Time flies when you're having fun!  Thanks to our many wonderful clients, and the fun associated with serving Michigan's hospitality industry, we are fast approaching the five year anniversary of our firm.  When we opened for business on August 1, 2006, some people may have wondered whether a law firm devoted almost exclusively to liquor licensing and regulation could survive.  Today, nearly five years later, Carlin Edwards Brown PLLC has more than survived as the legal team for literally hundreds of liquor license holders and major trade associations serving Michigan's hospitality industry.  The recent addition of Rick Perkins, former Director of Enforcement and Deputy Director of Licensing at MLCC, as a non-lawyer licensing consultant has added a whole new dimension to the services available to our clients.  Our fifth anniversary is a wonderful time to reflect on the short history of our firm, but also an opportunity to look forward to the next five years of helping our clients and the Michigan hospitality industry grow.  We are particularly excited to welcome in a new era at the MLCC, as detailed below, in introducing new MLCC Chairperson Andy Deloney and Administrative Commissioner Teri Quimby.  We thank all of our clients, large and small, for continuing to make our jobs fun each and every day. 

The MLCC recently conducted its quarterly public meeting on June 22, 2011 in its Southfield office.  Several pending legislative matters were reviewed with those in attendance, a number of which would impact various licensed businesses.  Other statistics were reviewed, most notably that MLCC violations for the months of February, March and April, 2011 are up 15% over last year.  Violation appeal hearings are up 75% during that same time.  Although total fines imposed by the MLCC are down by 16%, the number of license suspensions is up by 58%.  The MLCC reported that, compared to 2010, more licensees are now in compliance with the server training requirements imposed by MLCC.  Steve Robinson, MLCC Finance Division Director, reported the number of cases sold in the current fiscal year is higher by 111,695, resulting in increased revenue to the State of Michigan of $16.2 million.  This represents a 2.66% increase in revenue through the first eight months of the fiscal year.  Mr. Robinson also noted on-premise sales are down $4.7 million, while off-premise sales are up $20.9 million.  There has been a 4% drop in spirit sales to on-premise licensees during this eight-month period.  Sharon Martin, Director of Licensing, reported the MLCC has issued 5,519 new AM Sunday sales permits.  The MLCC has also issued 429 new beer and wine sampling permits and 39 catering permits under the law recently adopted.  Remarkably, the MLCC has issued 3,054 emergency suspension orders for failure to provide proof of financial responsibility so far in fiscal year 2011.  Ms. Martin also noted the MLCC has issued 2,631 special licenses to date.  Lastly, Ms. Martin reported the MLCC will soon update the State Class C and SDD license quotas based on 2010 census information.  Changes in the license quotas will be made public shortly.  Thus, we urge any of our clients looking to obtain a new Class C or SDD license to contact us immediately so we can file a license application in those areas of the state where the license quota may be increasing due to a population increase.  Many of the new quota licenses will be allocated on a "first come, first served" basis, so an early filing for these licenses is recommended.

Michigan utilizes a three-tier distribution system for the importation/manufacture, distribution and sale of beer and wine and a modified Authorized Distribution Agent system, where the MLCC acts as the spirit wholesaler, for the importation/manufacture, distribution and sale of spirits.  This system licenses participants in each of the three distribution tiers (suppliers, wholesalers and retailers).  Section 603 of the Liquor Control Code is the primary statute regulating the relationships between licensees operating on the different tiers.  Such statutes, commonly known as 'tied-house' laws, restrict ties between the three distribution tiers and have been a standard part of most regulatory structures since the end of Prohibition.  The Michigan Legislature recently amended Section 603 to further tighten the separation of the three-tiers by, among other things, expressly prohibiting suppliers, wholesalers and retailers from holding, directly or indirectly, a license in any of the other distribution tiers.  These changes have directly impacted existing wholesalers who previously were able to also act as suppliers.

While the recent changes to Michigan's tied-house law makes cross-ownership between the distribution tiers even more restrictive, all is not lost to existing and prospective licensees.   There are often ways to structure ownerships to allow for continued operation or business expansion by 'virtually' touching another distribution tier without violating MLCC law.  This same principle can be utilized for Michigan manufacturers such as Brewpubs and Micro Brewers desiring to expand their businesses.  Carlin Edwards Brown PLLC would welcome the opportunity to assist you in preserving or expanding your businesses while maintaining compliance with Michigan law.   Don't hesitate to contact our office to discuss legal alternatives to your business operation plans.