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NJ ABC Prohibits Crowd-Source Funding for Liquor License

Acting Director Graziano Prohibits Crowd-Sourcing for Breweries, Distilleries and Wineries in NJ

On March 12, 2019, the New Jersey Division of Alcoholic Beverage Control’s Acting Director, James B. Graziano, issued an Advisory Notice to the Alcoholic Beverage Industry which stated, in sum, that crowd-sourced funding platforms like “GoFundMe” are not permissible platforms to acquire the financial resources to purchase or open a liquor license establishment. This prohibition applies the liquor stores, restaurants, bars, clubs, craft breweries, distilleries, wineries and wholesalers.

What is Crowd-Sourced Funding?

Crowd-sourced funding, or Crowdfunding, is an evolving method of raising capital that has been used to raise funds through the Internet for a variety of projects.l Generally, a large number of investors invest small amounts of money through web-based platforms such as Kickstarter, IndieGoGo, Crowdfunder, RocketHub, and others. Some examples of industries in which crowd-sourced funding has become prominent are education, (where public school teachers have utilized the process to request materials for classrooms), humanitarian causes (such as the iCancer project to support development of an anti-cancer drug), and the arts (where crowd-sourced funding has been used to fund theatrical releases and musical recordings).

What Did the Division of ABC Say?

After receiving information that a number of licensed entities and applicants were utilizing or had previously utilized crowd-sourced funding campaigns to support either the purchase of a liquor license, a licensed business, or for additional financing in connection with the licensed business, the Division generated this Notice to the Industry. By relying on N.J.A.C. 13:2-2.9(b)(2), the Acting Director stated that part of the issuance of a license depends upon the individual or business having proper financing. According to the Division, crowd-sourced funding would not satisfy this requirement. Pursuant to this Notice, any licensee or applicant for a license engaging in this fundraising practice must immediately cease such campaigns and remove all said references from its website, social media, and other promotional materials.

New Jersey Liquor Law Attorneys

William C. Fay, IV, Esq., is a former New Jersey Deputy Attorney General with the Division of Alcoholic Beverage Control. He represents liquor licenses, both municipal and state issued liquor licenses, on an array of matters. If you would like to speak to Mr. Fay about obtaining a liquor license, filing for 12.39 relief or fighting ABC Charges, please call 732-858-5857.

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