The property owner ceased operations in 1999 and no other businesses have operated at the property since that time. The building was demolished, except for a concrete slab that served as the floor for the facility. The slab was left in place to prevent the off-gassing of toxic vapors from soil and groundwater.
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New York Times Highlights Growth of Craft Distilleries in New Jersey
Since New Jersey’s Craft Distillery Law went into effect on December 1, 2013, several craft distilleries have opened in the State of New Jersey. This is the focus of a recent New York Times article, which details the stories behind three distilleries that have opened in New Jersey recently. Some of the most attractive