Michigan controls the sale and purchase of alcohol more heavily than most states. And despite hopes for deregulation which grew from Gov. Rick Snyder's formation during his first term of a 21-member Liquor Control Advisory Rules Committee to look into reforms, only small steps have been taken to modernize the antiquated system.
One of the few reforms that has actually occurred came last October when the Michigan Liquor Control Commission voted to remove a rule prohibiting liquor stores from operating within a half-mile of each other. The "half-mile" rule repeal was a small step toward the alcohol deregulation the industry needs.
The biggest issue with the current system, however, is its fundamental structure — a holdover from the prohibition era. Because each tier — producers, distributors and consumers — must remain separate, wineries, breweries and distilleries cannot distribute their own products. This makes for a flabby, expensive system.
Local brewery owners can't walk their beer down the street to a grocery store to sell. Instead, a wholesaler must collect the beer, drive it to a warehouse to log it, and then distribute it to stores and restaurants, skimming a tidy profit in the process. Though nearly all producers would say that wholesalers are necessary to distribution, the mandate forces inefficiencies.
An example: A brewer in Saugatuck wants to sell his beer to a restaurant down the street. Due to the government mandate, a wholesaler based out of Kalamazoo (the closest wholesaler) must pick up the beer, drive it to Kalamazoo, log it, and then return it to Saugatuck. It is a government-mandated, 100-mile roundtrip just to move the beer a few blocks.
The structure of the system cannot be changed by the MLCC. It can only be done through legislation.
"We are in a holding pattern for alcohol legislation," says Michael Lafaive, senior director of fiscal policy at the Mackinac Center for Public Policy. "Snyder had initial intent to get rid of onerous regulation in alcohol control, but even he would agree that not enough has been accomplished."
Jim Storey, who served as a Michigan Liquor Control commissioner from 1997-2007, says there are too many constraints concerning liquor marketing and too many roadblocks to obtaining a liquor license.
"We are a Pure Michigan tourist state, but we make it difficult to let people into the hospitality industry," he says.
Doing away with the three-tiered system would cause alcohol prices to fall dramatically, which some fear would harm public health. Making booze cheaper won't neccessarily translate into higher consumption, but it could spur a craft beverage boom that would boost local tourist business.
This is an exciting industry that has tremendous growth potential, if the state gets out of its way.
— THE DETROIT NEWS (AP)